Showing papers on "Managerial economics published in 2000"

Development theory and the economics of growth

Abstract: Why are some countries richer than others? Why do some economies grow so much faster than others do? Do economies tend to converge at similar levels of per capita income? Or is catching up simply impossible? These questions have vast implications for human welfare. After a period of lack of interest in growth theory, they are back on the research agenda of mainstream economics. They have also been at the heart of development economics since its inception some decades ago. This book endeavors to answer such questions by blending classical contributions to development theory with recent developments in the economics of growth.The unifying theme is that early theoretical insights and accumulated empirical knowledge of development economics have much to offer to research in the theory and empirics of economic growth. With the help of a number of recent contributions, the ideas and insights of the classical literature in development economics can be given simple and rigorous formulations. Together, they amount to an approach to growth theory that can overcome the long-recognized empirical shortcomings of neoclassical growth economics, while being free from the objections that can be raised against the new brand of endogenous growth theory.In addition to an original thesis on the contribution that early development theory can make to the research program of modern growth economics, the book provides professional and research economists and graduate students with an evaluation of the strengths and limitations of the different strands of inquiry in the modern economics of growth. In addition it presents findings on comparative growth performance across countries.Jaime Ros is Professor of Economics and Faculty Fellow of the Helen Kellogg Institute of International Studies, University of Notre Dame.

Does economics have an effect?: towards an economics of economics

Abstract: Due to its formality and highly analytic thinking, economics is often attributed a leading role among the social sciences and a prominent position as contributor to economic or social issues in the real world. Fact is, however, that the empirical proof for such a claim is either missing or anecdotal. This paper aims to outline the "economics of economics". It surveys and compares approaches of impact measurement such as a production function of economics or the demand and supply of trained economists and discusses the determinants of the strength of the influence of economics. It furthermore discriminates between the impact of economic ideas versus that of economists as scientists or politicians. Economists tend to display a remarkable degree of self-confidence. They do so when they claim that their analytical approach - often relying on a formal language - makes economics the "Queen of the Social Sciences". Unsurprisingly, they also take it for granted that economics contributes to the solution of social problems. And yet, it is this point where they are misled. While in other areas of economics they would not easily accept that looking at the input side allows the effect on output to be assessed, they do so when it comes to evaluating the effects of economic theory on economic or political development. It is striking that a systematic analysis of the impact of economic ideas is lacking. Instead, economists refer to their participation in advisory boards, i.e. the input side of the political

Foreign Direct Investment in India: Issues and Problems

Abstract: In this paper, we have attempted to identify the issues and problems associated with India's current foreign direct investment regime, and more importantly the other associated factors responsible for India's unattractiveness as an investment location. Despite India offering a large domestic market, rule of law, low labor costs, and a well working democracy, her performance in attracting FDI flows has been far from satisfactory. A restrictive FDI regime, high import tariffs, exit barriers for firms, stringent labor laws, poor quality infrastructure, centralized decision-making processes, and a very limited scale of export processing zones make India an unattractive investment location.

Classic Papers in Natural Resource Economics

Abstract: Preface Acknowledgements Notes on the Contributors Classic Papers in Natural Resource Economics: An Overview C.Gopalakrishnan PART I: THE INTERTEMPORAL PROBLEM The Social Time Preference Discount Rate in Cost Benefit Analysis M.S.Feldstein On the Social Rate of Discount W.F.Baumol Uncertainty and the Evaluation of Public Investment Decisions K.J.Arrow & R.C.Lind Environment Preservation, Uncertainty and Irreversibility K.J.Arrow & A.C.Fisher PART II: EXTERNALITIES AND MARKET FAILURE The Problem of Social Cost R.Coase Externality J.Buchanan & W.C.Stubblebine On Divergences Between Social Cost and Private Cost R.Turvey PART III: PROPERTY RIGHTS, INSTITUTIONS AND PUBLIC CHOICE Toward a Theory of Property Rights H.Demsetz The Economic Theory of a Common Property Resource: The Fishery H.S.Gordon Politics, Policy and the Pigovian Margins J.Buchanan PART IV: THE ECONOMICS OF EXHAUSTIBLE RESOURCES The Economics of Exhaustible Resources H.Hotelling The Economics of Resources or the Resources of Economics R.M.Solow PART V: THE ECONOMICS OF RENEWABLE RESOURCES Economics of Production from Natural Resources V.L.Smith Economics of Forestry in an Evolving Society P.A.Samuelson Further Readings Index

