Evaluating the financial performances of Korean luxury hotels using data envelopment analysis

In the wake of catastrophic natural disasters and rising threats of terrorism, the hotel industry has been hit hard by declining revenues and increasing competition. To avoid such a downward spiral, the hotel industry should find remedies to make its operations lean and robust. These remedies may include: niche marketing, reduced debt ratio, increased profit margin, and continuous improvement of hotel service quality. These remedies, however, would be of no avail, unless the hotel management finds a way to compare its financial strengths and weaknesses against its competitors. In an effort to help the hotel management enhance its financial efficiency and price leverage in the increasingly competitive hotel industry, this article aims to develop a meaningful set of financial benchmarks that will dictate best practices and shape up a successful hotel business model. Thus, we propose a data envelopment analysis (DEA) that is proven to be useful for measuring the financial efficiency of various profit or non-profit organizations. Using the examples of first-class, luxury hotels in Korea, this article illustrates the usefulness of DEA for the continuous improvement of hotel business practices.     

Adverse selection when loss severities differ: First-best and costly equilibria

With information asymmetry between contracting parties, adverse selection may result. A separation may be achieved if low-risk types can signal their identity—for example, by selecting from a menu of price-quantity contracts. In such models, signaling is costly and solutions are, at best, second best. These models characterize risk types by differences in the probability, rather than in severity, of the costs they impose. However, when severity differences also are considered, first best solutions become feasible. We identify the circumstances in which costly separating equilibria prevail and those in which full-information equilibria can be attained.     

Intergenerational Transmission of Fertility Patterns*

Recent studies by economists have focused on cultural transmission from the origin country rather than the origin family. Our paper extends this research by investigating how family‐specific‘cultural transmission’ can affect fertility rates. Following Machado and Santos Silva [Journal of the American Statistical Association (2005) Vol. 100, p. 1226] and Miranda [Journal of Population Economics (2008) Vol. 21, p. 67], we estimate count data quantile regression models using the British Household Panel Survey. We find that a woman's origin‐family size is positively associated with completed fertility in her destination family. A woman's country of birth also matters for her fertility. For a sub‐sample of continuously partnered men and women, both partners’ origin‐family sizes significantly affect destination‐family fertility.     

Development of consumer techno segmentation and its application to international markets

This study aimed to develop consumer techno segments based on technology‐related psychographic variables in four different countries including the US, Canada, Spain and Italy. The respondents' technology innovativeness, technology opinion leadership, network externality risk and technology anxiety were used as metrics to identify consumer techno segments. Cluster analysis identified three to four distinct techno segments in each country. Multivariate analysis of variance and univariate analyses were used to validate the differences among techno segments in need for change, leisure orientation and e‐shopping preference in each local market. The similarities and differences of each techno segment were examined across different international markets. A discussion and implications were drawn to help marketers develop penetration and market strategies for different international markets by understanding an expected diffusion rate of a new product and of product life cycles for each local market.     

Growth-cycle decomposition diffusion model

The diffusion model has been widely used to explain the S-shaped cumulative growth of markets for retail service and consumer durable goods. In many situations, sales fluctuate because of both growth of innovation diffusion and transitory changes in an external factor, called cycle. The traditional diffusion model, however, cannot distinguish between the two. We develop the growth-cycle decomposition diffusion model to distinguish the growth from the cycle, where the cycle incorporates a few external variables determining the transitory sales environment. The proposed model is applied to estimating the diffusion process for the annual sales of room air conditioners in Korea.     

Estimating Open Economy New Keynesian Phillips Curve for Korea

We estimate the open economy new Keynesian Philips curve (NKPC) to characterize the inflation dynamics of Korea. While recent studies show that the NKPC holds for the pre‐currency crisis period, the empirical evidence is inconclusive for the post‐crisis period. Has globalization increased the role of global factors relative to domestic factors? Can labor income share still serve as a good measure of real marginal cost following the structural break? To address these issues for the post‐crisis period, we use two types of open NKPC: the relative prices model and the incomplete pass‐through model. The estimation of both models indicates that the forward‐looking behavior is important, and its role is reinforced in an open economy specification. Both NKPC models also show that the external factors are more relevant inflation drivers than the domestic factors.     

Antecedents of customer participation in business ecosystems: evidence of customers’ psychological ownership in Facebook

Customers can influence the health of business ecosystem through their participation. What are the determinants of customer participation at the business ecosystem level? This study addresses this question by proposing a research model integrating the organizational socialization of customers, customer participation, and psychological ownership. It proposes customers’ psychological ownership as an antecedent of their participation in the business ecosystem. No study to date has empirically examined customer participation in business ecosystems. This study tests the hypotheses based on online survey data from 397 Facebook users. The results show that psychological ownership is a significant determinant of customer participation in the business ecosystem via word-of-mouth (WOM) and boycott intention. The result of our study also indicates that customer socialization significantly affects customer participation in the individual firm, which in turn leads to an increased psychological ownership. This study (a) broadens the concept of customer participation by examining it via the business ecosystem lens and (b) highlights WOM and boycott activities as examples of customer participation at the business ecosystem level.     

Changing corporate culture over time in South Korea

Corporate culture change is an interesting topic, not least since cultures are often seen as deeply ingrained and slow moving. Here we look at the example of the large, diversified conglomerates in South Korea – the chaebol. This is partly because of their strong corporate cultures, importance in the country's economic development and growth and growing public and political backlash against what are seen as overly powerful institutions. We find that over the decade from one crisis, the 1997 Asian financial crisis, to the next, the 2008 global financial crisis, there has indeed been change between and within chaebol corporate cultures. However, this is not as straightforward as it seems and the situation in and after 2011 has become even more complex, mainly due to changes in the global environment.     

Macroeconomic effects of family business inheritance tax reduction: Evidence from South Korea

This study examines the macroeconomic effects of family business inheritance tax reduction in South Korea using a theoretical model that addresses the problem of a family member's occupational choice decision between being a worker and being an entrepreneur. In contrast with previous studies, the model considers the distribution of firm size. The effect of the reduction in the family business inheritance tax rate on the macroeconomy is positive in this model, whereas it is negative in a model in the literature that does not consider the distribution of firm size when addressing the occupational choice decision. Calibrated results obtained using data for South Korea show that a 50% reduction in the family business inheritance tax rate increases the total labour demand, total real investment, and total sales by 0.13%, 1.88%, and 0.15%, respectively.     

The role of observed and unobserved heterogeneity in the duration of unemployment

This paper studies the degree to which observable and unobservable worker characteristics account for the variation in the aggregate duration of unemployment. I model the distribution of unobserved worker heterogeneity as time varying to capture the interaction of latent attributes with changes in labor-market conditions. Unobserved heterogeneity is the main explanation for the duration dependence of unemployment hazards. Both cyclical and low-frequency variations in the mean duration of unemployment are mainly driven by one subgroup: workers who, for unobserved reasons, stay unemployed for a long time. In contrast, changes in the composition of observable characteristics of workers have negligible effects.