Showing papers in "Social Science Research Network in 2014"

Modelling Asymmetric Cointegration and Dynamic Multipliers in a Nonlinear ARDL Framework

Abstract: We develop a cointegrating nonlinear autoregressive distributed lag (NARDL) model in which short- and long-run nonlinearities are introduced via positive and negative partial sum decompositions of the explanatory variables. We demonstrate that the model is estimable by OLS and that reliable long-run inference can be achieved by bounds-testing regardless of the integration orders of the variables. Furthermore, we derive asymmetric dynamic multipliers that graphically depict the traverse between the short- and the long-run. The salient features of the model are illustrated using the example of the nonlinear unemployment-output relationship in the US, Canada and Japan.

Bibliometric Methods in Management and Organization

Abstract: We aim to develop a meaningful single-source reference for management and organization scholars interested in using bibliometric methods for mapping research specialties. Such methods introduce a measure of objectivity into the evaluation of scientific literature and hold the potential to increase rigor and mitigate researcher bias in reviews of scientific literature by aggregating the opinions of multiple scholars working in the field. We introduce the bibliometric methods of citation analysis, co-citation analysis, bibliographical coupling, co-author analysis, and co-word analysis and present a workflow for conducting bibliometric studies with guidelines for researchers. We envision that bibliometric methods will complement meta-analysis and qualitative structured literature reviews as a method for reviewing and evaluating scientific literature. To demonstrate bibliometric methods, we performed a citation and co-citation analysis to map the intellectual structure of the Organizational Research Methods journal.

A Review of Archival Auditing Research

Abstract: We define higher audit quality as greater assurance of high financial reporting quality. Researchers use many proxies for audit quality, with little guidance on choosing among them. We provide a framework for systematically evaluating their unique strengths and weaknesses. Because it is inextricably intertwined with financial reporting quality, audit quality also depends on firms’ innate characteristics and financial reporting systems. Our review of the models commonly used to disentangle these constructs suggests the need for better conceptual guidance. Finally, we urge more research on the role of auditor and client competency in driving audit quality.

Burnout and Work Engagement: The JD–R Approach

Abstract: Whereas burnout refers to a state of exhaustion and cynicism toward work, engagement is defined as a positive motivational state of vigor, dedication, and absorption. In this article, we discuss the main definitions and conceptualizations of both concepts used in the literature. In addition, we review the most important antecedents of burnout and work engagement by examining situational and individual predictors. We also review the possible consequences of burnout and engagement and integrate the research findings using job demands– resources theory. Although both burnout and work engagement are related to important job-related outcomes, burnout seems to be more strongly related to health outcomes, whereas work engagement is morestronglyrelatedtomotivationaloutcomes. Wediscussdaily and momentary fluctuations in burnout and work engagement as possibilities for future research.

Systemic Risk and Stability in Financial Networks

Abstract: We provide a framework for studying the relationship between the financial network architecture and the likelihood of systemic failures due to contagion of counterparty risk. We show that financial contagion exhibits a form of phase transition as interbank connections increase: as long as the magnitude and the number of negative shocks affecting financial institutions are sufficiently small, more "complete" interbank claims enhance the stability of the system. However, beyond a certain point, such interconnections start to serve as a mechanism for propagation of shocks and lead to a more fragile financial system. We also show that, under natural contracting assumptions, financial networks that emerge in equilibrium may be socially inefficient due to the presence of a network externality: even though banks take the effects of their lending, risk-taking and failure on their immediate creditors into account, they do not internalize the consequences of their actions on the rest of the network.

Psychological Safety: The History, Renaissance, and Future of an Interpersonal Construct

Abstract: Psychological safety describes people’s perceptions of the consequences of taking interpersonal risks in a particular context such as a workplace. First explored by pioneering organizational scholars in the 1960s, psychological safety experienced a renaissance starting in the 1990s and continuing to the present. Organizational research has identified psychological safety as a critical factor in understanding phenomena such as voice, teamwork, team learning, and organizational learning. A growing body of conceptual and empirical work has focused on understanding the nature of psychological safety, identifying factors that contribute to it, and examining its implications for individuals, teams, and organizations. In this article, we review and integrate this literature and suggest directions for future research. We first briefly review the early history of psychological safety research and then examine contemporary research at the individual, group, and organizational levels of analysis. We assess what has ...