Is there a role for transaction cost economics if we view firms as complex adaptive systems

Abstract: This article assesses the usefulness of transaction cost economics when we view economic organizations, such as firms as complex adaptive systems. Modern complexity science is a radically different in orientation to neoclassical economics, which deals with decision making in contexts that are presumed to be simple and, therefore, disconnected from complex reality. However transaction cost economics can be related to aspects of modern complexity science: bounded rationality, opportunism, and asset specificity are all associated with behavioral complexity. Furthermore, the emphasis of transaction cost economics on hierarchy and organizational rather than technological considerations is also consistent with complexity science. Drawing on literature in psychological economics, this article synthesizes transaction cost economics with aspects of complexity science in a manner that offers a new research agenda, not only in the context of the organization of production but in economics generally. Such theoretical developments are vital if policy makers are to have at their disposable analytical perspectives that are coherent and applicable in complex historical settings. (JEL A12, A13, D23, L14, L22, O31, Z13).

A Competence-Based Analysis of Key account management: Implications for a Customer-Focused Organization

Abstract: Account management has a rich tradition starting in the early 1960’s. At the same time, the concept is still ill-defined and under-researched. Consequently, some basic research questions remain unanswered. Is account management sales driven, marketing-driven or a strategy-driven process? Should the primary focus be on the management of sales activities towards important customers or should account management focus on relationship building and value creation in order to create a competitive advantage? The authors take a new perspective and examine account management from a (strategic) competence-based point of view. They study the relationship between account management and competence leverage. The central thesis is that account management is more strategically oriented than sales-oriented or relationship-oriented. Finally, they introduce the concept of strategic account and strategic account management and propose an agenda for further research in this domain. INTRODUCTION Over the last 10 years, widespread attention has been given by both marketing academics and practitioners to relationship marketing (RM) (Day 1999; Dwyer et al. 1987; Håkansson and Snehota 2000; Morgan and Hunt 1994; Webster 1992) and to resource-based view (RBV) and competence-based management (CBM) (Hamel and Heene 1994; Sanchez and Heene 1997, 2000, 2003). As a consequence, one would expect to find a rich body of literature on theoretical developments and empirical research in the domain of building and leveraging customer relationships with important clients in business markets: so-called account management (AM). One can however observe that only limited academic research has been done from a relationship marketing perspective on AM (Gosselin 2002; Homburg et al. 2002), and nearly no research has been undertaken on AM from a CBM perspective (Wilson and Millman 1998). 13 A Competence-Based Analysis of Account Management: Implications for a Customer-Focused Organization The Journal of Selling and Major Account Management In spite of the recognition of the important link between CBM and relationship marketing in business markets and the importance stressed by scholars on the interaction between the buyer/ seller dyads, theoretical driven research in the domain of account management in general and more specific in relationship to CBM, is still in its early stages. It is only recently that quantitative based research has been reported in leading academic journals (Arnold et al. 2001; Birkinshaw et al. 2001; Homburg et al. 2002; Workman et al. 2003). The main objectives of this study are to: (1) synthesize the current body of knowledge on account management as found, (2) analyze the relationship between account management and CBM, (3) suggest an agenda for further research on the relationship between account management and CBM. CONCEPTS BEHIND ACCOUNT MANAGEMENT Mainly due to the impact of globalization, the maturity of business markets in most developed countries, the increase of the buying power of the customers (McDonald and Rogers 1999) and the impact of the information and communication technologies and mass customisation (Pine 1992), companies are faced with high levels of competition in a rapidly changing environment. In order to bring stability to their operations, to respond quickly and flexibly to accelerating change in technology, competition and customer preferences, companies have tried to create new business organizations (Homburg et al. 2000). These new forms of organization emphasis partnerships and strategic alliances with customers and suppliers, instead of putting the focus on market transactions (Day 1999; Doz and Hamel 1998; Webster 1992). One type of sellerinitiated strategic alliance, applied in situations where the structural change is due to supply base rationalization, is account management (Homburg et al. 2000; Millman 1994). Due to the existing relationship between: customer retention, customer satisfaction and customer loyalty with company performance and shareholder value creation (Reichheld 2001, 1993), marketing academics have turned their attention to study the subject of account management as a way to implement long-term buyer/seller relationships in business markets. Account management from this