Showing papers by "Copenhagen Business School published in 1995"

An Exploration of Common Ground: Integrating Evolutionary and Strategic Theories of the Firm

Abstract: The field of strategy has taken shape around a framework first conceived by Kenneth Andrews in the now-classic book, The Concept of Corporate Strategy. Andrews characterized the role of a strategist as one of finding the match between what a firm can do (organizational strengths and weaknesses) within the universe of what it might do (environmental opportunities and threats). The basic structure of this framework has demonstrated remarkable elasticity as the field has grown internally, and as insights borrowed from other disciplines have stretched its boundaries.

A Markov Model for the Term Structure of Credit Risk Spreads

Abstract: This paper provides a Markov model for the term structure of credit risk spreads. The model is based on Jarrow and Turnbull (1995) with the bankruptcy process following a discrete state space Markov chain in credit ratings. The parameters of this process are easily estimated using observable data. This model is useful for pricing and hedging corporate debt with imbedded options, for pricing and hedging OTC derivatives with counterparty risk, for pricing and hedging (foreign) government bonds subject to default risk (e.g., municipal bonds), for pricing and hedging credit derivatives, and for risk management.

Competitive Advantage and Industry Capabilities

Abstract: Recently, numerous strategy scholars have revitalized the concern with the resources and capabilities side of firms. This trend often referred to as the “resource-based perspective” (RBP), has led to a much improved understanding of firms’ diversification strategies (Montgomery and Wernerfelt 19881 Montgomery and Hariharan 1991) and of the underlying conditions for sustained competitive advantage (Barney 1991 Peteraf 1993). Furthermore, the perhaps more dynamic issue of resource- accumulation processes has been treated in some detail (Dierickx and Cool 1989). In terms of the SWOT framework—the overall idea that strategy is a matter of obtaining fit between the Strengths of the firm and the Opportunities of the environment, while simultaneously safeguarding the Weaknesses of the firm from the Threats of that environment—the RBP may be said to have investigated and added further analytical content to the “Strength-Weaknesses” part.

Theories of the Firm, Strategic Management, and Leadership

Abstract: Economics and strategic management have, for many years, been developing relatively independently of one another, and they have only to a limited extent mutually stimulated one another. One reason is that economists have focussed little attention on the individual firm and its specific competencies. Indeed, although economists have for a long time been occupied by something they called “the theory of the firm,” the purpose has never been to enable them to say something about the individual firm. On the contrary, the theory of the firm has merely been a sub-theory of a more general theory of prices and markets. A more important explanation of the absent collaboration between economists and strategic management theorists is probably that for many years economists have based their work on a conceptual model which actually excludes the very existence of the phenomenon which is the raison d’etre or the justification for the field of strategic management. By basing their theorizing on the assumption that firms within the same industry are subject to identical cost and demand conditions, economists have actually assumed a world in which heterogeneity among firms cannot occur. However, this heterogeneity is the very precondition for the domain of strategic management.

Environmental policy, pollution, unemployment, and endogenous growth

Abstract: The paper develops a model of endogenous economic growth with pollution externalities and a labor market distorted by union monopoly power and by taxes and transfers. We study the optimal second-best pollution tax and abatement policy and find that a shift toward greener preferences will tend to reduce unemployment, although it will hamper growth. We also find that greater labor-market distortions call for higher pollution tax rates. Finally, we show that a switch from quantity control of pollution combined with grandfathering of pollution rights to regulation via emission charges has the potential to raise employment, growth, and welfere without damaging the environment.

Understanding Ownership: Residual Rights of Control and Appropriable Control Rights

Abstract: Authors discuss the notion of ownership in economics, taking our point of departure in the Grossman-Hart-Moore property rights approach. They criticize the exclusive identification of ownership with residual rights to control in this approach, and argue that economic organization may be rendered determinate under complete contracting (contrary to the GHM approach). Crucially, they argue that under complete contracting, some control rights may be appropriable because of measurement and enforcement costs. This holds the key to a theory of ownership that is not dependent on the notion of residual rights to control, but rather relies on appropriable control rights. However, the two perspectives may be complementary rather than rival.

Respiratory Illnesses in Children and Air Pollution in Copenhagen

Abstract: The relationship between air pollution and the daily number of contacts (i.e., telephone calls and home visits) with or at Copenhagen Emergency Medical Service for children with and without respiratory illnesses was studied during a 91-d period (i.e., January 14, 1991, to April 14, 1991). A total of 12,132 contacts occurred. Diagnoses, which were recorded on the invoices for 5,307 contacts, revealed that 3,974 contacts were the result of respiratory illnesses. Regression analysis was used to investigate the short-term relationship between pollutants (i.e., carbon monoxide, nitric oxide, nitrogen dioxide, NOx, sulfur dioxide, ozone, and black smoke), measured at monitoring stations, and both the number of all contacts for children and the number of contacts for children with respiratory illnesses. Temperature and systematic effects that were the result of holidays and weekends were controlled for, after which only nitric oxide and NOx were associated significantly with the number of contacts for children who had respiratory illnesses. Nitric oxide and NOx, as indicators of traffic pollution, appeared, at low levels, to slightly exacerbate respiratory illnesses among children.