Bitcoin: Economics, Technology, and Governance

Abstract: Bitcoin is an online communication protocol that facilitates virtual currency including electronic payments. Since its inception in 2009 by an anonymous group of developers, Bitcoin has served tens of millions of transactions with total dollar value in the billions. Users have been drawn to Bitcoin for its decentralization, intentionally relying on no single server or set of servers to store transactions and also avoiding any single party that can ban certain participants or certain types of transactions. Bitcoin is of interest to economists in part for its potential to disrupt existing payment systems and perhaps monetary systems, and also for the wealth of data it provides about agents’ behavior and about the Bitcoin system itself. This article presents the platform’s design principles and properties for a non-technical audience, reviews its past, present and future uses, and points out risks and regulatory issues as Bitcoin interacts with the conventional financial system and the real economy.

Financial Literacy, Financial Education and Downstream Financial Behaviors (full paper and web appendix)

Abstract: Policy makers have embraced financial education as a necessary antidote to the increasing complexity of consumers’ financial decisions over the last generation. We conduct a meta-analysis of the relationship of financial literacy and of financial education to financial behaviors in 168 papers covering 201 prior studies. We find that interventions to improve financial literacy explain only 0.1% of the variance in financial behaviors studied, with weaker effects in low-income samples. Like other education, financial education decays over time; even large interventions with many hours of instruction have negligible effects on behavior 20 months or more from the time of intervention. Correlational studies that measure financial literacy find stronger associations with financial behaviors. We conduct three empirical studies and we find that the partial effects of financial literacy diminish dramatically when one controls for psychological traits that have been omitted in prior research or when one uses an instrument for financial literacy to control for omitted variables. Financial education as studied to date has serious limitations that have been masked by the apparently larger effects in correlational studies. We envisage a reduced role for financial education that is not elaborated or acted upon soon afterward. We suggest a real but narrower role for “just in time” financial education tied to specific behaviors it intends to help. We conclude with a discussion of the characteristics of behaviors that might affect the policy maker’s mix of financial education, choice architecture, and regulation as tools to help consumer financial behavior.

Employee Voice and Silence

Abstract: When employees voluntarily communicate suggestions, concerns, information about problems, or work-related opinions to someone in a higher organizational position, they are engaging in upward voice. When they withhold such input, they are displaying silence and depriving their organization of potentially useful information. In this article, I review the current state of knowledge about the factors and motivational processes that affect whether employees engage in upward voice or remain silent when they have concerns or relevant information to share. I also review the research findings on the organizational and individual effects of employee voice and silence. After presenting an integrated model of antecedents and outcomes, I offer some potentially fruitful questions for future research.

Public Opinion on Automated Driving: Results of an International Questionnaire Among 5,000 Respondents

Abstract: This study investigated user acceptance, worries, and willingness to buy partially, highly, and fully automated vehicles. By means of a 63-question Internet-based survey, we collected 5,000 responses from 109 countries (40 countries with at least 25 respondents). We determined cross-national differences, and assessed correlations with personal variables, such as age, gender, and personality traits as measured with a short version of the Big Five Inventory. Results showed that respondents, on average, found manual driving the most enjoyable mode of driving. Responses were diverse: 22% of the respondents did not want to pay more than $0 for a fully automated driving system, whereas 5% indicated they would be willing to pay more than $30,000 for it, and 33% indicated that fully automated driving would be highly enjoyable. 69% of respondents estimated that fully automated driving will reach a 50% market share between now and 2050. Respondents were found to be most concerned about software hacking/misuse, and were also concerned about legal issues and safety. More neurotic people were slightly less comfortable about data transmitting, whereas agreeable persons were slightly more comfortable with that. The more developed countries (in terms of accident statistics, education, and income) were less comfortable with their vehicle transmitting data, with cross-national correlations between ρ= -0.80 and ρ= -0.90. The present results indicate the major areas of promise and concern among the international public, and could be useful for vehicle developers and other stakeholders.

