Showing papers by "Tilburg University published in 2002"

Three worlds of welfare capitalism or more? A state-of-the-art report:

Abstract: This paper surveys the debate regarding Esping-Andersen's typology of welfare states and reviews the modified or alternative typologies ensuing from this debate. We confine ourselves to the classif...

Stock Markets, Banks, and Growth: Panel Evidence

Abstract: This paper investigates the impact of stock markets and banks on economic growth using a panel data set for the period 1976-98 and applying recent GMM techniques developed for dynamic panels. On balance, we find that stock markets and banks positively influence economic growth and these findings are not due to potential biases induced by simultaneity, omitted variables or unobserved country-specific effects.

A Poisson log-bilinear regression approach to the construction of projected lifetables

Abstract: This paper implements Wilmoth’s [Computational methods for fitting and extrapolating the Lee–Carter model of mortality change, Technical report, Department of Demography, University of California, Berkeley] and Alho’s [North American Actuarial Journal 4 (2000) 91] recommendation for improving the Lee–Carter approach to the forecasting of demographic components. Specifically, the original method is embedded in a Poisson regression model, which is perfectly suited for age–sex-specific mortality rates. This model is fitted for each sex to a set of age-specific Belgian death rates. A time-varying index of mortality is forecasted in an ARIMA framework. These forecasts are used to generate projected age-specific mortality rates, life expectancies and life annuities net single premiums. Finally, a Brass-type relational model is proposed to adapt the projections to the annuitants population, allowing for estimating the cost of adverse selection in the Belgian whole life annuity market. © 2002 Elsevier Science B.V. All rights reserved.

Financial and legal constraints to firm growth: does size matter?

Abstract: Using a unique firm-level survey database covering 54 countries, we investigate the effect of financial, legal, and corruption problems on firms’ growth rates. Whether these factors constrain growth depends very much on firm size. It is consistently the smallest firms that are most constrained. Financial and institutional development weakens the constraining effects of financial, legal and corruption obstacles and it is again the small firms that stand to benefit the most. There is only a weak relation between firms’ perception of the quality of the courts in their country and firm growth. We also provide evidence that the corruption of bank officials constrains firm growth.

Pace, rhythm, and scope: process dependence in building a profitable multinational corporation

Abstract: Many potential benefits of foreign expansion have been identified in the literature, yet empirical support that multinational firms perform better than domestic firms is mixed. This paper takes a longitudinal perspective and argues that how much a firm benefits from having foreign subsidiaries depends on its process of internationalization. We argue that a firm's capacity to absorb expansion is subject to constraints: some expansion patterns increase profitability less than others, owing to diseconomies of time compression. We hypothesize that the speed of internationalization, the spread of the geographical and product markets entered, and the irregularity of the expansion pattern negatively moderate a firm's increase in profitability resulting from international expansion. Model estimations based on panel data raised strong support for these predictions.

Strategic Bundling of Products and Prices: A New Synthesis for Marketing

Abstract: Bundling is pervasive in today’s markets. However, the bundling literature contains inconsistencies in the use of terms and ambiguity about basic principles underlying the phenomenon. The literature also lacks an encompassing classification of the various strategies, clear rules to evaluate the legality of each strategy, and a unifying framework to indicate when each is optimal. Based on a review of the marketing, economics, and law literature, this article develops a new synthesis of the field of bundling, which provides three important benefits. First, the article clearly and consistently defines bundling terms and identifies two key dimensions that enable a comprehensive classification of bundling strategies. Second, it formulates clear rules for evaluating the legality of each of these strategies. Third, it proposes a framework of 12 propositions that suggest which bundling strategy is optimal in various contexts. The synthesis provides managers with a framework with which to understand and c...

The Market Valuation of Internet Channel Additions

Abstract: The emergence of the Internet has pushed many established companies to explore this radically new distribution channel Like all market discontinuities, the Internet creates opportunities as well as threats—it can be performance-enhancing as readily as it can be performance-destroying Making use of event-study methodology, the authors assess the net impact of adding an Internet channel on a firm’s stock market return, a measure of the change in expected future cash flows The authors find that, on average, Internet channel investments are positive net-present-value investments The authors then identify firm, introduction strategy, and marketplace characteristics that influence the direction and magnitude of the stock market reaction The results indicate that powerful firms with a few direct channels are expected to achieve greater gains in financial performance than are less powerful firms with a broader direct channel offering In terms of order of entry, early followers have a competitive ad

Which graphs are determined by their spectrum

Abstract: For almost all graphs the answer to the question in the title is still unknown. Here we survey the cases for which the answer is known. Not only the adjacency matrix, but also other types of matrices, such as the Laplacian matrix, are considered.

