Integrating soft factors into the assessment of cooperative relationships between firms: accounting for reputation and ethical values

Alliances and other forms of cooperation between firms often promise great benefits, for example, by the exchange of knowledge or co‐specialization of resources. At the same time, the necessary actions to realize these benefits can augment vulnerability to opportunistic behaviour of partners. In addition to formal contracts to mitigate the resulting behavioural uncertainties, often, mechanisms, such as reputation or ethical values, are suggested as important supplements. However, when it comes to assessment of a specific cooperation opportunity, it is difficult to account systematically for the economic consequences of these ‘softer factors’. Therefore, this paper aims to surpass mere financial analysis of chance and risk and to integrate systematically both reputation and ethical values into an economic assessment of cooperative relationships. For this purpose, we develop a theoretical framework that is based on a simple‐decision model to account for reputation and ethical values of potential partners as drivers of behavioural uncertainty reduction. We also discuss how this framework can be used to assess cooperative relationships and illustrate these ideas with reference to the inter‐organizational accounting practices of a large drugstore chain and its suppliers.     

Challenges for land system science

While considerable progress has been made in understanding land use change, land system science continues to face a number of grand challenges. This paper discusses these challenges with a focus on empirical land system studies, land system modelling and the analysis of future visions of land system change. Contemporary landscapes are contingent outcomes of past and present patterns, processes and decisions. Thus, empirical analysis of past and present land-use change has an important role in providing insights into the socio-economic and ecological processes that shape land use transitions. This is especially important with respect to gradual versus rapid land system dynamics and in understanding changes in land use intensity. Combining the strengths of empirical analysis with multi-scale modelling will lead to new insights into the processes driving land system change. New modelling methods that combine complex systems thinking at a local level with macro-level economic analysis of the land system would reconcile the multi-scale dynamics currently encapsulated in bottom-up and top-down modelling approaches. Developments in land use futures analysis could focus on integrating explorative scenarios that reflect possible outcomes with normative visions that identify desired outcomes. Such an approach would benefit from the broad and in-depth involvement of stakeholders in order to link scientific findings to political and societal decision-making culminating in a set of key choices and consequences. Land system models have an important role in supporting future land use policy, but model outputs require scientific interpretation rather than being presented as predictions. The future of land system science is strongly dependent on the research community's capacity to bring together the elements of research discussed in the paper, via empirical data collection and analysis of observed processes, computer simulation across scale levels and futures analysis of alternative, normative visions through stakeholder engagement.     

How Do Investors' Expectations Drive Asset Prices?

Based on an extension of the process of investors' expectations to stochastic volatility we derive asset price processes in a general continuous time pricing kernel framework. Our analysis suggests that stochastic volatility of asset price processes results from the fact that investors do not know the risk of an asset and therefore the volatility of the process of their expectations is stochastic, too. Furthermore, our model is consistent with empirical studies reporting negative correlation between asset prices and their volatility as well as significant variations in the Sharpe ratio.     

Die sozialen Kosten von Währungsreserven

Ohne ZusammenfassungMit 2 TextabbildungenDer Verfasser, der während der Arbeit an diesem Artikel Research Assistant bei Professor Fritz Machlup, Princeton, gewesen ist, möchte aus Anlaß dieser Veröffentlichung für die dort empfangenen Anregungen ausdrücklich danken.     

The Impact of Moral Intensity on Decision Making in a Business Context

The present paper reports the results of a vignette- and questionnaire-based research project investigating the influence of Moral Intensity (MI) on decision making in a New Zealand business context. The use of a relatively sensitive research design yielded results showing that – in contrast to previous research – objective manipulations, as well as subjective perceptions, of three of the six MI components were of particular importance in accounting for a comparatively large proportion of the variation in four outcome variables. There were no interactions of appreciable magnitude between MI components, or variations across scenarios. Also, no support was found for a reliable multi-dimensional structure of perceptions of Moral Intensity. Implications of the findings are discussed.