relationship marketing perspective occurs as the natural development of a customer focused organization (Capon 2001; Day 1999; McDonald et al. 1997). The concept of account management emerged in de mid 1970,s because several environmental conditions stimulated companies to change the way they sold their products to a limited number of large customers. Those conditions were: (1) increased concentration of buying companies accounting for a large portion of the sales and increased pressure to improve services, (2) increasing geographic dispersion of buyers of the same company, (3) increased pressure on cost and communication, (4) increasing desire to develop partnerships, (5) increased sophistication of buyers. To address these new pressures, some companies assigned one salesperson the responsibility to manage and develop a limited number of key clients. Very rapidly, it could be observed that these sales people did much more than just selling products. They increasingly became in charge of understanding the customer,s operations in order to increase the efficiency and productivity of these important customers. They took the responsibility for selling, delivery, 14 Vol 5, No 1, 2003 coordination of activities, monitoring progress of orders, monitoring inventory, assure the installation, handling billing and many other activities (e.g. Shapiro and Posner 1976). These early attempts to address the needs of a limited number of key clients proved to be successful. Benefits both for the customer as for the suppliers were reported. The customer would benefit from a single interface to resolve problems combined with uniform prices leading to better cost control, increased availability, reliability, and delivery. The supplier would benefit from insured, continued orders and a reduction of selling costs (e.g. Pegram 1972). The evolution of this new type of sales organization resulted in two schools of thought. The first school takes an operational sales-driven approach. This school emphasizes “how to do it”, but provides little theoretical or empirical underpinnings. We refer to this school as the “Key account selling”-school (KAS). The second school takes a marketing relationship approach. This school emphasizes long-term relationships with key customers. We refer to this school as the “Key account management”-school (KAM). Under KAS, the objectives are simple and trivial: sell more and make more profit with your existing customers who already present a major part of the revenues of the company. Because of this primary sales driven approach, the emphasis towards key customers is operational and short-term sales driven. Relationship building is here a means to increase sales. The KAS approach does not focus on strategic objectives such as the creation of entry barriers. Key account selling started to appear in the research literature in the mid 70,s in the USA (Weilbaker and Weeks 1997). When an industry or a company faces a growth decline, companies start to realize more than ever the benefits of customer loyalty: keeping existing customers is more cost effective than systematically finding new ones (Reichheld 1993). The globalization of the economy, the maturity of most business markets in the developed world and the increased power of customers because of mature markets, have all contributed to a rethinking of the way companies approach and service their customers. Companies realize that not building a competitive advantage with key customers can have a dramatic impact on revenues and profitability if a key account decides to switch suppliers. The second school (i.e. KAM) takes a more relationship marketing approach. Its purpose is to create strategic alliances with key customers and suppliers in order to become the sole or one of the main suppliers. Through those strategic alliances, companies want to create a competitive advantage and bring stability to their operations when faced with high levels of competition in a rapidly changing environment. The purpose of KAM is to create a long-term relationship with key customers by giving them special attention through a better and dedicated service and customer specific solutions compared to other customers (McDonald and Rogers 1999). The business logic behind this approach is that those key customers represent both a major opportunity, for cost reduction and profitable growth, and as a major risk if they stop buying. As a result, companies allocate special and sufficient resources to satisfy key customers in order to create entry barriers and switching barriers. A company should therefore identify its key customers; set-up a dedicated marketing and sales channel and finally manage the interaction with the most important customer from a strategic point of view. 15 A Competence-Based Analysis of Account Management: Implications for a Customer-Focused Organization The Journal of Selling and Major Account Management 16 Vol 5, No 1, 2003 KAS and KAM are marketing approaches found primarily in business markets (Capon 2001). This is due to the special structure of the customer base in these types of markets. Business markets typically have a limited number of customers and the structure of the customer base follows a Pareto distribution: 20% of the customers generate 80% of revenues (Sheth and Parvatiyar 2002). The AM concept is however not restricted to business markets. It progressively becomes possible to apply some of the concepts to consumer markets as well (Peppers and Rogers 1997). The existence of the two schools of thought creates confusion as to what the nature, processes, and objectives of account management are. However, while being different, the terms KAM and KAS are used