Regret in Decision Making

Abstract: Decision research has only recently started to take seriously the role of emotions in choices and decisions. Regret is the emotion that has received the most attention. In this article, we sample a number of the initial regret studies from psychology and economics, and trace some of the complexities and contradictions to which they led. We then sketch a new theory, decision justification theory (DJT), which synthesizes several apparently conflicting findings. DJT postulates two core components of decision–related regret, one associated with the (comparative) evaluation of the outcome, the other with the feeling of self–blame for having made a poor choice. We reinterpret several existing studies in DJT terms. We then report some new studies that directly tested (and support) DJT, and propose a number of research issues that follow from this new approach to regret.

From Street‐Level to System‐Level Bureaucracies: How Information and Communication Technology is Transforming Administrative Discretion and Constitutional Control

Abstract: The use of information and communication technology (ICT) is rapidly changing the structure of a number of large, executive public agencies. They used to be machine bureaucracies in which street-level officials exercised ample administrative discretion in dealing with individual clients. In some realms, the street-level bureaucrats have vanished. Instead of street-level bureaucracies, they have become system-level bureaucracies. System analysts and software designers are the key actors in these executive agencies. This article explores the implications of this transformation from the perspective of the constitutional state. Thanks to ICT, the implementation of the law has virtually been perfected. However, some new issues rise: What about the discretionary power of the system-level bureaucrats? How can we guarantee due process and fairness in difficult cases? The article ends with several institutional innovations that may help to embed these system-level bureaucracies in the constitutional state.

The Economics of Roscas and Intrahousehold Resource Allocation

Abstract: This paper investigates individual motives to participate in rotating savings and credit associations (roscas).Detailed evidence from roscas in a Kenyan slum (Nairobi) suggests that most roscas are predominantly composed of women, particularly those living in a couple and earning an independent income. To explain this phenomenon, we propose an argument based on conflictual interactions within the household.Participation in a rosca is a strategy a wife employs to protect her savings against claims by her husband for immediate consumption.The empirical implications of the model are then tested using the data collected in Kenya.

Breaking Through the Clutter: Benefits of Advertisement Originality and Familiarity for Brand Attention and Memory

Abstract: Rising levels of advertising competition have made it increasingly difficult to attract and hold consumers' attention and to establish strong memory traces for the advertised brand. A common communication strategy to break through this competitive clutter is to increase ad originality. However, ad originality may have detrimental effects when consumers pay more attention to the ad at the expense of the advertised brand. Moreover, the positive effects of originality may quickly wane when the ad becomes familiar. Surprisingly, no research to date has examined such brand attention and memory effects of ad originality and familiarity. The current study aims to fill this void. We use a stochastic model of the influence that ad originality and familiarity have on consumers' eye fixations to the key elements of advertisements--brand, text, and pictorial--and how the information extracted during eye fixations promotes memory for the advertised brand. The model explicitly accounts for heterogeneity due to consumers and advertisements. Infrared eye tracking was applied to collect eye fixation data from 119 consumers who paged through two general-audience magazines containing 58 full-page advertisements. Memory for the advertised brands was assessed with an indirect memory task. The model was estimated using Markov Chain Monte Carlo (MCMC) methods. In support of our hypotheses, original advertisements drew more attention to the advertised brand. More importantly however, advertisements that were both original and familiar attracted the largest amount of attention to the advertised brand, which improved subsequent brand memory. In addition, original and familiar ads were found to promote brand memory directly. Implications of these findings for communication and media planning strategy are discussed.

