Is there a profit premium for market-oriented firms? A panel data investigation

ABSTRACT

This paper provides an empirical investigation of the impact of market orientation on firms' economic performance during the period 1998–2012 using a panel of Italian manufacturing firms. We introduce a dynamic concept of market orientation, in that we define a market-oriented firm as one that persistently undertakes product and marketing innovation, while at the same time introducing organizational changes and training efforts to manage and improve its knowledge assets over the long term. This notion of market orientation is therefore crucially related to the so-called dynamic capability approach. The related empirical model shows that being a market-oriented firm significantly affects profitability, in a framework in which this latter is simultaneously estimated with productivity, thus allowing for more precise estimates of the profit premium which is earned accordingly.     

Political corruption and capture of the minority

This article presents a model of political corruption in which a briber can choose either to bribe only the incumbent party or to capture also the opposition party to sterilize its monitoring role. The analysis also explores interparty collusion, media independence, and political contestability. The model suggests that policies aiming to strengthen the role of minorities can produce ambiguous effects as they may induce bribers' avoidance behavior. Reputational sanctions appear to be less effective than criminal ones, although political contestability increases their deterrence effect. Paradoxically, harsh criminal sanctions may induce tacit collusion because minorities highly regard their outcomes once in power.     

Trade Liberalization and Antidumping: Is There a Substitution Effect?

Many nations have undergone significant trade liberalization even as they have increased their use of contingent protection measures. This raises the question of whether some of the trade liberalization efforts, at times accomplished through painful reforms, have been undone through a substitution from tariffs to non‐tariff barriers. Among the new forms of protection, antidumping is the most relevant. This paper examines whether the use of antidumping is systematically influenced by the reduction of applied sectoral tariffs in a sample of 29 developing and six developed countries from 1991 through 2002. Evidence is found of a substitution effect only for a small set of heavy users of antidumping among developing countries. There is no similar statistically significant result for other developing countries or developed countries. Robust evidence is also found of retaliation and deflection effects as determinant of antidumping filings across all subsamples.     

Financial development,institutions, and poverty alleviation: an empirical analysis

The aim of this article is to analyse empirically whether the level of institutional quality influences how financial development affects poverty for a sample of developing countries covering the period from 1984 to 2012. Using an interaction term constructed as a product between financial development and institutional quality we find that the pro-poor impact of financial development decreases as the quality of institutions rises. Such a differential effect can be ascribed to the capacity of banks to provide functions that mimic those performed by an institutional framework that works well. The results of this article can be used for policy management.     

On the use of measure-valued strategies in bond markets

We propose here a theory of cylindrical stochastic integration, recently developed by Mikulevicius and Rozovskii, as mathematical background to the theory of bond markets. In this theory, since there is a continuum of securities, it seems natural to define a portfolio as a measure on maturities. However, it turns out that this set of strategies is not complete, and the theory of cylindrical integration allows one to overcome this difficulty. Our approach generalizes the measure-valued strategies: this explains some known results, such as approximate completeness, but at the same time it also shows that either the optimal strategy is based on a finite number of bonds or it is not necessarily a measure-valued process.Received: November 2002, Mathematics Subject Classification: 60H05, 60G60, 90A09JEL Classification: G10, E43The first author gratefully acknowledges financial support from the CNR Strategic Project Modellizzazione matematica di fenomeni economici. We thank professors A. Bagchi, R. Douady and J. Zabczyk for helpful discussions. A special thanks goes to professors T. Björk, Y. Kabanov and W. Schachermayer for comments and suggestions which contributed to improve the final version of this paper.     

