Showing papers by "Stockholm School of Economics published in 1998"
TL;DR: This paper developed models such as the heterarchy (Hedlund, 1986) and the transnational (Bartlett and Ghoshal, 1989) to reflect the critical role played by many subsidiaries in their corporations' competitiveness.
Abstract: There has been a profound evolution in thinking about multinational corporations (MNCs) [since the late 1980s]. Traditionally, in academic models researchers assumed that ownership-specific advantages were developed at the corporate headquarters and leveraged overseas through the transfer of technology to a network of foreign subsidiaries (Vernon, 1966; Dunning, 1981). As these overseas subsidiaries grew in size and developed their own unique resources, however, it became apparent to many researchers that corporate headquarters was no longer the sole source of competitive advantage for the MNC. Scholars developed models such as the heterarchy (Hedlund, 1986) and the transnational (Bartlett and Ghoshal, 1989) to reflect the critical role played by many subsidiaries in their corporations’ competitiveness, and research attention began to shift toward understanding the new roles played by subsidiaries.
1,417 citations
TL;DR: A central theme of much of the recent literature on the strategy of the multinational corporation (MNC) is the increasingly important role played by subsidiary companies as contributors to the development of firm-specific advantages.
Abstract: A central theme of much of the recent literature on the strategy of the multinational corporation (MNC) is the increasingly important role played by subsidiary companies as contributors to the development of firm-specific advantages. Traditional academic models that viewed subsidiaries as either ‘market access’ providers or as recipients of the parent company’s technology transfers (Vernon, 1966) gave way in the 1980s to richer conceptualizations in which subsidiaries tapped into leading-edge ideas, undertook important research and development work, and became active participants in the formulation and implementation of strategy (Bartlett and Ghoshal, 1986; Hedlund, 1986; Gupta and Govindarajan, 1994). The generation of firm-specific advantages, correspondingly, shifted from being the sole concern of the parent company to a collective responsibility for the corporate network.
973 citations
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TL;DR: In this article, the effects on technology transfer and spillovers deriving from ownership sharing of foreign multinational affiliates were examined using unpublished Indonesian micro data, and the results showed that foreign establishments have comparable high levels of labor productivity and that domestic establishments benefit from spillovers.
Abstract: This paper examines the effects on technology transfer and spillovers deriving from ownership sharing of foreign multinational affiliates More specifically, we try to answer two questions, using unpublished Indonesian micro data Firstly, do establishments with minority and majority ownership differ in terms of productivity levels? Secondly, does the degree of spillover differ with the degree of ownership in the FDI? Our results show that foreign establishments have comparable high levels of labor productivity and that domestic establishments benefit from spillovers However, the degree of foreign ownership does neither affect the level of labor productivity in foreign establishments, nor the degree of spillovers
819 citations
TL;DR: In this article, the authors examine the patterns of communication and control in international companies and find that local and international adaptors both focus their communication on their internal corporate network; and international creators have strong internally and externally oriented networks of relationships.
Abstract: This paper addresses issues of global innovation in multinational corporations by examining the patterns of communication and control in international RD (2) local and international adaptors both focus their communication on their internal corporate network; and (3) international creators have strong internally and externally oriented networks of relationships. The implications for the management of global innovation are discussed. © 1998 John Wiley & Sons, Ltd.
583 citations
TL;DR: In this article, the form of the relationship between customer satisfaction and customer behaviour is investigated under conditions of low and high satisfaction, and the results point to the fact that differences in the form do exist.
Abstract: Explores the extent to which the form of the relationship between customer satisfaction and customer behaviour is different under conditions of “low” satisfaction and “high” satisfaction. Three behavioural variables (word‐of‐mouth, feedback to the supplier, and loyalty) were examined. The results point to the fact that differences in the form do exist. Moreover, the results show that differences exist between the differences, in the sense that different patterns emerge for each behavioural variable.
475 citations
TL;DR: Results reported here show that perceived risk and worry are indeed weakly correlated, both for generalized worry and for more specific measures of worry matched with the same hazard as risk ratings.
Abstract: Risk perception is sometimes measured by means of judgments about worry, sometimes as perceived risk more directly. However, perceived level of risk calls for a more intellectual judgment and worry tends to refer to emotional reactions. These two are therefore not the same and need not be strongly correlated. Results reported here show that perceived risk and worry are indeed weakly correlated, both for generalized worry and for more specific measures of worry matched with the same hazard as risk ratings. A distinction is suggested between cognitive, abstract hazards and concrete, sensory hazards, with implications for the worry-perceived risk relationship. It was furthermore found by means of cluster analysis that there were groups of subject displaying different dynamics of risk and worry.
