interest rates and money in the measurement of monetary policy over the last 25 years a set of influential studies has placed interest rates at the heart of analyses that interpret and evaluate monetary policies in light of this work the federal reserve s recent policy of quantitative easing with its goal of affecting the supply of liquid assets appears to be a radical break from standard practice alternatively one could posit that the monetary aggregates when measured properly never lost their ability to explain aggregate fluctuations and for this reason represent an important omission from standard models and policy discussions in this context the new policy initiatives can be characterized simply as conventional attempts to increase money growth this view is supported by evidence that superlative divisia measures of money often help in forecasting movements in key macroeconomic variables moreover the statistical fit of a structural vector autoregression deteriorates significantly if such measures of money are excluded when identifying monetary

evaluating leases with complex operating options abstract the paper deals with the numerical valuation of leasing contracts with a variety of embedded operating options unlike earlier work which either ignores such options or focuses on only one type of operating option in isolation this paper recognizes that leasing is a context in which complex options typically occur as well as the importance of using computational methods to quantify the interactions among several options present in combination it describes a contingent claims analysis cca of operating lease options and suggests a cca based numerical analysis method for valuing leasing contracts with multiple such options a numerical leasing example with the options to cancel the lease early extend its life and purchase the leased asset is presented for illustration

optimal consumption and investment with transaction costs and multiple risky assets we consider the optimal intertemporal consumption and investment policy of a constant absolute risk aversion cara investor who faces fixed and proportional transaction costs when trading multiple risky assets we show that when asset returns are uncorrelated the optimal investment policy is to keep the dollar amount invested in each risky asset between two constant levels and upon reaching either of these thresholds to trade to the corresponding optimal targets an extensive analysis suggests that transaction cost is an important factor in affecting trading volume and that it can significantly diminish the importance of stock return predictability as reported in the literature this paper studies the optimal intertemporal consumption and investment policy of an investor with a constant absolute risk aversion cara preference and an infinite horizon the investor can trade in one risk free asset and n 1 risky assets in contrast to the standard setting the investor faces both fixed and proportional transaction costs in trading any of these risky assets in the absence of transaction costs and when risky asset prices follow geometric brownian motions the optimal investment policy is to keep a constant dollar amount in each risky asset as shown by merton 1971 this trading strategy requires continuous trading in all the risky assets in addition the optimal consumption is affine in the total wealth in the presence of transaction costs however trading continuously in a risky asset would incur infinite transaction costs therefore risky assets are traded only infrequently in this case the literature on optimal consumption and investment with multiple risky assets subject to transaction costs is limited leland 2000 examines a multiasset investment fund that is subject to transaction costs and capital gains taxes under the assumption that the fund has an exogenous target for each risky asset he develops a relatively simple numerical procedure to compute the no transaction region akian menaldi and sulem 1996 consider an optimal consumption and investment problem with proportional transaction costs for

leverage management in a bull bear switching market abstract should an investor unwind his portfolio in the face of changing economic conditions we study an investor s optimal trading strategy with finite horizon and transaction costs in an economy that switches stochastically between two market conditions we fully characterize the investor s time dependent investment strategy in a bull market and a bear market we show that when the market switches from the bull market to the bear market complete deleveraging reducing the degree of leverage or keeping leverage unchanged may all be optimal strategies subject to underlying market conditions we further show that the investor may optimally keep leverage unchanged in the bear market particularly so for illiquid asset on the other hand a lower borrowing cost in the bear market would prevent sell offs

the federal funds rate and the channels of monetary transmission the authors show that the interest rate on federal funds is extremely informative about future movements of real macroeconomic variables then they argue that the reason for this forecasting success is that the funds rate sensitively records shocks to the supply of bank reserves that is the funds rate is a good indicator of monetary policy actions finally using innovations to the funds rate as a measure of changes in policy the authors present evidence consistent with the view that monetary policy works at least in part through credit i e bank loans as well as through money i e bank deposits copyright 1992 by american economic association