A virtual voyage through 3D structures generated by chaotic mixing of magmas and numerical simulations: a new approach for understanding spatial and temporal complexity of magma dynamics

In this contribution, we present a virtual voyage through 3D structures generated by chaotic mixing of magmas and numerical simulations with the aim to highlight the power of 3D representations in the understanding of this geological phenomenon. In particular, samples of mixed juveniles from Salina island (Southern Italy) are reconstructed in 3D by serial lapping and digital montage and numerical simulations are performed by using a 3D chaotic dynamical system. Natural and simulated magma mixing structures are visualized by using several multimedia tools including animations and “virtual reality” models. It is shown that magma interaction processes can generate large spatial and temporal compositional heterogeneities in magmatic systems. The same topological structures are observed in both 3D reconstructed rock samples and chaotic numerical simulations, indicating that the mixing of magmas is governed by chaotic dynamics. The use of 3D multimedia models gives the opportunity to penetrate into magma mixing structures and to understand their significance in the context of magma dynamics. Such an approach is very powerful since multimedia tools can strongly capture the attention of the reader bringing him/her into an interactive and memorable geological experience.     

Determinants of stock market volatility and risk premia

Summary. We show the dynamics of diverse beliefs is the primary propagation mechanism of volatility in asset markets. Hence, we treat the characteristics of the market beliefs as a primary, primitive, explanation of market volatility. We study an economy with stock and riskless bond markets and formulate a financial equilibrium model with diverse and time varying beliefs. Agents states of belief play a key role in the market, requiring an endogenous expansion of the state space. To forecast prices agents must forecast market states of belief which are beliefs of others hence our equilibrium embodies the Keynes Beauty Contest. A market state of belief is a vector which uniquely identifies the distribution of conditional probabilities of agents. Restricting beliefs to satisfy the rationality principle of Rational Belief (see Kurz, 1994, 1997) our economy replicates well the empirical record of the (i) moments of the price/dividend ratio, risky stock return, riskless interest rate and the equity premium; (ii) Sharpe ratio and the correlation between risky returns and consumption growth; (iii) predictability of stock returns and price/dividend ratio as expressed by: (I) Variance Ratio statistic for long lags, (II) autocorrelation of these variables, and (III) mean reversion of the risky returns and the predictive power of the price/dividend ratio. Also, our model explains the presence of stochastic volatility in asset prices and returns. Two properties of beliefs drive market volatility: (i) rationalizable over confidence implying belief densities with fat tails, and (ii) rationalizable asymmetry in frequencies of bull or bear states.This research was supported by a grant of the Smith Richardson Foundation to the Stanford Institute for Economic Policy Research (SIEPR). We thank Kenneth Judd for constant advice which was crucial at several points in the development of this work. We also thank Kenneth Arrow, Min Fan, Michael Magill, Carsten Nielsen, Manuel Santos, Nicholas Yannelis, Ho-Mou Wu and Woody Brock for comments on earlier drafts. The RBE model developed in this paper and the associated programs used to compute it are available to the public on Mordecai Kurzs web page at http://www.stanford.edu/ mordecai.This revised version was published online in January 2005 with corrections to the Cover date.     

Socioeconomic inequality in health-related behaviors: a lifestyle approach

The adoption of certain behaviors—like smoking or physical activity—is recognized as a major factor affecting health. Analyzing the social determinants of these behaviors, then, should be considered an important goal, since it may improve our understanding of the more general phenomenon of health inequalities. In this paper we analyze the association between socioeconomic status (SES) and health-related behaviors among the Italian population aged 18–74 in 2004/2005. Using large-scale sample survey data and a Weberian lifestyle approach, we first identify an ordered multidimensional space of health-related behaviors, and partition this space into a meaningful set of discrete regions representing a fine-grained taxonomy of health lifestyles. Then, we use regression analysis to determine if, and to what extent, the identified lifestyles are associated with SES. Using level of education as an indicator of SES, we find that the propensity to adopt healthier lifestyles exhibits a positive educational gradient, whereas the probability of following less healthy lifestyles is inversely associated with the level of education. We conclude that, in general, focusing on health lifestyles—i.e., on combinations of multiple health-related behaviors—instead of single behaviors may lead to a better understanding of health-related practices and their relationship with socioeconomic status.