A consistent analysis of diversification decisions with non-observable firm effects

The empirical analyses of firm diversification decisions, both for new activities (new products) and markets (for example, new routes for airlines), have usually estimated a binary dependent variable model for each of the decisions the firm makes. To obtain consistent estimators, every relevant effect must be considered in the specification. As this will hardly happen, the presence of nonobserved firm effects (either because such data do not exist or because it is impossible to obtain them) must be econometrically treated, because it causes inconsistency in the estimations. In this paper we propose to use the estimators provided by the maximization of the conditional likelihood function in problems of this kind because they give consistent results even when unobserved firm effects are present. Finally, we apply this technique to an example of diversification among Spanish manufacturers. © 1997 John Wiley & Sons, Ltd.     

And if the ball does not cross the line? A comprehensive analysis of football clubs’ performance

The football club market is changing fast in the social media era. In this global market, clubs must maintain or improve fans’ attendance at the stadium; simultaneously, they need, more than ever, to take care of social media. The aim of this article is to test and discuss a comprehensive approach to analysing the performance of football clubs regarding their multiplicity of objectives. We analyse the efficiency of English Premier League (EPL) clubs during three seasons (2012/13–2014/15). The methodologies employed are data envelopment analysis (DEA) and a bootstrapped DEA model. The input is the market value of the squad, and the outputs are sports results, total revenue, the ratio of stadium utilization during the season and an index of social media impact. The results are robust to alternative estimation methods and indicate that EPL clubs still have a margin for improving their overall efficiency, mainly the medium clubs. The analysis of football clubs’ performance with the proposed comprehensive approach provides a useful tool to help managers with evaluation and feedback considering the actual context of the market. The approach brings closer the opportunity to design appropriate strategies to improve clubs’ efficiency as well as competition policies.     

Looking into the abyss? Brazil at the mid-2010s

In 2015, the Brazilian economy was afflicted by a lethal combination of a falling level of activity and accelerating inflation. Expectations for 2016 are equally or even more adverse, since the effects of rising unemployment emerge only after a lag. The domestic debate has opposed analysts who believe the crisis is due exclusively to past policy mistakes to analysts who believe that all was well until the government decided to implement austerity policies in 2015. A closer examination of the evidence shows that in fact both reasons contributed to causing the crisis, but it also suggests that its depth has a more proximate cause in the political collapse of the federal government in 2015, which led Brazilian society to an impasse for which a solution is not yet in view.     

Persistence,mean reversion and non-linearities in the US housing prices over 1830–2013

The objective of this study is to provide a direct estimate of the degree of persistence of measures of nominal and real house prices for the US economy, covering the longest possible annual sample of data, namely 1830–2013. The estimation of the degree of persistence accommodates for non-linear (deterministic) trends using Chebyshev polynomials in time. In general, the results show a high degree of persistence in the series along with a component of non-linear behaviour. In general, if we assume uncorrelated errors, non-linearities are observed in both nominal and real prices, but this hypothesis is rejected in favour of linear models for the log-transformation of the data. However, if autocorrelated errors are permitted, non-linearities are observed in all cases, and mean reversion is found in the case of logged prices, though given the wide confidence intervals, the unit root null hypothesis cannot be rejected in these cases.     

The impact of network configurations on value constellations in business markets — The case of an innovation network

A growing body of scholars are advocating a better understanding of how value is created in business networks, rather than merely in business relationships or at the level of single actors. Among such networks, innovation networks, i.e. the configurations of strategic entrepreneurial nets aimed at improving the effectiveness of innovation performance, have come under scrutiny in the business marketing literature. However, research that explicitly connects value considerations with innovation network configurations is still in its infancy, with empirical evidence being notably scarce. This study is aimed at identifying if and how network configurations affect value constellation aspects in business networks, in terms of value recipients and value outcomes. We interviewed key informants representing 46 high-technology entrepreneurial firms co-located in an innovation network (Daresbury Science and Technology Park — UK). Our study identifies that different network configurations can co-exist in the same overall network; these, nevertheless, are not alternative independent structures, but rather they interact with each other through actors spanning their boundaries. Our study thus provides an understanding of network configurations relating to specific value consequences, but also provides evidence relating to the interactions between different configurations. By doing this, we establish a bridge between a business marketing and a strategy perspective on value in networks. Important managerial implications and implications for policy makers also emerge from our study.     

The value of entrepreneurship by gender on regional behaviour

This paper examines how the value of entrepreneurship by gender is related to regional behaviour. Researchers have traditionally defined entrepreneurial organization as separate to gender and to economic growth. Using the Global Entrepreneurship Monitor (GEM) we complete a dataset of 50 countries using variables such as total early-stage entrepreneurial activity (TEA) and opportunity-driven entrepreneurial activity (OPP). The methodology used proposes an analysis of regional convergence, comparing the evolution over time of both the rate of entrepreneurial activity and the ratios of opportunity-driven and need-driven entrepreneurial activity, distinguishing by gender. On the other hand, a regression model is proposed that explains the greater presence of female entrepreneurship. The results show that entrepreneurship by gender is an important factor to define different cluster of countries according to how men and women entrepreneurs create new economic opportunities.

     

Community banks' capital requirements and regional housing tenure

Bank capital requirements aim at reducing the likelihood of banks' failure. However, these policies may generate externalities on the overall economy. By investigating the pathways from capital requirements to housing tenure using structural equation modelling, we show that community banks' capital requirements increase the gap between the regional real estate loans-based and non-real estate loans-based housing purchase rate and act as driving factors of housing market imbalance. The drop in residential real estate loans caused by the increase in capital requirements has two opposite effects: the direct effect motivates residents to rent properties, while the indirect effect motivates residents to purchase them due to the fall in housing prices. When both effects exist in housing purchases with real estate loans, the former effect is more influential than the latter one. Our findings suggest that the impact of capital requirements on housing tenure will depend on residents' reliance on real estate loans. If a housing purchase requires real estate loans, capital requirements will have a negative impact on the housing purchase, and vice versa.     

Fixed-term employment contracts in an equilibrium search model

We develop a theoretical model of firm dynamics and unemployment and characterize equilibria with tenure dependent separation taxes. The model is a version of the Lucas and Prescott island model with undirected search. Two equivalent decentralizations are considered: one with spot labor markets and one with long-term employment relations. We model “temporary contracts” as the special case of a separation tax that only applies to workers with tenure higher than J. While in principle these contracts require a J-dimensional state space, equilibrium allocations solve a simple dynamic programming problem characterized by two-dimensional inaction set(s).     

Short-run exchange rate uncertainty in Latin America

This paper to obtain an ex ante measure of exchange rate uncertainty in 11 Latin American countries. As a preliminary issue, the purchasing power parity (PPP) condition is tested using Engle and Granger two-step procedure and Johansen method. The argument is that exchange rate uncertainty could be lower if PPP holds in the long run. The expected exchange rate uncertainty is estimated according to an extended version of the autoregressive, conditionally heteroscedastic (ARCH) model. The results show that the ARCH adjusment produces more efficient estimates in seven countries and that the acceptance of PPP has little effect on exchange rate uncertainty.