The Expansion of AFTA: Widening and Deepening?

Regional trading arrangements (RTAs) have recently tended to both widen and deepen . This paper examines the impact of widening and assesses progress with deepening in the ASEAN Free Trade Area (AFTA). Widening of AFTA has seen its membership grow from six to nine countries (and perhaps ten in 1998). Widening has increased AFTA's diversity, with the emergence of a two-tier structure of developed and under-developed segments. An AFTA-Plus program is designed to deepen regional integration. Apart from harmonising customs procedures and tariff nomenclature, and fast-tracking a common customs valuation method, progress has been limited.     

Failing firms and successful entrepreneurs: serial entrepreneurship as a temporal portfolio

Entrepreneurial performance is almost always confounded with firm performance. In this paper we argue for an instrumental view of the firm by formally showing that entrepreneurs can amplify their expected success rates by designing their careers as temporal portfolios that exploit contagion processes embedded in serial entrepreneurship. The advantages to holding concurrent portfolios that exploit heterogeneity are well known. The same advantages may be achieved in the serial context through contagion. Our model exploits an observation due to William Feller on the near equivalence of the two, statistically speaking. It also leads to empirically plausible implications about the size distribution of firms in the economy and illustrates the relevance of considering firms and entrepreneurs as distinct loci of analysis.     

Assessing advertising content in a hospital advertising campaign: An application of Puto and Wells (1984) measure of informational and transformational advertising content

The following is a report of a study designed to measure advertising content based on the cognitive and affective elements of informational (i.e., information processing) and transformational (i.e., experiential) content using the measure of advertising informational and transformational content developed by Puto and Wells (1984). A university hospital advertising campaign designed to be high in transformational content did not appear to affect perceived quality of local university hospitals relative to private hospitals or increase the likelihood of choosing a university hospital in the future. Further, experiences with university hospitals that seemed to be in direct contrast to the content of the advertisements based on subject perceptions affected how university hospital advertisements were perceived in terms of content. Conclusions and implications for hospital advertising campaigns are discussed.     

Consequences of misspecified mental models: Contrasting effects and the role of cognitive fit

Research summary: Mental models, reflecting interdependencies among managerial choice variables, are not always correctly specified. Mental models can be underspecified, missing interdependencies, or overspecified, containing nonexistent interdependencies. Using a simulation model, we find that under‐ and overspecification have opposite effects on exploration, and thereby, performance. The effects are also opposite, depending on whether a manager controls all choice variables. The mechanism underlying our results is a feedback loop: misspecified mental models influence managerial learning about the effectiveness of choices; this learning guides how the environment is explored, which in turn, affects which information will be generated for future learning. We explore implications of these results for strategic management and introduce the notion of “cognitive fit” between the mental model of the decision‐maker and the strategic environment. Managerial summary: Managers often rely on mental models to guide their decision‐making. These mental models, however, are often misspecified, that is, more or less complex than the situation managers are facing. Using a simulation model, we study the consequences of such misspecified mental models. We find that the performance implications of misspecified mental models crucially depend on whether the manager controls all choice variables. We identify situations in which simpler mental models are better than overly complex ones, and vice versa. Copyright © 2015 John Wiley & Sons, Ltd.     

The Effect of Computer Use on Work Discretion and Work Intensity: Evidence from Europe

This article studies changes in computer use and work discretion and intensity in the EU-15 between 1995 and 2015. We document that while the proportion of workers using computers has increased from 40 per cent to more than 60 per cent, there remain significant differences between countries even within the same occupations. Several countries have seen a significant increase in computer use even in low-skilled occupations generally assumed to be less affected by technology. Overall, the great increase in computer use between 1995 and 2015 coincided with a period of modest deterioration of job quality in the EU-15 as a whole, as work discretion declined for most occupational and educational groups, while work intensity increased slightly for most of them. Our OLS results exploiting variation within country-occupation cells point to a sizeable positive effect of computer use on work discretion, but to no effect on work intensity. Our instrumental variable estimates point to an even more benign effect of computer use on job quality as measured by work discretion and work intensity. Hence, the results suggest that the (moderate) deterioration in the quality of work observed in the EU-15 between 1995 and 2015 has occurred despite the spread of computers, rather than because of them.     

Promotion Incentives and Corporate Performance: Is There a Bright Side to “Overpaying” the CEO?

Earlier studies have shown that stronger equity-based incentives for CEOs are generally associated with better corporate performance and higher values. In this article, the authors report the findings of their recent study of the effects of promotion-based "tournament" incentives for non-CEO executives (or "VPs") on corporate performance for a large sample of companies during the 12-year period from 1993-2004.
The study's main finding is that such tournament incentives, as measured by the pay differential between the CEO and VPs, were associated with better corporate operating performance and higher corporate stock returns. Moreover, tournament incentives, as one would expect, appeared to be more effective when CEOs were nearing retirement—but less effective when the firm had a new CEO (and even weaker when the new CEO was an outsider).