Using actors' perceptions of network roles and positions to understand network dynamics

This article explores network dynamics by analysing how actors make sense of time and space in business networks, and how they act based on these perceptions. The time dimension is understood here as actors' perceptions of past, present and future changes in their network. The space dimension is understood, first, in terms of the network position a company holds in relation to its business partners, and secondly, in terms of the network role it enacts. As such, this study relates three pivotal concepts in industrial marketing: network change, network position, and network role. The link between these three relates to the interdependencies within a network, in that if one company attempts to change its position, this will in turn affect the position of other companies. Moreover, actors' attempts to change their position or role in the network are directed by their subjective sensemaking or perceptions of their surrounding network. In this article we posit that in order to understand network dynamics we must analyse how actors attempt to affect change based on their perceptions of their positions and roles in their network environment. Our analysis suggests that although there are similarities between perceptions by actors holding similar positions in the network, such network positions alone cannot explain their actions. Rather, differences in actors' interpretations and enactments of their network role are necessary to explain their networking activities. We use an extensive case study of the changing distribution structure for seafood in Norway and Japan to exemplify these points.     

Demand and operating cost forecasting accuracy for toll road projects

Inaccurate forecasts represent a major source of risk in road and toll projects because they could result in financial difficulties or even bankruptcy. This paper focuses on demand and operating cost forecasting accuracy for Norwegian toll projects by comparing the forecasted and actual levels of traffic and operating costs. The differences among the types of projects and the effects of project size, time and demand ramp-up are also examined. Our study finds that traffic forecasts for Norwegian toll projects are fairly accurate, on average. However, a majority of the investigated projects experienced overestimation, and a huge general error in the forecasts suggests that this is also a source of risk that merits greater scrutiny. Inaccuracies are common among all project types and sizes. Operating costs are frequently underestimated; on average, these costs are about 30% higher than estimated.     

Stakeholder rights and economic performance: The profitability of nonprofits

This paper explores whether ownership matters in a fundamental sense by comparing the performance of stockholder-owned firms with the much less analyzed nonprofit firms. No stakeholder has residual cash flow rights in nonprofit firms, and the control rights are held by customers, employees, and community citizens. Accounting for differences in size and risk and comparing only firms in the same industry, we find that stockholder-owned firms do not outperform nonprofit firms. This result is consistent with the notin that the monitoring function of stockholders may be successfully replaced by other mechanisms. We find evidence that product market competition may play this role as a substitute monitoring mechanism.     

Stakeholder conflicts and dividend policy

This paper compares the dividend policy of owner-controlled firms with that of firms where the owners are a minority relative to non-owner employees, customers, and community citizens. We find that regardless of whether owners or non-owners control the firm, the strong stakeholder uses the dividend payout decision to mitigate rather than to intensify the conflict of interest with the weak stakeholder. Hence, the higher the potential agency cost as reflected in the firm’s stakeholder structure, the more the actual agency cost is reduced by the strong stakeholder’s dividend payout decision. These findings are consistent with a dividend policy in which opportunistic power abuse in stakeholder conflicts is discouraged by costly consequences for the abuser at a later stage. Indirect evidence supports this interpretation.     

Consumption,government spending,and the real exchange rate

Using panel structural VAR analysis and quarterly data from four industrialized countries, we document that an increase in government purchases raises output and private consumption, deteriorates the trade balance, and depreciates the real exchange rate. This pattern of comovement poses a puzzle for both neoclassical and Keynesian models. An explanation based on the deep-habit mechanism is proposed. An estimated two-country model with deep-habits is shown to replicate well the observed responses of output, consumption, and the trade balance, and the initial response of the real exchange rate to an estimated government spending shock.     

Asymptotic normality of narrow-band least squares in the stationary fractional cointegration model and volatility forecasting

We consider semiparametric frequency domain analysis of cointegration between long memory processes, i.e. fractional cointegration, allowing derivation of useful long-run relations even among stationary processes. The approach is due to Robinson (1994b. Annals of Statistics 22, 515–539) and uses a degenerating part of the periodogram near the origin to form a narrow-band frequency domain least squares (FDLS) estimator of the cointegrating relation, which is consistent for arbitrary short-run dynamics. We derive the asymptotic distribution theory for the FDLS estimator of the cointegration vector in the stationary long memory case, thus complementing Robinson's consistency result. An application to the relation between the volatility realized in the stock market and the associated implicit volatility derived from option prices is offered.     

Yardstick Competition and Investment Incentives

This paper analyzes how firms' investment incentives are affected by yardstick competition in a situation in which the regulator is unable to commit himself to the regulatory contract before firms invest. Despite its rent-extracting property, yardstick competition does not necessarily reduce efficiency-improving investment. Considering firm-specific investment, yardstick competition is shown to increase investment incentives over individual regulation affirms. In this case, therefore, yardstick competition both reduces the regulator's informational problem ex post and strengthens the firms' investment incentives ex ante. If instead investment is industry-specific, incentives to invest are lowered by yardstick competition.     

Schooling, Training, Growth and Minimum Wages

We examine how the long-run growth performance of an economy is affected by a labor market distortion. In our model, growth occurs through skill formation, and skills are generated through schooling and training of unskilled workers. We analyze how a minimum wage legislation affects long-run growth. In general, the effects are ambiguous. The reason is that while a minimum wage discourages training, it also encourages schooling. The net effect then depends on whether training or schooling dominates the long-run increases in labor productivity.
JEL classification : I 20, J 31, O 40     

Choke Price Bias in Choice Experiments

This paper reports on the results from a split sample choice experiment, where the effect of changing the maximum level of the cost attribute is investigated. The hypothesis was that changing the maximum price level would either give rise to an income effect or have no effect on consumers’ preferences. This was tested in the framework of a valuation study of different quality characteristics of minced pork. The data was analysed using a mixed logit error component model, which accounts for correlation in the unobserved part of the utility. Results suggest that the size of the maximum price level does matter, and that changing the maximum price level has a statistically significant effect on both the general preferences structure and the WTP estimates. Hence, researchers should be very careful when defining not only the range of the price attribute but also the maximum level of the price attribute.     

Adaptive contracting: the trial-and-error approach to outsourcing

Summary. Adaptive contracting occurs when a principal experiments with the delegation of authority through leaving contracts incomplete. We highlight two potential benefits of adaptive contracting: First, the delegation of authority can be advantageous even if the agent acts opportunistically, since expected private benefits will be shared between the parties through price negotiation. Second, the principal extracts information from experimenting with delegation of authority and we identify a positive option value embodied in the principals ability to extend or withdraw the delegated authority in future contracting periods.Received: 14 April 2003, Revised: 26 January 2004, JEL Classification Numbers: D72, L33, L97.We thank John Sørensen and Henrik Severin Hansen for introducing us to the contractual and economical issues in local bus outsourcing in Denmark, Oliver Hart and Antonio Rangel for early discussions on adaptive contracting and Christian Aastrup for research assistance. We are grateful to Danish Transportation Research Institute (www.dtf.dk) for comments and financial support for this project.