Showing papers by "Stockholm School of Economics published in 2010"
TL;DR: In this paper, the authors argue that both the goods and service-dominant logic are providerdominant and the customer's logic is examined in-depth as being the foundation of a customer•dominant (CD) marketing and business logic.
Abstract: Purpose – The paper seeks to introduce to a new perspective on the roles of customers and companies in creating value by outlining a customer‐based approach to service. The customer's logic is examined in‐depth as being the foundation of a customer‐dominant (CD) marketing and business logic.Design/methodology/approach – The authors argue that both the goods‐ and service‐dominant logic are provider‐dominant. Contrasting the provider‐dominant logic with CD logic, the paper examines the creation of service value from the perspectives of value‐in‐use, the customer's own context, and the customer's experience of service.Findings – Moving from a provider‐dominant logic to a CD logic uncovered five major challenges to service marketers: company involvement, company control in co‐creation, visibility of value creation, scope of customer experience, and character of customer experience.Research limitations/implications – The paper is exploratory. It presents and discusses a new perspective and suggests implication...
644 citations
TL;DR: The authors developed a conceptual model of entrepreneurial exit which includes exit through liquidation and firm sale for both firms in financial distress and firms performing well, and empirically test the model using two Swedish databases which follow 1,735 new ventures and their founders over eight years.
381 citations
TL;DR: In this paper, the authors empirically examined how increased competition affects the credit ratings market and found that increased competition from Fitch coincides with lower quality ratings from the incumbents, while the correlation between ratings and market-implied yields fell, and the ability of ratings to predict default deteriorated.
Abstract: The credit rating industry has historically been dominated by just two agencies, Moody’s and S&P, leading to longstanding legislative and regulatory calls for increased competition. The material entry of a third rating agency (Fitch) to the competitive landscape offers a unique experiment to empirically examine how in fact increased competition affects the credit ratings market. Increased competition from Fitch coincides with lower quality ratings from the incumbents: rating levels went up, the correlation between ratings and market-implied yields fell, and the ability of ratings to predict default deteriorated. We offer several possible explanations for these findings that are linked to existing theories.
377 citations
TL;DR: In this article, the authors develop a theory for stochastic control problems which are time inconsistent in the sense that they do not admit a Bellman optimality principle and attach these problems by viewing them within a game theoretic framework, and look for Nash subgame perfect equilibrium points.
Abstract: We develop a theory for stochastic control problems which, in various ways, are time inconsistent in the sense that they do not admit a Bellman optimality principle. We attach these problems by viewing them within a game theoretic framework, and we look for Nash subgame perfect equilibrium points. For a general controlled Markov process and a fairly general objective functional we derive an extension of the standard Hamilton-Jacobi-Bellman equation, in the form of a system of non-linear equations, for the determination for the equilibrium strategy as well as the equilibrium value function. All known examples of time inconsistency in the literature are easily seen to be special cases of the present theory. We also prove that for every time inconsistent problem, there exists an associated time consistent problem such that the optimal control and the optimal value function for the consistent problem coincides with the equilibrium control and value function respectively for the time inconsistent problem. We also study some concrete examples.
315 citations
TL;DR: The correlation between generous behavior and elicited beliefs is close to zero in all three experiments, suggesting that guilt aversion is smaller than previously thought.
305 citations
TL;DR: It is found that more culturally distant lead banks offer borrowers smaller loans at a higher interest rate and are more likely to require third-party guarantees and hamper risk sharing between participant banks and culturally distantlead banks.
Abstract: We investigate whether cultural differences between professional decision-makers affect financial contracts in a large dataset of international syndicated bank loans. We find that more culturally distant lead banks offer borrowers smaller loans at a higher interest rate and are more likely to require third-party guarantees. These effects do not disappear following repeated interaction between borrower and lender and are economically sizable: A one-standard-deviation increase in cultural distance, approximately the distance between Canada and the U.S. or between Japan and South Korea, is associated with a 6.5 basis point higher loan spread; the loan spread increases by about 23 basis points if the bank-firm match involves culturally more distant parties, for example, from Japan and the U.S. We also find that cultural differences not only affect the relation between borrower and lender, but also hamper risk sharing between participant banks and culturally distant lead banks.
261 citations
Posted Content•
TL;DR: In this article, the experimental play of the repeated prisoner's dilemma when intended actions are implemented with noise was studied, and it was found that subjects cooperate substantially more than in treatments without cooperative equilibria.
