Impacts of Jumps and Stochastic Interest Rates on the Fair Costs of Guaranteed Minimum Death Benefit Contracts

The authors offer a new perspective to the field of guaranteed minimum death benefit contracts, especially for simple return premium and rising floor guarantees. A particular feature of these contracts is a guaranteed capital upon the insured's death. A complete methodology based on the generalized Fourier transform is proposed to investigate the impacts of jumps and stochastic interest rates. This paper thus extends Milevsky and Posner (2001). If jumps alone are considered, similar results are obtained, but, when stochastic interest rates are introduced, the fair costs of the guarantee feature are found to be substantially higher in this more general economy.     

How to measure competition in an economy in transition

This paper attempts to find a robust method of measuring competition when firms' operational activities are subject to frictions. The first part theoretically tests the indicative quality of two competition measures, the price‐cost margin (PCM) and the profit elasticity, in a model of monopolistic competition. The second part studies the empirical performance of the indices for a panel of Ukrainian manufacturing firms. This study offers a new approach to measuring profit elasticity that relies on structural estimation of a production function. The estimation methodology retrieves a productivity index that is adjusted to imperfect competition. The proposed method of measuring profit elasticity is found to be robust to frictions, but the PCM and traditional profit elasticity are biased, especially when the intensity of competition is low. Empirical findings show that competition exhibits a significantly positive correlation with aggregate productivity performance, while its impact on firm productivity is nonlinear.     

Productivity Gains and Spillovers from Offshoring

Offshoring is generally believed to be productivity enhancing and this belief is underpinned by economic theory. This paper estimates the impact of materials and business services offshoring on productivity in Belgium over the period 1995–2004. It contributes to the literature: (i) by examining this issue separately for manufacturing and market services industries and (ii) by investigating the possibility of forward and backward spillovers from offshoring, i.e. that productivity gains from offshoring feed through to upstream and downstream industries. Results show that materials offshoring has no effect on productivity, while business services offshoring leads to productivity gains in manufacturing. Furthermore, there is no evidence of either forward or backward spillovers from offshoring.     

Transformation of Islamic Work Ethic and Social Networks: The Role of Religious Social Embeddedness in Organizational Networks

The aim of this study is to explore the influence of religious beliefs on social or work-related ties of managers who are member of organizational networks representing two different ideologies (religious and secular) in Turkey. In this research, the emergence of secular and devout entrepreneurs is considered as a phenomenon, and special attention is paid to religious transformation and secularism in Turkey. Social network analysis method is used to define the nature of communication links among 80 chairmen who are the members of two conflicting and dominant groups in Turkish business system. The findings show that Protestant work ethic suggested by Weber with regard to Christianity have attained a similar place over the past decade in Islamic organizational networks. The concern of political power in religion leads to organizational networks being nourished by religious norms and creeds in many developing countries. Especially in societies like Turkey where the state is dominant in the business life, organizations and managers prefer to be included in religious networks to make close contacts with the state. Another significant finding is that efforts of the members of religious networks—in spite of their relatively closed characteristics—in terms of being at the center of a network and taking the brokerage role, are highly developed on the contrary to the literature.     

Me,Myself, and Future Generations: The Role of Affinity and Effectiveness in the Creation of Consumer Environmental Stewardship (CENS)

Policymakers, consumer advocate groups, and researchers agree that consumers need to increase their proenvironmental behaviors if a decent standard of living is to be ensured for future generations. Despite high levels of environmental concern, consumers still refrain from large‐scale adoption of proenvironmental behaviors. Social marketers agree that a change in attitudes is not enough to stimulate the necessary behavioral change and are looking for ways to help consumers overcome the costs (e.g., price premiums, inconvenience) that are often associated with proenvironmental behaviors. Currently, consumers often see proenvironmental behavior as a trade‐off between short‐term personal benefits and longer term collective benefits. The authors contribute to the social marketing literature on proenvironmental behavior by introducing the concept of Consumer Environmental Stewardship (CENS), which centers on the use of intrinsic motivation to stimulate a personal sense of responsibility for the environment. The findings, based on a survey and three experiments, show that the stimulation of consumers’ affinity with future generations (AFGs) and perceived consumer effectiveness (PCE) can help to promote CENS, which in turn raises proenvironmental behaviors. However, this research also shows that increasing levels of AFGs can backfire and result in lower levels of CENS, if consumers experience low levels of PCE.     