404 citations
TL;DR: In this paper, a mixture of normal variables with zero mean can generate long return series with most of the properties Granger and Ding singled out, and a hidden Markov model is estimated for ten subseries of the well-known S&P 500 return series of about 17,000 daily observations.
Abstract: In two recent papers, Granger and Ding (1995a,b) considered long return series that are first differences of logarithmed price series or price indices. They established a set of temporal and distributional properties for such series and suggested that the returns are well characterized by the double exponential distribution. The present paper shows that a mixture of normal variables with zero mean can generate series with most of the properties Granger and Ding singled out. In that case, the temporal higher-order dependence observed in return series may be described by a hidden Markov model. Such a model is estimated for ten subseries of the well-known S&P 500 return series of about 17,000 daily observations. It reproduces the stylized facts of Granger and Ding quite well, but the parameter estimates of the model sometimes vary considerably from one subseries to the next. The implications of these results are discussed. © 1998 John Wiley & Sons, Ltd.
363 citations
TL;DR: Eckbo et al. as mentioned in this paper investigated the performance of insider trades on the closely held Oslo Stock Exchange (OSE) during a period of lax enforcement of insider trading regulations and found that the average mutual fund outperforms the insider portfolio.
Abstract: This paper estimates the performance of insider trades on the closely held Oslo Stock Exchange (OSE) during a period of lax enforcement of insider trading regulations Our data permit construction of a portfolio that tracks all movements of insiders in and out of the OSE firms Using three alternative performance estimators in a time-varying expected return setting, we document zero or negative abnormal performance by insiders The results are robust to a variety of trade characteristics Applying the performance measures to mutual funds on the OSE, we also document some evidence that the average mutual fund outperforms the insider portfolio CORPORATE INSIDERS, IE, INDIVIDUALS closely related to the firm either through direct employment or through participation on supervisory committees and boards, will from time to time possess information about the firm’s future cash f low which is not yet ref lected in the firm’s stock price Insiders who trade on the basis of such information tend to purchase stocks just prior to abnormal price increases and to sell just prior to abnormal price declines Employing traditional event-study techniques, in which equal-weighted average abnormal stock returns are estimated over a fixed time period following insider trades, the extant empirical literature tends to support this “buy low and sell high” hypothesis For example, Jaffe (1974) and Seyhun (1986) present evidence of significant abnormal stock returns following reported insider trades on the New York and the American Stock Exchanges Similarly, Baesel and Stein (1979) and Fowler and Rorke (1984) conclude that insiders on the Toronto Stock Exchange earn abnormal profits, and Pope, Morris, and Peel (1990) reach a similar conclusion for firms in the United Kingdom * Eckbo is with the Stockholm School of Economics and the Norwegian School of Economics and Business Administration; Smith is at the Norwegian School of Management We are grateful for the comments of Mark Britten-Jones, Oyvind Bohren, Glen Donaldson, Michael Cooper, Thore Johnsen, Kenneth Khang, Lisa Kramer, Ananth Madhavan, Maurizio Murgia, Rene Stulz (the editor), Raman Uppal and, in particular, Wayne Ferson We also thank seminar participants at the Central Bank of Norway, Concordia University, London Business School, Norwe
202 citations
TL;DR: In this paper, the authors focus on soft budget constraints for enterprises that are financed by banks in transition economies and analyze several theoretical models as variants of a basic sequential model, which share the same sequential structure in which soft budget constraint arise due to the endogenous lack of credibility for liquidating a project instead of refinancing it.
199 citations
TL;DR: In this article, the choice of price setting currency for an exporter faced with the choice between setting price in his own, in the importers' or a third currency under exchange rate uncertainty was studied.
173 citations
TL;DR: It is concluded that lifetime risks of hip fracture have been considerably underestimated.
Abstract: Estimates of lifetime risk of osteoporotic fracture have assumed that mortality rates do not change. Since mortality in the elderly is decreasing in all regions of the world we assessed the effect of this on lifetime risks for hip fracture using Sweden as a reference country. Lifetime risks of hip fracture at the age of 50 years were 4.6% and 13.9% in men and women respectively, assuming all survive to current average life expectancy. Estimates increased to 8.1% and 19.5% when based on present mortality and to 11.1% and 22.7% respectively based on predicted mortality. We conclude that lifetime risks of hip fracture have been considerably underestimated.