Abstract: We study the experimental play of the repeated prisoner’s dilemma when intended actions are implemented with noise. In treatments where cooperation is an equilibrium, subjects cooperate substantially more than in treatments without cooperative equilibria. In all settings there was considerable strategic diversity, indicating that subjects had not fully learned the distribution of play. Furthermore, cooperative strategies yielded higher payoffs than uncooperative strategies in the treatments with cooperative equilibria. In these treatments successful strategies were “lenient” in not retaliating for the first defection, and many were “forgiving” in trying to return to cooperation after inflicting a punishment.
260 citations
TL;DR: In this article, the authors evaluate the factors driving improvement of industry-sponsored private regulatory standards under conditions of competition in three-country contexts between 1995 and 2005, and explore how transnational and national actors created important moments of public comparison in which substantive as well as accountability standards were ratcheted up while they diffused more broadly across industry.
Abstract: This project evaluates the factors driving improvement of industry-sponsored private regulatory standards under conditions of competition in three-country contexts between 1995 and 2005. The paper provides a comparative analysis of regulatory competition in forestry in the USA, Sweden and Finland. While previous research has identified the importance of transnational supply chain pressure and of NGOs’ direct targeting campaigns in diffusing and upgrading standards, this paper stresses the role of public comparison and environmental benchmarking that contributed to an upgrading of industry standards via competition between the Forest Stewardship Council and rival industry-sponsored schemes. The paper explores how transnational and national actors created important moments of public comparison in which substantive as well as accountability standards were ratcheted up while they diffused more broadly across industry. This project evaluates the role of environmental benchmarking in constructing and contesting the legitimacy of private regulation.
222 citations
TL;DR: In this article, the authors investigate the effects of clusters on the survival and performance of new entrepreneurial firms where clusters are defined as regional agglomerations of related industries, and find that firms located in strong clusters create more jobs, higher tax payments, and higher wages to employees.
Abstract: This paper contributes to the literatures on entrepreneurship and economic geography by investigating the effects of clusters on the survival and performance of new entrepreneurial firms where clusters are defined as regional agglomerations of related industries. We analyze firm-level data for all 4,397 Swedish firms started in the telecom and consumer electronics, financial services, information technology, medical equipment, and pharmaceuticals and pharmaceutical sectors from 1993 to 2002. We find that that firms located in strong clusters create more jobs, higher tax payments, and higher wages to employees. These effects are consistent for absolute agglomeration measures (firm or employee counts), but weaker for relative agglomeration measures (location quotients). The strengths of the effects are found to vary depending on which geographical aggregation level is chosen for the agglomeration measure.
195 citations
TL;DR: This paper found that approximately 25% of individual variation in portfolio risk is due to genetic variation and that these results extend to several other aspects of financial decision-making, such as financial decision making.
Abstract: Individuals differ in how they construct their investment portfolios, yet empirical models of portfolio risk typically account only for a small portion of the cross-sectional variance. This paper asks whether genetic variation can explain some of these individual differences. Following a major pension reform Swedish adults had to form a portfolio from a large menu of funds. We match data on these investment decisions with the Swedish Twin Registry and find that approximately 25% of individual variation in portfolio risk is due to genetic variation. We also find that these results extend to several other aspects of financial decision-making.
186 citations
TL;DR: In this article, the authors explore which borrowers are able to benefit from foreign bank presence in emerging markets and find that the limits to financial integration are less tight than the static picture of firm-bank relationships implies.
Abstract: Using a novel dataset that allows us to trace the bank relationships of a sample of mostly unlisted firms, we explore which borrowers are able to benefit from foreign bank presence in emerging markets. Our results suggest that the limits to financial integration are less tight than the static picture of firm-bank relationships implies. Even though foreign banks are more likely to engage large and foreign-owned firms, after an acquisition, a bank is 20 percent less likely to terminate a relationship with a firm if the acquirer is foreign rather than domestic. Most importantly, within a credit market, firms appear to have the same access to financial loans and ability to invest whether they borrow from a foreign bank or not, while foreign banks benefit all firms by indirectly enhancing credit access.
TL;DR: This article found that the actual willingness to pay for various consumer goods can be manipulated by an uninformative anchor, replicating Ariely et al. (2003) and showed that the anchoring effect decreases but does not vanish with higher cognitive ability.
TL;DR: The capacity of the Chinese wind power sector has increased rapidly over the past half-decade, essentially doubling every year since 2005 as mentioned in this paper, and some of the policies and policy challenges related to the particular business environment in China are highlighted.
TL;DR: This article developed a model of North-South trade with multinational firms and economic growth in order to analyze formally the effects of stronger intellectual property rights (IPR) protection in developing countries.