Do Institutions Matter for Foreign Direct Investment?

Using a panel of 69 countries during 1981 and 2005, we investigate the role of institutions in determining foreign direct investment (FDI). We find that institutions are a robust predictor of FDI and that the most significant institutional aspects are linked to propriety rights. Using a novel data set, we also study the impact of institutions on FDI at the sectoral level. We find that institutions do not have a significant impact on FDI in the primary sector but that institutional quality matters for FDI in manufacturing, and particularly in services.     

ACQUISITION OF INFORMATION TO DIVERSIFY CONTRACTUAL RISK*

Are hedging transactions that diversify a manager’s compensation risk detrimental to incentives, or can they improve contracting efficiency? If hedging provides efficiency benefits, should the manager or the firm undertake it? In our model, both the firm and the manager can trade financial portfolios to diversify the manager’s compensation risk. Prior to the portfolio selection, the parties need to acquire information on how different financial portfolios fit their diversification purposes. We illustrate that financial portfolios correlated with firm‐specific risk improve contracting efficiency. For equal information costs, it is optimal for the firm to undertake the hedging on the manager’s behalf.     

Religious obligations to travel: first-generation Pakistani migrants from Newcastle-upon-Tyne

This article analyses the religious travel experiences of members of the first generation of the Muslim Pakistani diaspora living in Newcastle-upon-Tyne, UK drawing upon qualitative interpretations collected from semi-structured interviews. Religious travel for first-generation Muslim Pakistanis is influenced by Islamic principles and practices associated with obligations to travel to meet with friends and relatives. Religious obligations to travel are considered as a key factor influencing visiting friends and relatives (VFR) mobilities at a local and national level. The religious obligation associated with VFR travel is examined in view of one of the five pillars of Islam, which is salah (prayer), which stimulates various mobilities. Central to the analysis of religious-orientated (VFR) journeys are the conceptual underpinnings of obligations situated in the mobilities paradigm, which give rise to understandings of spiritualities of place. Religious obligations to travel unite the Muslim diaspora in various local (in Newcastle-upon-Tyne) and national (UK) settings. The contribution of this paper is, therefore, to advance the understanding of the relationship between Islam and travel, and add to existing knowledge of the journeys of Muslim travellers in the context of VFR travel. We conclude by suggesting further avenues of research concerning religious obligations to travel.     

A Walk in Customers' Shoes: How Attentional Bias Modification Affects Ownership of Integrity-violating Social Media Posts

The number of social media posts that expose company integrity violations has increased dramatically. In response, some companies empower employees to respond to customer blogs, which requires employees to recognize the customer's perspective. We show that attentional bias modification can be used to prime employees of two global Fortune 100 companies with a self-sufficiency or empathy bias. The results indicate that narrative transportation, or the extent to which employees mentally enter the world evoked by a customer's story, mediates the effect of attentional bias on two relevant psychological ownership dimensions: acknowledgment of responsibility and willingness to respond. Participants with a self-sufficiency bias neither acknowledge responsibility nor want to respond. However, participants primed with an empathy bias take responsibility for the customer's case and respond to the integrity violation. We find evidence for two boundary conditions of this effect: (1) it strengthens when the employee perceives the customer's financial vulnerability as high and (2) it weakens when the customer is impolite in the blog post.     

The role of European «ro-ro» port terminals in the automotive supply chain management

The aim of this paper is concerned with the design and development of a functional framework for maritime mode integration in European automotive supply chain management when considering outbound distribution. Furthermore, it provides a readjustment of traditional concepts and terminology with findings that the role of ro-ro port terminals should be considered as decoupling points, poles and postponement platforms. Case studies examine relevant Western European ro-ro port terminals for cars and respective links to assembly/factories of vehicles localized in the hinterland and concludes that ro-ro port terminals reduce logistical friction and impedance, as well as promote space/time compression.