Environmental Regulation and Innovation Offsets in the Bluegrass Seed Industry

Burning bluegrass seed stubble is an important production practice that, among other benefits, increases production and stand life of this perennial crop. Despite economic forecasts that higher production costs from the 1996 state ban on seed stubble burning would reduce Washington production by up to 30%, output in the years 1998–2005 was nearly two-thirds higher than in any previous eight-year period. This study seeks to explain why that paradoxical behavior occurred. This study puts forward and systematically tests several hypotheses. The only hypothesis with any support, innovation offsets, is examined by an assessment of contemporaneous innovations and by corroborative statistical evidence.     

Debt and Firms' Relationships: The Italian Evidence

Theories that predict the strategic use of debt by players engaged in a verticalrelationship are tested using an empirical model of debt usage. It is found thatfirms selling mainly to other firms are characterised on average by a higherlevel of debt. No evidence supports the notion that buyers increase their leverageto commit themselves not to behave opportunistically towards their suppliers. Theresults in the paper also suggest that group organisation limits the incentive to usedebt strategically within the holding-subsidiaries relationship.     

Promise and peril in implementing pay‐for‐performance

Why would managers abandon pay‐for‐performance plans they initiated with great hopes? Why would employees celebrate this decision? This article explores why managers made their decisions in 12 of 13 pay‐for‐performance “experiments” at Hewlett‐Packard in the mid‐1990s. We find that managers thought the costs of these programs to be higher than the benefits. Alternative managerial practices such as effective leadership, clear objectives, coaching, or training were thought a better investment. Despite the undisputed instrumentality of pay‐for‐performance to motivate, little attention has been given to whether the benefits outweigh the costs or the “fit” of these programs with high‐commitment cultures like Hewlett‐Packard was at the time. © 2004 Wiley Periodicals, Inc.     

The transaction costs perspective on international supply chain management; evidence from case studies in the manufacturing industry in the Netherlands

Transaction costs are barriers for internationalisation processes. This paper investigates the practical relevance of transaction costs economics (TCE) for international supply chain management (SCM) in this era of globalisation, which is characterised by splitting up the supply chain in more and more parts. The analysis is based on data from in-depth interviews with seven manufacturing companies in the Netherlands which are actually engaged in this modern way of organising production. It is shown that the balance between transaction costs and sheer production costs (transformation costs) plays a prominent role in the strategic decisions on how and where to organise production. Especially intangible (or ‘soft’) transaction costs are important in this respect. The analysis provides insight in practical experience in the manufacturing industry in the Netherlands with transaction costs and shows how transaction costs affect decisions on transaction management, personnel policy and internationalisation of R&D. This study is to our knowledge the first to confront the theory of TCE with practice of manufacturing firms in their internationalisation decisions using in-depth interviews instead of survey data.     

Quality Uncertainty as Resolution of the Bertrand Paradox

It is well‐known that product differentiation eliminates the Bertrand paradox (i.e. marginal cost pricing under duopoly). While differentiation is often justified with reference to the consumer's ‘preference for variety’, the conditions under which such a preference is likely to arise are rarely considered. We investigate this question in a setting in which uncertainty about product quality can endogenously generate either convex or non‐convex preferences. We show that even when two goods are ex ante homogeneous, quality uncertainty can eliminate the Bertrand paradox.     

Optimal Welfare-to-Work Programs

A Welfare-to-Work (WTW) program is a mix of government expenditures on various labour market policies targeted to the unemployed ( e.g. unemployment insurance (UI), job search monitoring (JM), social assistance (SA), wage subsidies). This paper provides a dynamic principal–agent framework suitable for analysing chief features of an optimal WTW program, such as the sequence and duration of the different policies, the dynamic pattern of payments along the unemployment spell, and the emergence of taxes/subsidies upon re-employment. The optimal program endogenously generates an absorbing policy of last resort ("social assistance") characterized by a constant lifetime payment and no active participation by the agent. Human capital depreciation is a necessary condition for policy transitions to be part of an optimal WTW program. The typical sequence of policies is quite simple: the program starts with standard UI, then switches into monitored search and, finally, into SA. The optimal benefits are decreasing during unemployment insurance and constant during both JM and SA. Whereas taxes (subsidies) can be either increasing or decreasing with duration during UI, they must decrease (increase) during a phase of JM. In a calibration exercise, we use our model to analyse quantitatively the features of the optimal program for the U.S. economy. With respect to the existing U.S. system, the optimal WTW scheme delivers sizeable welfare gains to unskilled workers because the incentives to search for a job can be retained even while delivering more insurance and using costly monitoring less intensively.     

A structured approach to conflict prediction in information systems strategy implementation

Organizational power and politics are the central issues of this paper. By developing a model of organizational power it is possible to determine whether an organizational change initiative is likely to be politically feasible. The formal model described has been derived largely from research reported in the social sciences. The modelling process involved using formal methods, in logic and entity relationship analysis, to discover an effective and consistent means of representing key organizational power concepts. The result is an advisory expert system called MP/L1 that can be employed by change agents to predict likely sources of potential resistance to major change initiatives and to suggest tactics that might be effective in combating anticipated resistance. Industrial experience with MP/L1 to date indicates that it has significant potential as a change management tool within the IS strategy-implementation domain. © 1998 John Wiley & Sons, Ltd.     

Public utility valuation and risk under incentive regulation

The objective of providing inducements for public utilities to seek to improve the efficiency of their operations has been a longstanding regulatory concern. Among the evolving strategies for furthering that objective is a shift toward what has come to be referred to as incentive regulation. We examine here how this departure from past regulatory practice will affect the market value and market risk of the utility firm, and the specific manner in which an incentive mechanism can be implemented in order to achieve a desired valuation outcome. A particular focus is the establishment of boundaries on allowed rates of return under incentive regulation which are consistent with that desired outcome. The likely impact on utility ratepayers is considered.