TL;DR: In this article, the authors explore the endogenous formation of jurisdictions, assuming the political process is a costly fight to acquire shares of the GNP pie, and they show that the stability of a unified jurisdiction is not necessarily determined by the preferences of the richest member region.
TL;DR: In this article, the trade-off between the relative size of regions and the distribution of tastes is considered in determining the optimum as well as the equilibrium design of jurisdictions, and the tradeoff between these two forces is modeled formally.
TL;DR: This work proposes an alternative simple solution to the problem of obtaining confidence intervals for cost-effectiveness ratios by multiplying the effectiveness units by the price per effectiveness unit, which avoids the ratio estimation problem.
Abstract: How to obtain confidence intervals for cost-effectiveness ratios is complicated by the statistical problems of obtaining a confidence interval for a ratio of random variables. Different approaches have been suggested in the literature, but no consensus has been reached. We propose an alternative simple solution to this problem. By multiplying the effectiveness units by the price per effectiveness unit, both costs and benefits can be expressed in monetary terms and standard statistical techniques can be used to estimate a confidence interval for net benefits. This approach avoids the ratio estimation problem and explicitly recognizes that the price per effectiveness unit has to be known to provide cost-effectiveness analysis with a useful decision rule.
01 Jan 1998
TL;DR: The findings show, for example, that the use of primary care "gatekeepers" seems to result in lower health expenditure and also that the way of remunerating physicians in the ambulatory care sector appears to influence health expenditure; capitation systems tend to lead to lower expenditure than fee-for-service systems.
Abstract: This paper uses international health expenditure and the latest OECD data to investigate the determinants of aggregate health expenditure. The study differs from most previous studies in two principal ways. First, it uses a somewhat larger sample for estimation, with pooled time-series, cross-section data for 22 OECD countries for a 20-year period. Most previous work has used a purely cross-section approach: in this case, the small sample size reduced the statistical reliability of results and limited the number of hypotheses that can be tested simultaneously. Second, and following from this, a more extensive range of hypotheses is tested, with particular emphasis on those relating to the contractual relations between payers, providers and patients. The findings show, for example, that the use of primary care “gatekeepers” seems to result in lower health expenditure and also that the way of remunerating physicians in the ambulatory care sector appears to influence health expenditure; capitation systems tend to lead to lower expenditure than fee-for-service systems.
TL;DR: The authors reviewed behavioral research on perceived risk of the public and experts, giving special attention to nuclear waste risk and pointed out that risk perception is probably less cognitive than has previously been believed, and that such factors as attitudes and moral values play a crucial role.
Abstract: Perceived risk is a crucial factor in the social dilemmas surrounding the risks and hazards of the environment. This paper reviews behavioral research on perceived risk of the public and experts, giving special attention to nuclear waste risk. Experts and the public frequently have very different views of risk, and three cases are distinguished and explanations for the differences between experts and the public are outlined. Theories and models of perceived risk are then discussed. Most theories have been found to have only low or modest explanatory power with regard to level of perceived risk, and even less when it comes to risk acceptability. It is pointed out that risk perception is probably less cognitive than has previously been believed, and that such factors as attitudes and moral values play a crucial role.
TL;DR: Estimates of the global cost of diabetes reveal that diabetes accounts for 2-3% of the total health care budget in every country; therefore, an increase in diabetes incidence and prevalence translates into a significant economic impact.
Abstract: In assessing the economic impact of diabetes for a population, several factors should be considered, including the incidence and prevalence of the disease, the level of development of the health care system, and the population's overall level of economic development. Two different approaches have been used to address the economic impact of an increasing incidence of diabetes. The first approach uses disability-adjusted life-years (DALYs) to measure intangible costs associated with diabetes. It combines the number of healthy life-years lost as a result of early mortality with those lost because of disability. The second approach, which has been used more frequently, is the cost-of-illness approach, which includes the concepts of direct, indirect, and intangible costs. A study conducted by the World Bank found that of the 1,362 million DALYs lost to all illnesses in 1990, 7.97 million DALYs were lost because of diabetes. In a 1992 study that assessed the direct costs of treating diabetes in the U.S., the American Diabetes Association used the cost-of-illness approach and found that the estimated total expenditure for 1 year was $45.2 billion. The 1994 epidemiological studies by Zimmet and the World Health Organization include estimates of increased prevalence of diabetes resulting from an increase in population. Estimates of the global cost of diabetes based on these studies reveal that diabetes accounts for 2-3% of the total health care budget in every country; therefore, an increase in diabetes incidence and prevalence translates into a significant economic impact.
