Real option valuation of public sector R&D investments with a down-and-out barrier option

This paper presents a real options approach for valuing public-sector research and development projects, using a down-and-out barrier option. Specifically, it considers the potential savings to the tax payer for investing in technology to be purchased by a national government. The valuation is performed with stretched trinomial lattices. Government-driven demand for this technology is equated with the underlying asset, and valuation measured in terms of potential government savings. Two variables, volatility of demand for the technology and unit cost, are treated as uncertain. A Monte Carlo simulation is performed to understand the effects of these variables on the valuation. Other variables are estimated, and a parametric analysis is performed to understand the effects of these variables. To illustrate how this approach could be used, the development of a new sensor, to be used in large networks that track greenhouse gas fluxes, is considered as an example.     

Collegiality under pressure: the effects of family demands and flexible work arrangements in the Netherlands

Collegial relationships at work have become more important now that organizations increasingly use team-based work processes. Collegiality is also facing new challenges, however: more employees are meeting heavy demands beyond the workplace and making more frequent use of flexible work arrangements. This study seeks to explain the effect of employees’ family demands on collegiality and evaluates whether the use of flexible work arrangements improves or impedes collegial behaviour. Moreover, we aim to investigate collegial behaviour as an exchange process between co-workers, and therefore also take family demands and the use of flexible work arrangements by co-workers into account as predictors of employee collegiality. Based on a sample of 1114 employees from 30 organizations, the results show that when used by the employee and co-workers, flexitime decreases collegiality. Collegiality is decreased when the employee has young children, but increased when co-workers have older children. The implications of these findings for HR practices are discussed.     

Forecasting the US term structure of interest rates using a macroeconomic smooth dynamic factor model

We extend the class of dynamic factor yield curve models in order to include macroeconomic factors. Our work benefits from recent developments in the dynamic factor literature related to the extraction of the common factors from a large panel of macroeconomic series and the estimation of the parameters in the model. We include these factors in a dynamic factor model for the yield curve, in which we model the salient structure of the yield curve by imposing smoothness restrictions on the yield factor loadings via cubic spline functions. We carry out a likelihood-based analysis in which we jointly consider a factor model for the yield curve, a factor model for the macroeconomic series, and their dynamic interactions with the latent dynamic factors. We illustrate the methodology by forecasting the U.S. term structure of interest rates. For this empirical study, we use a monthly time series panel of unsmoothed Fama–Bliss zero yields for treasuries of different maturities between 1970 and 2009, which we combine with a macro panel of 110 series over the same sample period. We show that the relationship between the macroeconomic factors and the yield curve data has an intuitive interpretation, and that there is interdependence between the yield and macroeconomic factors. Finally, we perform an extensive out-of-sample forecasting study. Our main conclusion is that macroeconomic variables can lead to more accurate yield curve forecasts.     

Firm heterogeneity, productivity and spatially bounded knowledge externalities

In this paper, we argue that conceptually disentangling the ‘context versus composition’ aspects of regional growth is a multilevel issue. By applying multilevel models (also called random-effects models), we show (1) the importance of considering firm-specific characteristics simultaneously with region-specific characteristics, as we find that a large part of what is traditionally assigned to the impact of the region should be assigned to firm-specific characteristics and (2) that existing single-level methodologies can be problematic, as they are vulnerable to the charge of estimating significance levels that are too liberally assigned and promote exaggerations. This is illustrated empirically by showing that single-level approaches would lead to the conclusion that innovation spillovers are highly significant in a setting of Dutch urban growth differentials, while multilevel analyses shows less liberally assigned significance levels. We conclude that multilevel-effect models better fit research questions that combine firm and spatial characteristics simultaneously, especially because they allow firm-specific characteristics to be differently linked to their regional contexts.     

Cannabis use and mental health problems

This paper investigates whether cannabis use leads to worse mental health. To do so, we account for common unobserved factors affecting mental health and cannabis consumption by modeling mental health jointly with the dynamics of cannabis use. Our main finding is that using cannabis increases the likelihood of mental health problems, with current use having a larger effect than past use. The estimates suggest a dose–response relationship between the frequency of recent cannabis use and the probability of currently experiencing a mental health problem. Copyright © 2010 John Wiley & Sons, Ltd.     

Measuring the quality of managerial learning on the job

This article describes the development of an instrument to measure the quality of managerial learning on the job. The instrument can be used to analyse the quality of the individual learning process on the job. The literature shows that two factors determine the quality of the learning process: the learning potential of the job context and the way in which the manager approaches their work. So the instrument has two components. The first component measures the four types of work experience that offer potential opportunities for individual learning. These are transitions, task-related characteristics, obstacles and support. The second component, the so-called learning behaviour, analyses the way the individual approaches the potential learning opportunities present in the job. This can also be divided into four categories: emergent learning, planned learning, instruction-oriented learning and meaning-oriented learning. Based on these two components, an instrument has been developed to measure the quality of learning on the job. This has been shown to be valid and reliable in a sample of European managers.     

CEO's empathy and salience of socioemotional wealth in family SMEs – The moderating role of external directors

A focus on preserving socioemotional wealth may influence entrepreneurial activities in family firms. In this paper, we identify the emotion of empathy in the family CEO as an antecedent of socioemotional wealth creation. We argue that the presence of one or more external directors can have a direct as well as moderating influence on the relationship between CEO's empathy and the salience of socioemotional wealth to the family CEO. Our empirical tests confirm these hypotheses. Several areas of future research are suggested to incorporate empathy and other emotions in family business studies.     

Neoliberalization,Housing Institutions and Variegated Gentrification: How the ‘Third Wave’ Broke in Amsterdam

Neil Smith argues that in the last two decades gentrification has become a generalized global urban phenomenon. His theory is at a high level of abstraction, as it links urban gentrification to globalization, financial capitalism and neoliberalization. With these global processes, all cities have experienced ‘third wave’ gentrification. The theory, however, leaves little room for variegations of gentrification, apart from characterizing geographical differences as idiosyncrasies or as minor variations. This downplays the role of intervening mechanisms that impinge upon the pursuit and social outcomes of gentrification. This article aims to amend abstract theory by looking at Amsterdam from a historical institutional perspective. In Amsterdam, gentrification was particularly made possible by a process of neoliberalization within the housing system. However, as institutional change is incremental and based on layering and conversion, many older institutional arrangements remain in place. These arrangements tend to slow gentrification and assuage social consequences. Nevertheless, neoliberal modifications to the housing system have been accelerating the pursuit of gentrification. Current policies will very likely lead to exclusionary displacement.     

Estimating the Size of a Criminal Population from Police Records Using the Truncated Poisson Regression Model

The truncated Poisson regression model is used to arrive at point and interval estimates of the size of two offender populations, i.e. drunk drivers and persons who illegally possess firearms. The dependent capture–recapture variables are constructed from Dutch police records and are counts of individual arrests for both violations. The population size estimates are derived assuming that each count is a realization of a Poisson distribution, and that the Poisson parameters are related to covariates through the truncated Poisson regression model. These assumptions are discussed in detail, and the tenability of the second assumption is assessed by evaluating the marginal residuals and performing tests on overdispersion. For the firearms example, the second assumption seems to hold well, but for the drunk drivers example there is some overdispersion. It is concluded that the method is useful, provided it is used with care.