hysteresis bands on returns holding period and transaction costs abstract in the presence of transactions costs no matter how small arbitrage activity does not necessarily render equal all riskless rates of return when two such rates follow stochastic processes it is not optimal immediately to arbitrage out any discrepancy that arises between them the reason is that immediate arbitrage would induce a definite expenditure of transactions costs whereas without arbitrage intervention there exists some perhaps sufficient probability that these two interest rates will come back together without any costs having been incurred hence one can surmise that at equilibrium the financial market will permit the coexistence of two riskless rates that are not equal to each other for analogous reasons randomly fluctuating expected rates of return on risky assets will be allowed to differ even after correction for risk leading to important violations of the capital asset pricing model the combination of randomness in expected rates of return and proportional transactions costs is a serious blow to existing frictionless pricing models

portfolio selection with capital gains tax recursive utility and regime switching capital gains taxation has important implications for investors portfolio choice decisions to explore these implications we develop a continuous time investment and consumption model with capital gains tax epstein zin recursive utility and regime switching we find that various factors such as tax rate risk aversion interest rate stock return and volatility jointly affect optimal portfolio allocation whereas intertemporal substitution does not in a regime switching market investors may trade or stop trading purely because of a change in regime and there is a distinct cross regime effect on optimal portfolio allocation in particular investors tend to raise stock investment in a bear regime so as to reduce potential tax payments upon regime switching given reasonable parameter values regime switching has a greater impact on optimal portfolio allocation in a bear regime than in a bull regime this paper was accepted by neng wang finance

measurement matters recent results from monetary economics reexamined inferences about the effects of money on economic activity may depend importantly on the choice of a monetary index because simple sum aggregates cannot internalize pure substitution effects this hypothesis is investigated by replicating five recent studies that have challenged an aspect of the conventional wisdom about the effects of money on aggregate activity in four of the five cases the qualitative inference in the original study is reversed when a simple sum monetary aggregate is replaced by a divisia index of the same asset collection the results are mixed in the fifth case

monetary aggregates and output series title working paper frb title monetary aggregates and output date publication federal reserve bank of cleveland working paper no 9813 author s scott freeman finn kydland type working paper frb topics s us economy

corporate venturing and value creation a review and proposed framework abstract over the past decade companies worldwide have used corporate venturing cv as a means of revitalizing their operations building new capabilities and achieving strategic renewal creating value for shareholders business interest in cv has stimulated academic interest in the topic resulting in a rapidly growing but fragmented body of literature despite the growing international scholarly interest in cv researchers have devoted little effort to integrating prior findings in a cumulative fashion as a result studies do not build upon one another making it difficult to gauge the progress being made in addressing the fundamental research questions related to cv in this paper we examine the literature on cv seeking to synthesize integrate and link its key findings to do so we analyze this literature over the past decade to identify its major themes and research findings setting the stage for greater coherence in future research on cv we give special attention to the challenges and rewards of theory building in future cv research our review clearly shows that cv is an area of scholarly inquiry that has important implications for managerial practice

dynamic portfolio choice with frictions abstract we show how portfolio choice can be modeled in continuous time with transitory and persistent transaction costs multiple assets multiple signals predicting returns and general signal dynamics the objective function is derived from the limit of discrete time models with endogenous transaction costs due to optimal dealer behavior we solve the model explicitly and the intuitive solution is also the limit of the solutions of the corresponding discrete time models we show how the optimal high frequency trading strategy depends on the nature of the trading costs which in turn depend on dealers inventory dynamics finally we provide equilibrium implications and illustrate the model s broader applicability to micro and macro economics monetary policy and political economy

technology transfer in transitional economies a test of market state and organizational models abstract two competing views dominate the debate on restructuring the largely military r d sectors in transitional economies liberals view unadulterated market forces as the key to stimulating technology adaptation to commercial markets in contrast most policy and senior management stress the market failures perspective that rely on state subsidies for fostering technology commercialization by drawing on case study as well as survey research data from 100 russian scientific institutes this paper suggests the importance of a third organizational perspective inter firm relations as well as market and subsidy factors are all considered for their effectiveness in driving technology transfer attempts particularly important to such attempts is the spin off process by which old state institutes incubate new firms and hence new and important partners in their struggle to commercialize state r d