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TL;DR: In this article, the effects on technology transfer and spillovers deriving from ownership sharing of foreign multinational affiliates were examined using unpublished Indonesian micro data, and the results showed that foreign establishments have comparable high levels of labor productivity and that domestic establishments benefit from spillovers.
Abstract: This paper examines the effects on technology transfer and spillovers deriving from ownership sharing of foreign multinational affiliates. More specifically, we try to answer two questions, using unpublished Indonesian micro data. Firstly, do establishments with minority and majority ownership differ in terms of productivity levels? Secondly, does the degree of spillover differ with the degree of ownership in the FDI? Our results show that foreign establishments have comparable high levels of labor productivity and that domestic establishments benefit from spillovers. However, the degree of foreign ownership does neither affect the level of labor productivity in foreign establishments, nor the degree of spillovers.
TL;DR: This Policy Forum is based on the report of a 2-day meeting held on the island of AskA¶ in the Stockholm archipelago in September 1997 to assess whether an interdisciplinary consensus exists on the issue of food production, population growth, and environmental security.
Abstract: This Policy Forum is based on the report of a 2-day meeting held on the island of AskA¶ in the Stockholm archipelago in September 1997. The meeting was convened by the Beijer International Institute of Ecological Economics of the Royal Swedish Academy of Sciences, Stockholm. Its aim was to encourage a substantive dialogue among a group of natural and social scientists so as to assess whether an interdisciplinary consensus exists on the issue of food production, population growth, and environmental security.
TL;DR: This paper shows that QALYs can be derived from more elementary conditions than thought hitherto in the literature: it suffices to impose risk neutrality for life years in every health state and the axiomatization greatly facilitates the assessment of the normative (non)validity of QALys in medical decision making.
Abstract: This paper shows that QALYs can be derived from more elementary conditions than thought hitherto in the literature: it suffices to impose risk neutrality for life years in every health state. This derivation of QALYs is appealing because it does not require knowledge of concepts from utility theory such as utility independence. Therefore our axiomatization greatly facilitates the assessment of the normative (non)validity of QALYs in medical decision making. Moreover, risk neutrality can easily be tested in experimental designs, which makes it straightforward to assess the descriptive (non)validity of QALYs.
TL;DR: The two quality of life instruments performed about equally well in terms of being correlated with and being able to explain the responses to the health state utility questions and the willingness to pay questions.
Abstract: Background In asthma, a substantial impact of disease is on quality of life rather than survival. To date, the quality of life effects of asthma have not been quantitated. Objective The purpose of this study was to quantitate the quality of life effects of asthma via measurement of the health utility of asthmatic patients, and the willingness to pay for an asthma cure. A second goal was to analyze how these measures are related to the different dimensions of quality of life as measured by general and disease specific quality of life instruments. Methods Health utilities were measured on a scale between 0 and 1 using the rating scale, time trade off, and standard gamble methods. Willingness to pay was elicited using both the dichotomous choice and the bidding game approach. Quality of life was assessed using both a generic instrument (the SF-36) and a disease-specific instrument (the Asthma TyPE). Results Sixty-nine patients with asthma were surveyed. The mean health utility was 0.68 with the rating scale method, 0.89 with the time trade off, and 0.91 with the standard gamble. On average, patients were willing to pay between $200 to $350 dollars more per month for an asthma cure. Nearly all correlations between dimensions of quality of life, health state utilities, and willingness to pay were in the expected direction. Conclusion The two quality of life instruments performed about equally well in terms of being correlated with and being able to explain the responses to the health state utility questions and the willingness to pay questions. Correlations between the dimensions of the Asthma TyPE and the SF-36 were also fairly high. Further work should focus on validating and refining the different methods of quantitating quality of life for asthma patients.
TL;DR: The cost of illness in Sweden is determined by the number of people diagnosed with diabetes and the severity of the disease, and the amount of money spent on treatment and hospitalisation.
Abstract: Henriksson F, Jonsson B (Stockholm School of Economics, Stockholm, Sweden). Diabetes: the cost of illness in Sweden. J Intern Med 1998; 244: 461–8.
Objectives To estimate the total cost of diabetes mellitus in Sweden in 1994 and to compare the cost structure with a former Swedish study and with American studies. The study also aims to investigate how the total cost is distributed between control of and complications of the disease.