The Asset Pricing Implications of Government Economic Policy Uncertainty

Abstract: Using the Baker, Bloom, and Davis (2013) news-based measure to capture economic policy uncertainty (EPU) in the United States, we find that EPU positively forecasts log excess market returns. A one-standard deviation increase in EPU is associated with a 1.5% increase in forecasted 3-month abnormal returns (6.1% annualized). Furthermore, innovations in EPU earn a significant negative risk premium in the Fama French 25 size-momentum portfolios. Among the Fama French 25 portfolios formed on size and momentum returns, the portfolio with the greatest EPU beta underperforms the portfolio with the lowest EPU beta by 5.53% per annum, controlling for exposure to the Carhart four factors as well as implied and realized volatility. These findings suggest that EPU is an economically important risk factor for equities.

Financial Networks and Contagion

Abstract: We model contagions and cascades of failures among organizations linked through a network of financial interdependencies. We identify how the network propagates discontinuous changes in asset values triggered by failures (e.g., bankruptcies, defaults, and other insolvencies) and use that to study the consequences of integration (each organization becoming more dependent on its counterparties) and diversification (each organization interacting with a larger number of counterparties). Integration and diversification have different, nonmonotonic effects on the extent of cascades. Initial increases in diversification connect the network which permits cascades to propagate further, but eventually, more diversification makes contagion between any pair of organizations less likely as they become less dependent on each other. Integration also faces tradeoffs: increased dependence on other organizations versus less sensitivity to own investments. Finally, we illustrate some aspects of the model with data on European debt cross-holdings.

Comparative Politics and the Synthetic Control Method

Abstract: In recent years a widespread consensus has emerged about the necessity of establishing bridges between quantitative and qualitative approaches to empirical research in political science. In this article, we discuss the use of the synthetic control method as a way to bridge the quantitative/qualitative divide in comparative politics. The synthetic control method provides a systematic way to choose comparison units in comparative case studies. This systematization opens the door to precise quantitative inference in small-sample comparative studies, without precluding the application of qualitative approaches. Borrowing the expression from Sidney Tarrow, the synthetic control method allows researchers to put "qualitative flesh on quantitative bones.'' We illustrate the main ideas behind the synthetic control method by estimating the economic impact of the 1990 German reunification on West Germany.

Explicating Open Innovation: Clarifying an Emerging Paradigm for Understanding Innovation

Abstract: We explore the growth, scope and impact of the academic literature that has arisen since the publication of Open Innovation back in 2003. Moreover, we further clarify and develop the conceptualization of open innovation, which we define as a distributed innovation process based on purposively managed knowledge flows across organizational boundaries, using pecuniary and non-pecuniary mechanisms in line with the organization's business model. On this basis, we then discuss divergent views on open innovation and we call for greater consistency in future research. Next, we address some of the critiques on the notion and development of open innovation as they have emerged in the literature so far. Finally, we consider the progress open innovation research has made, relative to the research agenda identified in Chesbrough, Vanhaverbeke, and West (2006), and extend the possible research subjects and units of analysis.

Algorithm Aversion: People Erroneously Avoid Algorithms after Seeing Them Err

Abstract: Research shows that evidence-based algorithms more accurately predict the future than do human forecasters. Yet, when forecasters are deciding whether to use a human forecaster or a statistical algorithm, they often choose the human forecaster. This phenomenon, which we call algorithm aversion, is costly, and it is important to understand its causes. We show that people are especially averse to algorithmic forecasters after seeing them perform, even when they see them outperform a human forecaster. This is because people more quickly lose confidence in algorithmic than human forecasters after seeing them make the same mistake. In five studies, participants either saw an algorithm make forecasts, a human make forecasts, both, or neither. They then decided whether to tie their incentives to the future predictions of the algorithm or the human. Participants who saw the algorithm perform were less confident in it, and less likely to choose it over an inferior human forecaster. This was true even among those who saw the algorithm outperform the human.

Ride on! Mobility Business Models for the Sharing Economy

Abstract: The public perception of shared goods has changed substantially in the past few years. While co-owning properties has been widely accepted for a while (e.g., timeshares), the notion of sharing bikes, cars, or even rides on an on-demand basis is just now starting to gain widespread popularity. The emerging “sharing economy” is particularly interesting in the context of cities that struggle with population growth and increasing density. While sharing vehicles promises to reduce inner-city traffic, congestion, and pollution problems, the associated business models are not without problems themselves. Using agency theory, in this article we discuss existing shared mobility business models in an effort to unveil the optimal relationship between service providers (agents) and the local governments (principals) to achieve the common objective of sustainable mobility. Our findings show private or public models are fraught with conflicts, and point to a merit model as the most promising alignment of the strengths of agents and principals.