science parks and the growth of new technology based firms academic industry links innovation and markets the analysis distinguishes between firms 273 firms on and off science parks in sweden 1996 1998 in an effort to identify any element of added value which the park provides for new technology based firms ntbfs the study showed some differences between the experience of firms on and off park in respect to innovation and marketing issues firms located in science parks were significantly more likely to have a link with a local university than off park firms performance is examined under three headings employment growth sales growth and profitability initiatives to promote ntbfs on science parks will yield a higher rate of job creation than policies to help ntbfs in general

optimal portfolio selection with transaction costs and finite horizons we examine the optimal trading strategy for a crra investor who maximizes the expected utility of wealth on a finite date and faces transaction costs closed form solutions are obtained when this date is uncertain we then show a sequence of analytical solutions converge to the solution to the problem with a deterministic finite horizon consistent with the common life cycle investment advice the optimal trading strategy is found to be horizon dependent and largely buy and hold moreover it might be optimal for the investor in our model not to buy any stock even when the risk premium is positive further analysis of the optimal policy is also provided financial advisers typically recommend that younger investors should allocate a greater share of wealth to stocks than older investors and all investors

retail sweep programs and monetary asset substitution abstract this paper examines how retail sweep programs affect monetary asset substitution estimates from the fourier flexible form reveal that sweeping generates systematic and sometimes large distortions in estimated bank depositor substitution elasticities

portfolio tax trading with carryover losses we study portfolio choice with multiple stocks and capital gains taxation assuming that capital losses can only offset current or future realized capital gains we show through backtesting using empirical distributions that optimal equity holdings over an extended period are significantly lower on average than benchmark holdings suggested in the literature using value and growth or small and large portfolios the backtests show that allocations remain persistently underdiversified carryover losses have large economic significance since they can dramatically shrink the no trade region finally the backtested economic cost of incorrectly modeling capital losses is at least 8 of lifetime wealth the internet appendix is available at https doi org 10 1287 mnsc 2017 2733 this paper was accepted by neng wang finance

mapping the university technology transfer process abstract transfer of technologies from the universities to the private sector is increasingly regarded as playing a significant role in new business starts growth of existing businesses and new job creation further there are monerous models describing the process of technology transfer some of the existing models represent this process as a linear progression of steps from idea generation and technology development at the university to patenting the technology and then establishing a university private firm link through a formal search process the process culminates in patent rights transfer other models describe technology transfer in terms of networking arrangements and emphasize not so much formal search as the role of long term relationships between the two parties still other studies indicate that it is possible to combine the two approaches formal search and informal networking arrangements to ensure successful transfer business firms involved in transfer also may be classified into several groups transfer could occur between the university and an established firm between the university and a recently created new venture or transfer could result in the creation of a new company technology for example could be transferred to a large company that uses the transferred technology as a basis for just one of many product lines or to a small firm that makes the transferred technology a cornerstone of its product strategy are there any differences among the transfer processes used when large or small firms are involved or when technology is transferred to an existing company or results in the creation of a new firm to address these questions we mapped the technology transfer processes of 23 different technologies developed at the university of minnesota from 1983 to 1993 more than half of the technologies studied went to large companies and were used either to upgrade existing products or to extend existing product lines in eight cases technologies were transferred to small firms in three cases technologies were transferred to venture capital firms or intermediaries and had not been commercialized at the time the study was completed in the rest of the cases new firms were created by the inventors university scientists themselves and served as vehicles for marketing their inventions none of the firms of the latter group have grown beyond a part time employment opportunity for the inventors and only one firm provided evidence that additional hiring would be necessary in the near future only four cases involved transfers of technologies that have been developed and patented by the university to firms that did not have any relationships with the university prior to the transfer in these four cases the firms used some form of search strategy to find a needed technology however there is no evidence that any of the firms had a well developed formal search procedure in the overwhelming majority of cases some form of relationship existed between the university or individual inventors and the private firm prior to the transfer these relationships ranged from long term friendships and or cooperation to such less involved forms as interaction at research seminars and university sponsored events further in four cases the technologies were initially developed by private companies whereas the university s role was to assist in refinement or testing of the technology the research yielded a number of additional findings that deserve further investigation and discussion specifically the study did not provide any evidence that the successfully completed technology transfers made any substantial contribution to either new business creation or the generation of new jobs this finding suggests that scholars and policy makers should proceed with caution before accepting a notion that new or high technology firms will have any direct economic impact the study findings hold specific implications for entrepreneurial behavior and public policy the formal search and shopping for a technology model suggests that both business and academic government laboratories publicize respectively their requirements and offerings and that opportunities for creative brokerage ought to exist we found that in the majority of cases technology was transferred not through formal search but through some prior relationships among individuals this observation suggests that the ability to build extended networks of relationships not only within the business world but also with the university community is an important skill that owners and managers of the technology based businesses need to possess entrepreneurs seeking to start businesses based on new technologies may need to reevaluate how much of their limited time to allocate to build and maintain networks and cooperative relationships and how much time to shop for new technologies through formal channels further public policy and the efforts of the university transfer agencies intended to facilitate transfer may need to shift their emphasis from facilitating shopping by organizing and or paying for publicity which is currently the major emphasis to providing assistance in network building and relationship marketing efforts