Design In order to estimate the economic burden of diabetes mellitus in Sweden in 1994, the cost-of-illness method, based on the human capital theory, has been used. Both direct and indirect costs have been estimated using a prevalence approach and a ‘top-down’ method.
Results The economic burden of diabetes mellitus is estimated at 5746 MSEK (1US$ = 7.50 SEK) in Sweden in 1994. The direct costs are estimated at 2455 MSEK and constitute about 43% of the total cost. The indirect costs (production loss due to morbidity and premature mortality) were the dominant costs and amounted to 3291 MSEK, or 57% of total cost. Comparisons with a previous Swedish study from 1978 show some interesting results. Firstly, the distribution of direct and indirect costs is identical between the two studies. Secondly, the distribution of costs between management/control of the disease and complications was about the same, comparing the situation 16 years apart. Four American studies show a cost structure similar to the cost structure presented in this study.
Conclusions The overall conclusion must be that very little has changed in the cost structure of diabetes in Sweden between 1978 and 1994.
01 Jan 1998
TL;DR: In this article, a comparison of the two approaches consistently demonstrate that the psychometric model is superior when it comes to explanatory power when compared to the cultural theory approach, since it can explain individual differences in risk perception better than other approaches, such as personality and political attitudes.
Abstract: Introduction In 1982, Douglas and Wildavsky published a widely acclaimed book in which they suggested a link between risk perception and Cultural Theory concepts.1 Proponents claim that it can explain individual differences in risk perception better than other approaches, such as personality and political attitudes.2 The theory, with a basis in anthropology,3 has been regarded as a serious alternative to the psychological, so-called psychometric approach,4 for explaining perceived risk, although comparisons of the two approaches consistently demonstrate that the psychometric model is superior when it comes to explanatory power.5 Yet, the Cultural Theory approach has seemed worthwhile since it claims to explain risk perception with variables which are semantically much more distinct from perceived risk than the psychometric scales, and perhaps due to its attractive face validity. It seems perfectly sensible, and the need for empirical study of its explanatory value is great. Cultural Theory is a complex conceptual structure and much work on the theory has been concerned with theoretical analysis or has used
TL;DR: In this article, an error correction model for the demand for real M3 money is constructed for the period of 1976-1994 with real GNP, the GNP deflator, as well as a short-term and a long-term interest rate as explanatory variables.
Abstract: An error correction model for the demand for real M3 money is constructed for the period of 1976–1994 with real GNP, the GNP deflator, as well as a short-term and a long-term interest rate as explanatory variables. Quarterly, seasonally unadjusted data are used in estimating the model. It is found that there is a clear structural break due to the German unification in 1990. On the other hand, once this structural break is accounted for, a stable relation is found which resists a series of specification tests. These include a number of recent tests of parameter constancy and linearity. Our specification is at variance with findings reported by some other researchers, notably the Deutsche Bundesbank.
TL;DR: In this paper, two institutional set-ups are studied, each with a different level of authority given to the agents, where authority means the right to decide the own side's provision if negotiations break down.
TL;DR: In this paper, a framework for an ''internal market'' to understand how they work is proposed, and the authors assess the costs and benefits of internal initiatives, and point out the importance of arriving at an appropriate level of subsidiary entrepreneurship, agreed by head office and subsidiary, rather than applying blanket prescriptions.
TL;DR: A methodology for valuing corporate securities that allows the straightforward derivation of closed form solutions for complex scenarios, and makes economic interpretation far easier than what is typically possible with other approaches, such as solving systems of partial differential equations.
Abstract: We suggest a methodology for valuing corporate securities that allows the straightforward derivation of closed form solutions for complex capital structure scenarios. The tractability of the approach stems from its modularity - we provide a number of intuitive building blocks that are sufficient for valuation in most typical situations. A further advantage of our approach is that it makes economic interpretation far easier than what is typically possible with other approaches such as solving partial differential equations. As examples we consider a corporate coupon bond with discrete payments and debt subject to strategic debt service.
TL;DR: Using survey responses from more than 300 suppliers to a European automobile OEM, Christer Karlsson, Rajesh Nellore, and Klas Soderquist identify the problems those suppliers face in the specification process and describe the results of case studies conducted in the OEM and two suppliers.
TL;DR: In this article, the authors examine longitudinal changes in the geographical location of advanced technological capabilities in the multinational corporation and discuss the perceived tension between evolutionary growth and increasing commitments to foreign markets and the forces that tend to concentrate capabilities to a limited number of locations.