The Absence of the African-American Owned Business: An Analysis of the Dynamics of Self-Employment

Abstract: Estimates from the Panel Study of Income Dynamics (PSID) indicate that African-American men are one-third as likely to be entrepreneurs as white men. The large discrepancy is due to a black transition rate into self-employed business ownership that is approximately one half the white rate and a black transition rate out of self-employed business ownership that is twice the white rate. Using a new variation of the Blinder-Oaxaca decomposition technique, I find that racial differences in asset levels and probabilities of having self-employed fathers explain a large part of the black/white gap in the entry rate, but almost none of the gap in the exit rate.

Uncertainty, Financial Frictions, and Investment Dynamics

Abstract: Micro- and macro-level evidence indicates that fluctuations in idiosyncratic uncertainty have a large effect on investment; the impact of uncertainty on investment occurs primarily through changes in credit spreads; and innovations in credit spreads have a strong effect on investment, irrespective of the level of uncertainty. These findings raise a question regarding the economic significance of the traditional "wait-and-see" effect of uncertainty shocks and point to financial distortions as the main mechanism through which fluctuations in uncertainty affect macroeconomic outcomes. The relative importance of these two mechanisms is analyzed within a quantitative general equilibrium model, featuring heterogeneous firms that face time-varying idiosyncratic uncertainty, irreversibility, nonconvex capital adjustment costs, and financial frictions. The model successfully replicates the stylized facts concerning the macroeconomic implications of uncertainty and financial shocks. By influencing the effective supply of credit, both types of shocks exert a powerful effect on investment and generate countercyclical credit spreads and procyclical leverage, dynamics consistent with the data and counter to those implied by the technology-driven real business cycle models.

Corporate Social Responsibility and Stock Price Crash Risk

Abstract: This study investigates whether corporate social responsibility (CSR) mitigates or contributes to stock price crash risk. Crash risk, defined as the conditional skewness of return distribution, captures asymmetry in risk and is important for investment decisions and risk management. If socially responsible firms commit to a high standard of transparency and engage in less bad news hoarding, they would have lower crash risk. However, if managers engage in CSR to cover up bad news and divert shareholder scrutiny, CSR would be associated with higher crash risk. Our findings support the mitigating effect of CSR on crash risk. We find that firms' CSR performance is negatively associated with future crash risk after controlling for other predictors of crash risk. The result holds after we account for potential endogeneity. Moreover, the mitigating effect of CSR on crash risk is more pronounced when firms have less effective corporate governance or a lower level of institutional ownership. The results are consistent with the notion that firms that actively engage in CSR also refrain from bad news hoarding behavior and thus reducing crash risk. This role of CSR is particularly important when governance mechanisms, such as monitoring by boards or institutional investors, are weak.

Partial Least Squares Structural Equation Modeling (PLS-SEM): A Useful Tool for Family Business Researchers

Abstract: Structural equation modeling (SEM) has become a mainstream method in many fields of business research, but its use in family business research remains in its infancy. This lag in SEM’s application holds especially true for partial least squares SEM (PLS-SEM), an alternative to covariance-based SEM, which provides researchers with more flexibility in terms of data requirements, model complexity and relationship specification. This article draws attention to PLS-SEM as an opportunity to advance the development and testing of theory in family business research by providing a non-technical introduction into the basic concepts and issues of PLS-SEM, bearing the needs of potential users in mind. To this end, a systematic procedure for PLS-SEM results evaluation is presented and applied to an annotated example. The article also illustrates the analysis of mediating effects, which researchers are increasingly testing in their models.