Environmental Economics for Non-Economists

Abstract: With the rise in the significance of environmental issues, many professionals and students outside the discipline of economics have taken an interest in environmental economics. However, there are few publications that cater for this type of reader. The invaluable textbook is targeted at a broad range of disciplines, including engineering, business, forestry and agriculture. The following characteristics set the book apart from others: it does not assume a previous knowledge of economics; it deals with global environmental problems, with emphasis on Third World environmental issues; it includes material on the emerging discipline of ecological economics; and it incorporates simple spreadsheet-based examples and exercises to reinforce the concepts taught.

Economics and Business

Abstract: ‘… the Learned give up the evidence of their senses to preserve the coherence of the ideas of their imagination.

Towards a theory-based measure of purchase variation

Abstract: Els Gijsbrechts is Professor of Marketing at the University of Antwerp and the Catholic University of Mons – FUCAM, Prinsstraat 13, 2000 Antwerp, Belgium, + 32 3 220 41 08, els.gijsbrechts@ufsia.ac.be. Katia Campo is Senior Manager Modeling and Analytics at Accuris Group Belgium, and part-time Marketing Professor at the University of Antwerp, Accuris and University of Antwerp – UFSIA, Plantin & Moretuslei 220 b10, 2018 Antwerp, Belgium, + 32 486 89 61 25, katia.campo@accuris.com. Paricia Nisol is reseach assistant at Ghent University – Marketing Department, Hoveniersberg 4, 9000 Ghent, Belgium, +32 9 264 35 28, patricia.nisol@rug.ac.be.

Decisions in economics and finance

Abstract: Decisions in Economics and Finance is the official publication of the Association for Mathematics Applied to Social and Economic Sciences (AMASES). The journal provides a specialized forum for the publication of research in all areas of mathematics as applied to economics, finance, insurance, management, and social sciences. Primary emphasis is placed on original research exploring topics in mathematics or computational techniques that are explicitly motivated by or contribute to the analysis of economic or financial problems.

Economic Reforms and Constitutional Transition

Abstract: This paper studies the relationship between economic reform and constitutionaltransition, emphasizing that the competition between countries and within a country is the keyfactor pushing for constitutional transition. It compares Russia and China and analyses the charac-teristics and problems of the two models of transition. The conclusion is that economic transitionwill be captured by state opportunism under political monopoly. The dual track of economic transi-tion forces constitutional transition to incur very high long-run costs that surpass the short-runbenefits obtained by buying the support of the vested interests. Economic transition of the post-so-cialist countries is a convergence to the world economy governed by the WTO rules. It is not aninnovation leading to a different set of institutions.

The Early Development of Experimental Economics: The Influence of Game Theory

Abstract: An historical overview of experimental economics points out significant analogies between its origins and the contemporary emergence of game theory. In both cases, their effective introduction in economics was postponed until the 1960s. Such a delay cannot be ascribed to the supposed division between empirical and theoretical work but to the fact that in the 1950s experimental methodologies, such as game theory, were mainly developed by scholars of other social sciences which forced a re-examination of the prevailing postulates of economic theory. This interdisciplinary community gave rise to two different approaches: the socio-psychological one represented by experimental games, and the economic-managerial one represented by business games. Although both approaches were an outgrowth of game theory, the prevalence of the first had important consequences on subsequent developments.