A Longitudinal Study of Cognitive Factors Influencing Start-Up Behaviors and Success at Venture Creation

Abstract: Explores whether specific cognitive attributes of potential entrepreneurs can be used to predict future startup success and persistence in business startup activities. Two hypotheses are proposed and tested: (1) potential entrepreneurs who offer internal and stable explanations (attributions) for their plans for getting into business should be more likely to persist in actions that lead to successfully starting a business; and (2) potential entrepreneurs with high personal efficacy scores should be more likely to persist in actions that lead to successfully starting a new business. Data were gathered from 142 responses from pre-venture clients of a Small Business Development Center in a large southwestern metropolitan area between October 1990 and February 1991 and from 85 responses to a follow-up questionnaire completed in February 1992. Results show that both those who are successful and those who are not successful at getting into business devote the same amount of time to gathering market information, estimating profits, completing the groundwork, and structuring the company. However, those individuals who were successful at getting into business took the next step and devoted effort to beginning operations. Only assessing the market correlated with setting up business operations. It was also found that the internal attribution measure was significantly correlated to some entrepreneurial activities -- particularly structuring the company. The attribution measure was also useful at predicting individual success at getting into business. Females with internal and stable reasons and males with external and stable reasons for getting into business were more likely to start businesses that generated sales. In addition, the results contribute to the view that gender is not merely a demographic descriptor of the sample entrepreneurs' characteristics, but rather an important differentiating factor. If different reasons are given for the persistence of successful male and female nascent entrepreneurs, then selection and training need to account for the difference in their reasons. The value of the attributional framework for research and practice is further discussed. (SFL)

Subsidising Consumer Services: Effects on Employment, Welfare and the Informal Economy

Abstract: This is a revised version of a paper presented at the conference on ‘Employment and Growth in the Knowledge-Based Economy’, organised by the OECD and the Danish government, in Copenhagen, 7–8 November 1994. The authors wish to acknowledge useful comments from two anonymous referees. The activities of the Economic Policy Research Unit are supported by a grant from the Danish National Research Foundation.

Population Ageing, Public Debt and Sustainable Fiscal Policy

Abstract: Due to rising life expectancy and declining fertility, the world’s population is ageing rapidly. Not only does the number of elderly relative to the number of working-age people increase, so does the proportion of the very old in the general population of the aged. In consequence, government spending on pensions, health care and other services provided for the aged is increasing and has been projected to rise on an even larger scale after the turn of the century. How can the old-age social expenditures be accommodated into a sustainable path for the general government budget?2 In most European countries, public outlays allocated to the elderly are financed on a pay-as-you-go (PAYG) basis, i.e. benefits paid to retired people are directly financed by contemporaneous taxes levied on workers. In periods with dramatic swings in the age structure, the tax rate is likely to swing as well. For example, when the population is ageing, the ratio of the number of persons of drawing age to that of those of contributing age increases, and PAYG financing implies an increase in the transfers from young to old. Does that cause generational conflicts, and will the PAYG scheme eventually be undermined?

Imperative frames and modality

Abstract: L'A. substitue a l'analyse traditionnelle des propositions imperatives une analyse des structures imperatives fondee sur trois niveaux d'actes de parole, comprenant a la fois des preconditions et des postconditions. Cette analyse permet d'etablir certaines correspondances entre les modalites imperatives du russe, du danois et l'acte de parole indirect en anglais

Information and the market economy: A note on a common Marxist fallacy

Abstract: M arxists have seldom been noted for much economic sophistication in their critique of the capitalist market economy. Marxist reasoning was essentially easy game for Mises ([I9201 1990) in his classic initiation of what came later to be called \"the socialist calculation debate.\" However, later market socialist contributions to this debate were for a long time believed to have provided the definitive answer to Mises's challenge. As we all know well today, this understanding is completely fallacious (Lavoie 1985; Salerno 1993; Steele 1993), and as result of the Austrian critique of socialism, many contemporary socialists have become unsure of the viability of the socialist project (for example, Gamble 1986; Hahn 1990). However, socialists have certainly not given up hope. In a relatively recent article, the Marxist John O'Neill (1989) put forward a radical critique of the market order; one that has often been given more implicit articulation by other socialists, but had not been given its fully explicit statement until O'Neill's article. I will here argue that this critique amounts to a fallacy. Although O'Neill's critique was directed towards the increasing prominence of market socialism, he primarily argued against perhaps the best known Austrian defense of the market, that is to say, Hayek's conceptualization of the market a s a n information providing mechanism. Hayek's conceptualization and corresponding defence of the market in knowledge terms is well-known and influential among recent market socialist writers. Mises's ([I9201 1990, 1949) different and even more fundamental conceptualization of the calculation problem as one of