Is Bitcoin a Real Currency? An Economic Appraisal

Abstract: A bona fide currency functions as a medium of exchange, a store of value, and a unit of account, but bitcoin largely fails to satisfy these criteria. Bitcoin has achieved only scant consumer transaction volume, with an average well below one daily transaction for the few merchants who accept it. Its volatility is greatly higher than the volatilities of widely used currencies, imposing large short-term risk upon users. Bitcoin’s daily exchange rates exhibit virtually zero correlation with widely used currencies and with gold, making bitcoin useless for risk management and exceedingly difficult for its owners to hedge. Bitcoin prices of consumer goods require many decimal places with leading zeros, which is disconcerting to retail market participants. Bitcoin faces daily hacking and theft risks, lacks access to a banking system with deposit insurance, and it is not used to denominate consumer credit or loan contracts. Bitcoin appears to behave more like a speculative investment than a currency.

The psychology of entrepreneurship

Abstract: In this review of the psychology of entrepreneurship, we first present meta-analytic findings showing that personality dimensions, such as (general) self-efficacy and need for achievement, and entrepreneurial orientation are highly associated with entrepreneurship (business creation and business success). We then discuss constructs that were developed within entrepreneurship research, such as entrepreneurial alertness, business planning, financial capital as resources, and entrepreneurial orientation, and how they can be better understood by taking a psychological perspective. Next, we elaborate how traditional psychological constructs have been utilized in entrepreneurship and how this may enhance our knowledge in industrial and organizational psychology (with respect to, for example, knowledge, practical intelligence, cognitive biases, goals and visions, personal initiative, passion, and positive and negative affect). Finally, we provide an overall framework useful for the psychology of entrepreneurship...

Money Creation in the Modern Economy

Abstract: This article explains how the majority of money in the modern economy is created by commercial banks making loans. Money creation in practice differs from some popular misconceptions — banks do not act simply as intermediaries, lending out deposits that savers place with them, and nor do they ‘multiply up’ central bank money to create new loans and deposits. The amount of money created in the economy ultimately depends on the monetary policy of the central bank. In normal times, this is carried out by setting interest rates. The central bank can also affect the amount of money directly through purchasing assets or ‘quantitative easing’.

OR/MS Models for Supply Chain Disruptions: A Review

Abstract: We review the OR/MS literature on supply chain disruptions in order to take stock of the research to date and to provide an overview of the research questions that have been addressed. We first place disruptions in the context of other forms of supply uncertainty and discuss common modeling approaches. We then discuss nearly 150 scholarly works on the topic, organized into six categories: evaluating supply disruptions; strategic decisions; sourcing decisions; contracts and incentives; inventory; and facility location. We conclude with a discussion of future research directions.

Environmental Regulation and Competitiveness: Empirical Evidence on the Porter Hypothesis from European Manufacturing Sectors

Abstract: This paper represents an empirical investigation of the “weak” and “strong” Porter Hypothesis (PH) focusing on the manufacturing sectors of European countries between 1997 and 2009. By and large, the literature has analyzed the impact of environmental regulation on innovation and on productivity generally in separate analyses and mostly focusing on the USA. The few existing studies focusing on Europe investigate the effect of environmental regulation either on green innovation or on performance indicators such as exports. We instead look at overall innovation and productivity impact that are the most relevant indicators for the “strong” PH. This approach allows us to account for potential opportunity costs of induced innovations. As a proxy of environmental policy stringency we use pollution abatement and control expenditures (PACE), which represent one of the few indicators available at the sectoral level. We remedy upon its main drawback, that of potential endogeneity of PACE, by adopting an instrumental variable estimation approach. We find evidence of a positive impact of environmental regulation on the output of innovation activity, as proxied by patents, thus providing support in favor of the “weak” PH in line with most of the literature. On the other front, we find no evidence in favor or against the “strong” PH, as productivity appears to be unaffected by the degree of pollution control and abatement efforts.

Resource-Based Theory in Marketing

Abstract: The use of resource-based theory (RBT) in marketing research has increased by more than 500% in the past decade, which suggests its importance as a framework for explaining and predicting competitive advantages and performance outcomes. This article provides a comprehensive review of RBT, including a contemporary definitional foundation for relevant terms and assumptions and a synthesis of empirical findings from marketing literature. This multidimensional analysis of RBT also evaluates extant marketing research according to four perspectives: the marketing domains that use RBT, the characteristics and uses of market-based resources that differentiate it from other research contexts, the extension of RBT to the “marketing exchange” as a unit of analysis, and the connection of RBT to related theories. This analysis also reveals some common pitfalls associated with prior research, offers tentative guidelines on how to improve the use of RBT in marketing, and suggests research directions to advance the theorization and empirical testing of RBT in the future.

