Liquidity management with decreasing returns to scale and secured credit line

This paper examines the dividend and investment policies of a cash constrained firm, assuming a decreasing-returns-to-scale technology and adjustment costs. We extend the literature by allowing the firm to draw on a secured credit line both to hedge against cash-flow shortfalls and to invest/disinvest in a productive asset. We formulate this problem as a two-dimensional singular control problem and use both a viscosity solution approach and a verification technique to get qualitative properties of the value function. We further solve quasi-explicitly the control problem in two special cases.     

Designing a European unemployment insurance scheme

With disparities in national unemployment rates reaching record levels, the debate on fi scal stabilisers in Europe has gained new momentum. Can a European unemployment insurance scheme help to absorb asymmetric shocks and bring about the desired level of macroeconomic stabilisation? What should such an unemployment benefi t system look like? The contributions to this Forum explore the benefi ts expected from a European unemployment insurance scheme and discuss the diffi culties in establishing such a policy.     

Monetary policy with heterogeneous agents and borrowing constraints

We show that the long-run neutrality of inflation on capital accumulation obtained in complete market models no longer holds when households face binding credit constraints. Borrowing-constrained households are not able to rebalance their financial portfolio when inflation varies, and thus adjust their money holdings differently compared to unconstrained households. This heterogeneity leads to a new precautionary savings motive, which implies that inflation increases capital accumulation. We quantify the importance of this new channel in an incomplete market model where the traditional redistributive effects of inflation are also introduced. We show that this model provides a quantitative rationale for the observed hump-shaped relationship between inflation and capital accumulation.     

Transnational Management Influence over Changing Employment Practice: A Case from the Food Industry

The means by which multinational companies (MNCs) develop and diffuse transnational industrial relations practices are the focus of this article. It elaborates different channels through which international management exercises influence over local practice in operations across different countries. Drawing on survey findings, it identifies the kinds of MNC in which the exercise of such transnational influence is most prevalent. The processes involved are investigated through an in-depth study of a European food MNC. This highlights the importance of ‘unobtrusive’ channels of transnational influence operating within a structure which promotes both cooperation and competition between local units.     

Incomplete markets,liquidation risk,and the term structure of interest rates

We analyse the term structure of interest rates in a general equilibrium model with incomplete markets, borrowing constraint, and positive net supply of government bonds. Uninsured idiosyncratic shocks generate bond trades, while aggregate shocks cause fluctuations in the trading price of bonds. Long bonds command a “liquidation risk premium” over short bonds, because they may have to be liquidated before maturity – following a bad idiosyncratic shock – precisely when their resale value is low – due to the simultaneous occurrence of a bad aggregate shock. Our framework endogenously generates limited cross-sectional wealth heterogeneity among the agents (despite the presence of uninsured idiosyncratic shocks), which allows us to characterise analytically the shape of the entire yield curve, including the yields on bonds of arbitrarily long maturities. Agents? desire to hedge the idiosyncratic risk together with their fear of having to liquidate long bonds at unfavourable terms implies that a greater bond supply raises the level of the yield curve, while an increase in the relative supply of long bonds raises its slope.     

Small business management and environmental engagement

Small firms in tourism are characterised by informal approaches to management, allowing their owners to meet a variety of often overlapping business and personal goals. Environmental certification schemes generally require members to subscribe to formal environmental management systems (EMS), even when aimed at small business operators. This paper examines in detail the managerial approaches of a small group of owner-managers who are operating within the approximately 3000-member Green Tourism Business Scheme (GTBS) available in the UK and Ireland. The findings suggest that the type of environmental practices adopted most willingly reflect the formality of management within the business and the owner-managers’ various backgrounds, values, reasons to be in business, expectations from acting and their understanding of the “environment”. It finds that the “Plan-Do-Check-Review” approach of most EMS does not easily relate to the complex motivations and needs of the world of small business. The paper concludes that environmental engagement is more likely to be fostered if owner-managers’ managerial approaches and assumptions are better understood and that shared visions for environmental engagement are encouraged through informed dialogue. Both economic benefits and the fostering of “feel good” factors should be stressed if small tourism businesses are to adopt EMS programmes.     

Putting one-to-one marketing to work: Personalization, customization, and choice

The tailoring of a firm’s marketing mix to the individual customer is the essence of one-to-one marketing. In this paper, we distinguish between two forms of one-to-one marketing: personalization and customization. Personalization occurs when the firm decides what marketing mix is suitable for the individual. It is usually based on previously collected customer data. Customization occurs when the customer proactively specifies one or more elements of his or her marketing mix. We summarize key challenges and knowledge gaps in understanding both firm and customer choices in one-to-one markets. We conclude with a summary of research opportunities.     

Targeting biomed cluster from a mature pharma industry: the Medicon Valley experience

This paper analyses the emergence and development of the Medicon Valley biomedicine cluster from an evolutionary perspective. We focus on the co-evolution and synergies among the drivers of the cluster's emergence. Targeting biomed involves some challenges and complexities, which are particularly strong in this case, owing to its specificities (bi-national nature, predominant context of horizontal policies, pre-existent pharma industry). The main aim is to analyse the role of the different institutional players in this policy process. The study suggests that targeting emerges from regional coordination bodies. It also reveals a smart specialisation strategy ‘avant la lettre’ and shows a number of critical insights for the implementation of this policy approach.     

Trade associations as corporate social responsibility actors: an institutional theory analysis of animal welfare in tourism

Most travel trade associations ignore their responsibility towards sustainable development broadly and animal welfare in particular. We analyse the development and implementation of animal welfare standards across 62 national and international associations using interviews, surveys, content analysis of published materials and websites. Only 21 associations mention sustainability in their websites, and only six refer to animal welfare. Of these, three associations have well-developed animal welfare activities (ABTA, ANVR and GSTC) [AQ1] and only one (lightly) monitors its members’ sustainability and animal welfare standards (ANVR). ABTA’s Animal Welfare Guidelines are the de facto industry standard, despite being designed for information (not auditing) purposes and lacking enforcement mechanisms. We examine jolts that prompt some associations to respond to external pressures and the institutional entrepreneurship process that triggers a process of reflexivity, theorisation and diffusion of a broader sense of responsibility. We examine the field-level conditions that lead to mostly mimetic pressures on large European tour operators (that compel them to act due to reputational risk management), with minimal normative pressures that would diffuse animal welfare practices across other association members. Change is not divergent, and the resources allocated to animal welfare protect trade associations’ members from criticism without binding them to implementation.