Managerial economics : firms, markets, and business decisions

Abstract: PART ONE: INTRODUCTION PART TWO: DECISION ANALYSIS, TOOLS AND TECHNIQUES PART THREE: DEMAND AND COST ANALYSIS PART FOUR: MARKET STRUCTURE AND THEORIES OF THE FIRM PART FIVE: PRICING AND RELATED DECISIONS PART SIX: REGULATORY INTERVENTION PART SEVEN: ORGANIZATIONAL ARCHITECTURE

Environmental Risk Management and the Business Firm

Abstract: This chapter considers three matters that business firms whose activities can be dangerous for human health and the environment increasingly have to deal with: public disclosure of all health and environmental risks, direct involvement of stakeholders in the management of operations, and integration of health and environmental risk management with the management of other business risks. It summarizes recent managerial economics research on those matters and suggests some promising research areas. Ce chapitre considere trois questions qui preoccupent de plus en plus les firmes dont les activites font peser certains risques sur la sante humaine et l'environnement, soit la revelation au public de ces risques, l'implication directe de parties externes (assureurs, banquiers, representants du public, etc.) dans la gestion des operations, voire la planification strategique, et la gestion integree de tous les risques d'affaires. On resume les recentes percees de l'economie manageriale sur ces sujets, et l'on indique certaines pistes de recherche particulierement prometteuses.

Development and the environment: an introduction

Abstract: This paper has two objectives. First, it investigates some conceptual linkages between the sub‐disciplines of development economics and environmental economics. We find common methodological orientations, and shared interests in growth processes, resources and sustainability, international trade, market mechanisms and market failure, institutions, and co‐operative international behaviour. Second, it introduces the other papers that appear in this special issue, and sets them within the context of the common orientations and themes that have been identified here. Finally, we offer some recommendations for the design of syllabuses in the field of development and environmental economics.

The economics of tourism - Volume II

Abstract: Tourism is a major global industry and continues to expand at a rapid rate. This two volume collection of key published articles provides a comprehensive and much needed overview of the economics of tourism. Many of these articles are not readily available as they have been published in a range of non-economics journals. This reflects partly the presence of specialized journals devoted to tourism and partly the interdisciplinary nature of the subject. The editor has prepared an authoritative introduction, which not only presents an overview of the contents of each volume, introducing the subject to a wider non-specialist audience, but also provides insights and critical comments. The first volume concentrates on the basic economics of tourism. It covers the nature and role of tourism economics, determinants of tourism demand and the forecasting of such demand, supply-side aspects of tourism including industrial organization and issues in managerial economics, and public finance and public economics in relation to tourism. The second volume examines wider matters such as impact analyses of tourism, international tourism, tourism in developing countries and its role in economic development, and sustainability and environmental aspects of tourism. This book is a valuable reference for researchers, students and policymakers interested in tourism economics and tourism management, as well as non-specialists seeking an introduction to the subject.

Towards a new experimental economics: complex behaviour in bargaining

Abstract: In this paper we show that simple cognitive learning models, in a Computational Organization set-up can predict very well the bargaining behaviour observed in laboratory experiments with human players. Economist are interested in bargaining because transactions are not determined by market forces, and the because conceptually is the opposite to the idealized perfect competition equilibrium models. In fact in bargaining the complexity of the "institutional" setting depends upon the way the strategies of the negotiation is being unfolded all along the process. And this process is essential to export economic theory to managerial economics. Game theory has provided a rigorous conceptual frame to analyse strategic decisions and negotiations. But while game theory departs in this way from the competitive equilibrium both share three basic assumptions. The players are fully rational decision makers; they comprehend the faced situation and they know all the relevant institutional parameters.Experimental economics today has became a well accepted tool of economic research. To gain credit in managerial and applied economics many laboratory experiments on bargaining were design. Although some of the qualitative predictions of game theoretic models of bargaining have received some support, the existing models have performed poorly as point predictors. And experimental economics as conducted so far have faced the basic resistence: "I'm an economist; I don't accept anecdotal evidence". Most recently, this led to interesting research, Erev and Roth (1998), on how well simple but robust learning and coordination models can predict the observed experimental outcomes. The main findings being that institutional complexity can be induced by simple learning rules. And that more complex learning will deteriorate the predictive capacity of the model.We totally agree with their claim that "approximating the strategies used by players...will be the area of future research in which low-rationality adaptive game theory will need to interact most closely with cognitive theory". But as our paper demonstrates, bargaining and negotiation problems can be engineered even better by instruments developed in multiagent system theory. The agents are endorsed with behavioural rules empirically based, since they come from a previous bargaining experiment with human agents. Learning procedures as used in adaptive game theory, based on mechanical and optimizing players, will be replaced by cognitive learning and agenda based agents. And by so doing we argue computational organization theory will become a useful part of both economic theory and applied economics.