TL;DR: In this paper, the authors analyze how family ties affect incentives, with focus on the strategic interaction between two mutually altruistic siblings, and define a notion of local evolutionary stability of degrees of sibling altruism and show that this degree is lower than the kinship relatedness factor.
Abstract: We analyze how family ties affect incentives, with focus on the strategic interaction between two mutually altruistic siblings. The siblings exert effort to produce output under uncertainty, and they may transfer output to each other. With equally altruistic siblings, their equilibrium effort is nonmonotonic in the common degree of altruism, and it depends on the harshness of the environment. We define a notion of local evolutionary stability of degrees of sibling altruism and show that this degree is lower than the kinship-relatedness factor. Numerical simulations show how family ties vary with the environment, and how this affects economic outcomes.
TL;DR: This work considers the problem of maximizing terminal utility in a model where asset prices are driven by Wiener processes, but where the various rates of returns are allowed to be arbitrary semimartingales and manages to provide a surprisingly explicit representation of the optimal terminal wealth as well as the optimal portfolio strategy.
Abstract: We consider the problem of maximizing terminal utility in a model where asset prices are driven by Wiener processes, but where the various rates of returns are allowed to be arbitrary semimartingales. The only information available to the investor is the one generated by the asset prices and, in particular, the return processes cannot be observed directly. This leads to an optimal control problem under partial information and for the cases of power, log, and exponential utility we manage to provide a surprisingly explicit representation of the optimal terminal wealth as well as of the optimal portfolio strategy. This is done without any assumptions about the dynamical structure of the return processes. We also show how various explicit results in the existing literature are derived as special cases of the general theory.
TL;DR: In this paper, the effects of investor protection on stock returns and portfolio allocation decisions were studied and it was shown that portfolio investors' participation in the domestic stock market and home equity bias are positively related to investor protection and provide original evidence in their support.
Abstract: We study the effects of investor protection on stock returns and portfolio allocation decisions In our theoretical model, if investor protection is weak, wealthy investors have an incentive to become controlling shareholders In equilibrium, the stock price reflects the demand from both controlling shareholders and portfolio investors Due to the high demand from controlling shareholders, the price of weak corporate governance stocks is not low enough to fully discount the extraction of private benefits Thus, stocks have lower expected returns when investor protection is weak This has implications for domestic and foreign investors’ stockholdings In particular, we show that portfolio investors’ participation in the domestic stock market and home equity bias are positively related to investor protection and provide original evidence in their support
TL;DR: In this article, the authors integrate the resource-based view (RBV) with a network perspective on resources, which contributes to the growing body of knowledge regarding the internationalization of smaller biotech firms.
TL;DR: In this article, the authors study costless pre-play communication of intentions among inexperienced players in symmetric 2 × 2 games and find that communication facilitates coordination in common interest games with positive spillovers and strategic complementarities, but also games in which any type of communication hampers coordination.
Abstract: We study costless pre-play communication of intentions among inexperienced players. Using the level-k model of strategic thinking to describe players’ beliefs, we fully characterize the effects of preplay communication in symmetric 2×2 games. One-way communication weakly increases coordination on Nash equilibrium outcomes, although average payoffs sometimes decrease. Two-way communication further improves payoffs in some games but is detrimental in others. Moving beyond the class of symmetric 2 × 2 games, we find that communication facilitates coordination in common interest games with positive spillovers and strategic complementarities, but there are also games in which any type of communication hampers coordination. (JEL C72, D83)
TL;DR: In this paper, a trade model with firm-level productivity differences and R&D-driven growth is presented, where trade liberalization causes the least productive firms to exit but also slows the development of new products.
Abstract: This paper presents a trade model with firm-level productivity differences and R&D-driven growth. Trade liberalization causes the least productive firms to exit but also slows the development of new products. The overall effect on productivity growth depends on the size of intertemporal knowledge spillovers in R&D. When these spillovers are relatively weak, then trade liberalization promotes productivity growth in the short run and makes consumers better off in the long run. However, when these spillovers are relatively strong, then trade liberalization retards productivity growth in the short run and makes consumers worse off in the long run.
TL;DR: It is found that the most significant association reported in previous research between the amount donated in a dictator game and an OXTR genetic variant cannot be replicated.