External Technology Sourcing Through Alliances or Acquisitions: An Analysis of the Application-Specific Integrated Circuits Industry

Abstract: In today's turbulent business environment innovation is the result of the interplay between two distinct but related factors: endogenous R&D efforts and (quasi) external acquisition of technology and know-how. Given the increasing importance of innovation, it is vital to understand more about the alternative mechanisms--such as alliances and acquisitions--that can be used to enhance the innovative performance of companies. Most of the literature has dealt with these alternatives as isolated issues. Companies, however, are constantly challenged to choose between acquisitions and strategic alliances, given the limited resources that can be spent on research and development. This paper contributes to the literature because it focuses on the choice between innovation-related alliances and acquisitions. We focus on the question of how the trade-off between strategic alliances and acquisitions is influenced by previous direct and indirect ties between firms in an industry network of interfirm alliances. We formulate hypotheses pertaining to the number of direct ties between two companies, their proximity in the overall alliance network, and their centrality in that network. In so doing, we distinguish between ties that connect firms from the same and from different industry segments, and those that connect firms from the same or from different world regions. These hypotheses are tested on a sample of strategic alliances and acquisitions in the application-specific integrated circuits (ASIC) industry. The findings show that a series of strategic alliances between two partners increases the probability that one will ultimately acquire the other. Whereas previous direct contacts tend to lead to an acquisition, this is not true of previous indirect contacts, which increase the probability that a link between the companies, once it is forged, takes the form of a strategic alliance. In the case of acquisitions, firms that are more centrally located in the network of interfirm alliances tend to be acquirers, and firms with a less central position tend to become acquired. These findings underscore the importance of taking previously formed interfirm linkages into account when explaining the choice between strategic alliances and acquisitions, as these existing links influence the transaction costs associated with both alternatives.

How Organizational Field Networks Shape Interorganizational Tie-Formation Rates

Abstract: We investigate the impact of communication in field-level networks on rates of formation of interorganizational collaborative ties, such as strategic alliances and joint ventures. After developing the concept of an organizational field network (“field-net”), we derive a set of testable propositions and corollaries that relate field-net properties, such as density, reciprocity, centralization, multiplexity, and hierarchy, to subsequent nonlinear changes in interorganizational tie-formation rates. We conclude by discussing aspects of empirical research for testing the empirical validity of these propositions.

Option Attachment: When Deliberating Makes Choosing Feel Like Losing

Abstract: Common sense suggests that consumers make more satisfying decisions as they consider their options more closely. Yet we argue that such close consideration can have undesirable consequences because it may induce attachment to the options - a sense of prefactual ownership of the choice options. When consumers then select one option, they effectively lose this prefactual possession of the other, non-chosen option(s). This yields a feeling of discomfort (choosing feels like losing) and an increase in the attractiveness of the forgone option, compared to its appeal before the choice. A series of nine experiments provides evidence of this phenomenon and support for our explanation.

Management challenges in a new time

Abstract: As the year 2000 approached, so too did the years 5760, 2544, and 1420, according to the Jewish, Buddhist, and Moslem dating systems, respectively. Still, the coming of the year 2000 held meaning for most Western societies, serving as an opportunity for broader speculation about the new millennium and the 21st century. In the field of management, cycles of boom and bust in Asia had called into question new ways of organizing hailed in the 1980s, and questions and concerns mounted about inadequacies of 20th century views of business firms. Opinions were astonishingly diverse and often contradictory, but the central theme was change--dramatic change--and the idea that, to cope with it, managers ought to strategize anew and shape and reshape their firms.

Chapter 23 – Environmental Taxation and Regulation*

Abstract: This chapter examines government policy alternatives for protecting the environment. We compare environmentally motivated taxes and various non-tax environmental policy instruments in terms of their efficiency and distributional impacts. Much of the analysis is performed in a second-best setting where the government relies on distortionary taxes to finance some of its budget. The chapter indicates that in this setting, general-equilibrium considerations have first-order importance in the evaluation of environmental policies. Indeed, some of the most important impacts of environmental policies take place outside of the market that is targeted for regulation. Section 2 examines the optimal level of environmental taxes, both in the absence of other taxes and in the second-best setting. Section 3 analyzes the impacts of environmental tax reforms, concentrating on revenue-neutral policies in which revenues from environmental taxes are used to finance cuts in ordinary, distortionary taxes. Here we explore in particular the circumstances under which the “recycling” of revenues from environmental taxes through cuts in distortionary taxes can eliminate the non-environmental costs of such reforms – an issue that has sparked considerable interest in recent years. Section 4 compares environmental taxes with other policy instruments – including emissions quotas, performance standards, and subsidies to abatement – in economies with pre-existing distortionary taxes. We first compare these instruments assuming that policymakers face no uncertainties as to firms’ abatement costs or the benefits of environmental improvement, and then expand the analysis to explore how uncertainty on the part of regulators and the associated monitoring and enforcement costs affect the choice among alternative policy instruments. Section 5 concentrates on the trade-offs between efficiency and distribution in a second-best setting. Section 6 offers conclusions.