Structured Managerial Approach to Decision Processes Shaping Information Technology in Non-IT Organizations

Abstract: : This thesis purpose is to address the inter-disciplinary area of managerial decisions concerning IT structures in non-IT organizations. it is neither intended as a review of general managerial theory, nor aimed at the technical aspects involved. It rather approaches the IT support implementation and revising from a practical managerial perspective, attempting to systematize and streamline the decision-making process. Both managerial theory and technological dimension are considered equally important, but called upon only when and at the necessary extent they are required to lay the basis for making decisions. Between the large knowledge base in the managerial field on one hand, and the newer but dynamic IT-related sciences on the other, there is a gray area avoided by both management scholars and computer scientists. The first group sees IT as merely a tool, without accepting they have to deal with the transformational effect of technological developments. It is characteristic for the exponents of this school to label IT people as "technical" and to discount the specific impact of this particular technology on organizations. The second group, in a continual effort to keep up with the technological boom, is drifting away from the social and organizational issues of IT to focus on the technical side, without acknowledging other managerial dimensions than the one centered on the IT structures as its object. Both sides tend to focus research in their respective areas, leaving managers of non-IT organizations with an inadequate choice between the two approaches. This thesis is aimed towards bridging the resulting inter-disciplinary gap with a flowchart model for the decision process in the analyzed area, using as modules applicable techniques and methods from both managerial and computer science fields, presented in practical operational form.

Recognising the design in practice in service operations analysis

Abstract: Service operations contain numerous variables interacting simultaneously. At best management can provide guidelines to influence the behaviour of the system and monitor outcomes. The interface between the customer’s experience and the working of the service-delivery system cannot be precisely pre-planned or pre-specified. This contrasts with the success in designing product features for which the agreement on criteria can be pre-specified. Nevertheless it is possible to define the design of the guidelines for working the delivery system, if not the service experience itself, and this can be evaluated so as to give evidence of the successful working of the bargain between service delivery system and the customer satisfaction provided. The process for identifying this design-satisfaction relationship will be explained and illustrated. This will show the value of the identification of this relationship in the creation of successful service systems.

Consolidation in the Banking Industry: A Homework Assignment

Abstract: This paper introduces ideas on how to incorporate the internet and spreadsheets as research tools in the study of the effects of consolidation, specifically the effects of consolidation in the banking industry. A homework assignment is described that can be used in any course dealing with consolidation (e.g. managerial economics or money and banking). The homework assignment outlines procedures that can be used to: access insured commercial bank data for a specific state, create a chart to plot return on assets by the natural log of total assets, and run a regression of return on assets as a function of the natural log of total assets using Microsoft Excel.

Contemporary Issues in Empirical Public Finance

Abstract: The paper provides an overview of reasons for and nature of dramatic changes that have taken place in public economics in the past few decades. It gives a brief account of innovations in public economics that have taken place in large part due to developments in economic theory. It is argued that tools of information theory and game theory have significantly altered the theory and practice of public economics. Developments in public choice theory and inter temporal analysis also had a far reaching impact on thinking about public economics issues in the design of public policy. These developments in the new public economics have implications for empirical public economics. Some of these implications are taken up by eight papers in the symposium on public economics. The papers cover the topics of the targeting of income transfers to the disabled; the control of tax evasion; the efficiency of government; the tendency of the political process to be benevolent towards the electorate; and, the role of government in fostering economic growth.