The economic thought of an Austrian Marshallian George Barclay Richardson

Abstract: Discusses the economic contributions of George Barclay Richardson. Detailing the Austrian and Marshallian aspects of his work, argues that all his contributions – on industrial organization, welfare economics, history of thought, etc. – are united in their concern with the co‐ordination problem, that is, the problem of theoretically demonstrating how order may be achieved in decentralized market economies. Furthermore, argues that Richardson′s work from 1953 to 1972 in the answers it gave to this problem anticipated a number of themes that have only recently acquired prominence in economic theory, specifically in neo‐institutionalist thought. The pioneering originality of his work also partly accounts for the relative neglect with which it was originally received.

Entrainment in a disaggregated economic long wave model

Abstract: This paper investigates how mode-locking and other nonlinear dynamic phenomena arise through the interaction of two capital-producing sectors in a disaggregated economic long wave model Each sector in isolation produces a self-sustained oscillation with a period and amplitude determined by the characteristics of that sector However, the sectors interact through their mutual dependence on each other's output for their own production When this coupling is accounted for, the two sectors tend to synchronize or lock together with a rational proportion between the periods While keeping the aggregate equilibrium characteristics of the system constant, we study how this locking occurs as a function of the difference in capital lifetimes and as a function of the strength of the coupling between the sectors Besides mode-locking and quasi-periodic behavior, the observed phenomena include cascades of period-doubling bifurcations, chaos, and intermittency When the difference in capital lifetimes is very large, the coupled system tends to behave like a one-sector model with a reduced capital content of production

Soft cultures: the symbolism of cross-border organizing 1

Abstract: It is not always true that the concept of culture implies a convergence on one meaning, one set of values, one pattern of behaviour. This paper develops the notion of soft culture. Cultures are soft in the sense that multiple renderings of reality are accepted and legitimized. Soft culture is studied in the context of cross-national technology development projects. Such projects are loosely structured communities, as organizational actors are separated in time and space. The paper demonstrates how symbols work among those actors. In addition to the traditional uses of symbolic categorizing, in soft culture the symbols also play an important role in attracting more networks to the action and licensing a wide variety of exploratory activities. These equivocal characteristics of symbols should be considered a strength in face of overwhelming uncertainty since they allow actors to construct multiple futures and pursue them.

A memory approach to consistent, reliable distributed shared memory

Abstract: Fault-tolerant distributed shared memory systems do not always need to support a complete and consistent recovery after a failure. We describe a framework, within which different approaches to, and different degrees of consistency and recoverability can be understood. The addition of consistent failure recovery may be approached from two different viewpoints: either by an application-oriented view or a memory-oriented view. The major characteristics used in our framework are variations of availability, consistency, and application support. The paper explains the basic model, which is used in RELIABLE MIRAGE+, and describes how the framework can be used by other researchers to understand and classify solutions to the reliable DSM problem. The model distinguishes a recoverable system, which must be able to survive any single-site failure, from a reliable system which also ensures consistency after the recovery. Since consistency requirements may impose a high penalty on standard operational performance, various relaxed recoverability consistencies are described by the multi-level model. Recovery under this model may be accomplished by applications specifying consistency and availability requirements.

Text, Topos, and Mental Models.

Abstract: We examine how predications in text affect the inferences which are generated and used during reading. Inferences of the so‐called “topos” type, that is, the more votes X gets, the more likely X will win (Anscombre, 1989; Ducrot, 1988) were explored in the reading of texts describing competitions which involved two main participants. The texts contained ambiguous definite noun phrases, as in “In the first round, John Smith got almost/only 500 votes. The Irish lawyer was leading/trailing.” When both sentences in such a sequence were oriented toward a winning or a losing outcome, the ambiguous noun phrases were interpreted as being coreferential with the individual just named, the text was judged as being clearer and more comprehensible, and reading was more rapid. In contrast, when the sentences were oriented in opposite directions, the ambiguous noun phrases were interpreted as referring to the other major participant in a contest, the text was rated as being less clear and less comprehensible, and readin...

Welfare effects of aid under quantitative trade restrictions

Abstract: The paper examines the effects of tied-aid on the welfare of both the donor and the recipient countries. We depart from the previous literature by assuming preexistence of quantitative trade distortions. To mitigate these distortions the donor country provides aid that is tied to the rationed good. Conditions for the presence of the transfer paradox and of the enrichment of both countries are derived and interpreted under the stability of the system. Furthermore, we show that whereas untied aid cannot increase global welfare, tied-aid unambiguously does so.