Abstract: Background: Oxytocin (OXT) has been implicated in a suite of complex social behaviors including observed choices in economic laboratory experiments. However, actual studies of associations between oxytocin receptor (OXTR) gene variants and experimentally elicited social preferences are rare. Methodology/Principal Findings: We test hypotheses of associations between social preferences, as measured by behavior in two economic games, and 9 single nucleotide polymorphisms (SNPs) of the OXTR gene in a sample of Swedish twins (n=684). Two standard economic games, the dictator game and the trust game, both involving real monetary consequences, were used to elicit such preferences. After correction for multiple hypothesis testing, we found no significant associations between any of the 9 single nucleotide polymorphisms (SNPs) and behavior in either of the games. Conclusion: We were unable to replicate the most significant association reported in previous research between the amount donated in a dictator game and an OXTR genetic variant.
TL;DR: In this article, the gatekeeper concept has been re-examined in light of the recent advances in Internet technologies that have dramatically altered how knowledge workers source and share their information.
Abstract: Previous studies have firmly established the technological gatekeeper to be a key
node in the innovation process – acquiring, translating, and disseminating external
information throughout the R&D unit. However, the gatekeeper concept has received
modest attention in recent times. We argue that the concept needs to be re-examined
in light of the recent advances in Internet technologies that have dramatically altered
how knowledge workers source and share their information. Drawing on social
network analysis and interview evidence from a medical devices R&D group, we find
that the gatekeeper role is still vital, but no longer needs to be performed by a single
individual. Instead, the modern R&D group can keep abreast of the latest
technological advances through a combination of Internet-enabled internal and
external communication specialists. This study makes a number of important
contributions. The gatekeeper theory is extended through the development of an
updated conceptual framework. We also discuss the practical implications of our
findings and advise R&D managers on how to organise resources to maximise
optimal information flows.
TL;DR: This article reviewed the stability of the overall system of exchange rates by examining macroeconomic performance (inflation, growth, crises) under alternative exchange rate regimes; implications of exchange rate regime choice for interaction with the rest of the system (external adjustment, trade integration, capital flows); and potential sources of stress to the international monetary system.
Abstract: The member countries of the IMF collaborate to try to ensure orderly exchange arrangements and promote a stable system of exchange rates, recognizing that the essential purpose of the international monetary system is to facilitate the exchange of goods, services, and capital, and to sustain sound economic growth. The paper reviews the stability of the overall system of exchange rates by examining macroeconomic performance (inflation, growth, crises) under alternative exchange rate regimes; implications of exchange rate regime choice for interaction with the rest of the system (external adjustment, trade integration, capital flows); and potential sources of stress to the international monetary system.
TL;DR: In this paper, the authors explored the adoption of the corporate balanced scorecard (CBSC) and its impact on corporate control of business units and found that CBSC had little impact on control at the corporate level.
TL;DR: In this article, the authors explore the association between open book practices and two different purchasing strategies, i.e., transactional purchasing and relational purchasing, and show that data disclosure supports cost reduction through joint product development, and is more comprehensive.
TL;DR: The authors performed a meta-analysis on a sample of 67 country-specific studies yielding 137 observations that have gauged the link between FDI and measures of economic growth, finding that the impact of FDI is, on average, more positively significant for China than for the full sample of countries, but that the difference between China and other transition economies is less clear.
Abstract: Empirical evidence suggests that China has benefited from foreign direct investment (FDI). An important question that remains unanswered is whether China has benefited more from FDI than other countries in general, and other transition and developing countries in particular. This paper investigates this issue by performing a meta-analysis on a sample of 67 country-specific studies yielding 137 observations that have gauged the link between FDI and measures of economic growth. The results suggest that the impact of FDI is, on average, more positively significant for China than for the full sample of countries, but that the difference between China and other transition economies is less clear.
TL;DR: In this article, a case study traces how Biacore undertook segmentation activities while shaping the market for its new product technology, affinity biosensors, which involved stabilising the modes of exchange with customers, the product and the identity of the company.
TL;DR: In this paper, a simple random-walk process captures much of the life-cycle dynamics of the Swedish earnings process, and it is shown that the true earnings process is not a random walk.
TL;DR: A worldwide increase in new nonstate, multi-stakeholder organizations setting standards for socially and environmentally responsible behavior has been reported in the last few decades as discussed by the authors, and these standard-setting arenas offer new c...
Abstract: We have seen a worldwide increase in new nonstate, multi-stakeholder organizations setting standards for socially and environmentally responsible behavior. These standard-setting arenas offer new c ...
TL;DR: In this paper, the authors identify general dimensions of agential variation in three areas: in the constitution of agents, in how agents are put together/what agents are made of; in their programs of actions, i.e. the motives, interests and/or functions ascribed to agents; and in what market agents are capable of.