Cross-Cultural Differences and Joint Venture Longevity

Abstract: In this paper we test whether national cross cultural differences between joint venture (JV) parents affect JV longevity by comparing that of two categories of JVs placed in the same environment, those between two or more Japanese parents on one hand, and those between Japanese and American parents, on the other. Carefully controlling for other factors that may affect JV longevity, we find that the longevity of Japanese-American JVs is lower than that of Japanese-Japanese JVs. Such effects, however, appear only for dissolutions that result from the sale of the venture to one of the partners, not for those due to liquidation or sale to a third party.

Who talks to whom? Intra-and interdisciplinary communication of economics journals

Abstract: Citation patterns between 42 journals in economics from 1995 to 1997 are examined, plus between economics and anthropology, political science, psychology, sociology and five business disciplines. Building on social network theory, we identify a hierarchical organization of journals in economics and seven journal clusters. Major citation flows are found from all areas of economics to the general interest and theory and method clusters, but not the other way around. Economics emerges as a significant source of interdisciplinary knowledge for the other social sciences and business. However, no area of economics appears to build substantially on insights from its sister disciplines.

International Evidence on Ethical Mutual Fund Performance and Investment Style

Abstract: Using an international database containing 103 German, UK and US ethical mutual funds we review and extend previous research on ethical mutual fund performance. By applying a multi-factor Carhart (1997) model we solve the benchmark problem most prior ethical studies suffered from. After controlling for investment style, we find little evidence of significant differences in risk-adjusted returns between ethical and conventional funds for the 1990-2001 period. Introducing time-variation in betas however leads to a significant under-performance of domestic US funds and a significant out-performance of UK ethical funds, relative to their conventional peers. Finally, we differentiate previous results by documenting a learning effect. After a period of strong under-performance, older ethical funds finally are catching up, while younger funds continue to under-perform both the index and conventional peers.

What Goals Do Business Leaders Pursue? A Study in Fifteen Countries

Abstract: Goals-in-use of successful businesspersons were rated by over 1,800 junior managers and professionals, attending evening MBA courses at local universities in 15 countries. A hierarchical cluster analysis of perceived goals divided the countries into seven clusters. The relative ordering of goals within these clusters suggested seven different archetypal business leader roles. Perceptions correlated significantly with national wealth, as well as with dimensions of national culture.

Cultural Dimensions at the Individual Level of Analysis: The Cultural Orientations Framework

Abstract: This article describes a theoretically-grounded framework of cultural dimensions conceptualized and operationalized at the individual level of analysis, based on the work of anthropologists Kluckho...

Structural Equivalence in Multilevel Research

Abstract: In cross-cultural research, there is an increasing interest in the comparison of constructs at different levels of aggregation, such as the use of individualism—collectivism at the individual and country levels. A procedure is described for establishing structural equivalence (i.e., similarity of psychological meaning) at various levels of aggregation based on exploratory factor analysis. A construct shows structural equivalence across aggregation levels if its factor structure is invariant across levels. The procedure was applied to the Postmaterialism scale of the World Values Survey. The similarity of postmaterialism at the individual and country levels could not be unambiguously demonstrated; a likely reason is that the concept does not have an identical meaning in countries with low and high gross national products.

Distance, Lending Relationships, and Competition

Abstract: A recent string of theoretical papers highlights the importance of geographical distance in explaining pricing and availability of loans to small firms. Lenders located in the vicinity of small firms have significantly lower monitoring and transaction costs, and hence considerable market power if competing financiers are located relatively far. We directly study the effect on loan conditions of the geographical distance between firms, the lending bank, and all other banks in the vicinity. For our study, we employ detailed contract information from more than 15,000 bank loans to small firms and control for relevant relationship, loan contract, bank branch, firm, and regional characteristics. We report the first comprehensive evidence on the occurrence of spatial price discrimination in bank lending. Loan rates decrease in the distance between the firm and the lending bank and increase similarly in the distance between the firm and competing banks. Both effects are statistically significant and economically relevant, are robust to changes in model specifications and variable definitions, and are seemingly not driven by the modest changes over time in lending technology we infer.