Social Heuristics Shape Intuitive Cooperation

Abstract: Cooperation is central to human societies. Yet relatively little is known about the cognitive underpinnings of cooperative decision-making. Does cooperation require deliberate self-restraint? Or is spontaneous prosociality reined in by calculating self-interest? Here we present a theory of why (and for whom) intuition favors cooperation: cooperation is typically advantageous in everyday life, leading to the formation of generalized cooperative intuitions. Deliberation, by contrast, adjusts behavior towards the optimum for a given situation. Thus, in one-shot anonymous interactions where selfishness is optimal, intuitive responses tend to be more cooperative than deliberative responses. We test this “Social Heuristics Hypothesis” by aggregating across every cooperation experiment using time pressure we conducted over a two-year period (15 studies and 6,910 decisions), as well as performing a novel time pressure experiment. Doing so demonstrates a positive average effect of time pressure on cooperation. We also find substantial variation in this effect, and show that this variation is partly explained by previous experience with one-shot lab experiments.

Inside the 'Black Box' of Sell-Side Financial Analysts

Abstract: Our objective is to penetrate the “black box” of sell-side financial analysts by providing new insights into the inputs analysts use and the incentives they face. We survey 365 analysts and conduct 18 follow-up interviews covering a wide range of topics, including the inputs to analysts’ earnings forecasts and stock recommendations, the value of their industry knowledge, the determinants of their compensation, the career benefits of Institutional Investor All-Star status, and the factors they consider indicative of high-quality earnings. One important finding is that private communication with management is a more useful input to analysts’ earnings forecasts and stock recommendations than their own primary research, recent earnings performance, and recent 10-K and 10-Q reports. Another notable finding is that issuing earnings forecasts and stock recommendations that are well below the consensus often leads to an increase in analysts’ credibility with their investing clients. We conduct cross-sectional analyses that highlight the impact of analyst and brokerage characteristics on analysts’ inputs and incentives. Our findings are relevant to investors, managers, analysts, and academic researchers.

Knowledge Reuse for Innovation

Abstract: This study was conducted to better understand the knowledge reuse process when radical innovation (e.g., experiments to prepare for human exploration of Mars) is expected. The research involved detailing the knowledge reuse process in six case studies varying in degree of innovation. Across the six cases, a six-stage reuse-for-innovation process was identified consisting of three major actions: reconceptualize the problem and approach, including deciding to search for others’ ideas to reuse; search-and-evaluate others’ ideas to reuse; and develop the selected idea. Findings include (1) the need for an insurmountable gap in performance to stimulate the decision to reuse others’ knowledge; (2) the critical importance of an adapter to bridge the idea source and recipient; (3) three layers of search-and-evaluate activities in which the first layer of scanning to find ideas to reuse and the last layer of detailed analysis of ideas are bridged by a layer of brief evaluations of ideas assessing the presence (or absence) of targeted information about each idea; and (4) the differential use of metaknowledge about each idea to facilitate proceeding through each search-and-evaluate layer. In addition, reusers in the more (versus less) innovative cases redefined problems at the outset in nontraditional ways using analogies and extensions, rather than accepting the preexisting problem definition; used a substantially broader search strategy with a greater variety of search methods; and worked more closely with adapters during the latter stages of the reuse process.

The Economics of Bitcoin and Similar Private Digital Currencies

Abstract: Recent innovations have made it feasible to transfer private digital currency without the intervention of an institution. A digital currency must prevent users from spending their balances more than once, which is easier said than done with purely digital currencies. Current digital currencies such as Bitcoin use peer-to-peer networks and open-source software to stop double spending and create finality of transactions. This paper explains how the use of these technologies and limitation of the quantity produced can create an equilibrium in which a digital currency has a positive value. This paper also summarizes the rise of 24/7 trading on computerized markets in Bitcoin in which there are no brokers or other agents, a remarkable innovation in financial markets. I conclude that exchanges of foreign currency may be the obvious way in which use of digital currencies can become widespread and that Bitcoin is likely to limit governments’ revenue from inflation.