contextual influences on the corporate entrepreneurship performance relationship a longitudinal analysis abstract over the past several years corporate entrepreneurship has been widely touted by executives and researchers alike as an effective means for revitalizing companies and improving their financial performance for the most part the call for greater entrepreneurial behavior on the part of established companies has been accepted on faith as an inherently desirable objective the implicit logic behind the pervasive belief in the value of corporate entrepreneurship seems to be that risk taking innovation and aggressive competitive action the key elements of entrepreneurial corporations will help in identifying and pursuing lucrative product market opportunities and in providing new bases for achieving superior competitive positions but what do we really know about the financial consequences of corporate entrepreneurship most of the evidence that corporate entrepreneurship pays off is anecdotal in nature or based on cross sectional studies that focus on the short term implications of entrepreneurial behaviors as such in a definitive sense we know very little about the financial consequences of corporate entrepreneurship in an attempt to improve our understanding of this issue this article describes a study of corporate entrepreneurship and its impact on company financial performance data were collected from three different samples over a seven year period to assess the longitudinal impact of corporate entrepreneurship on firm performance these samples consist of 24 medium sized manufacturing firms representing 14 industry segments 39 chemical companies and 45 fortune 500 industrial firms representing five industry segments data were gathered on each sample using both primary and secondary sources regression analysis was then used to analyze the data the results suggest that corporate entrepreneurship has a positive impact on financial measures of company performance this effect on performance which tends to be modest over the first few years increases over time suggesting that corporate entrepreneurship may indeed be a generally effective means for improving long term company financial performance moreover the results indicate that corporate entrepreneurship is a particularly effective practice among companies operating in hostile environments as opposed to benign environments the study has three principal implications for practicing managers first the study documents the general financial viability of engaging in corporate entrepreneurship this is not to suggest that corporate entrepreneurship is a panacea for improving financial performance however entrepreneurial behavior when considered on the whole i e across firms and industries is associated with superior financial performance second the study suggests a need to use a long term time horizon in order to adequately judge the financial consequences of corporate entrepreneurship the use of a shorter evaluation period may not allow sufficient time for entrepreneurial actions to have their full market and corresponding financial impact finally the study identifies the context specific character of effective entrepreneurial practice specifically corporate entrepreneurship appears to be a particularly effective strategic practice among firms operating in hostile business settings

the anatomy of a corporate venturing program factors influencing success the author proposes a classification framework for factors that affect corporate venture success then a database of 37 new venture investments by exxon including 18 venture capital investments is analyzed for insight into the relative affect of these factors on venture technical and financial success this article presents a statistical analysis of those factors which were quantified as a group the venture capital investments were financially far more successful for exxon than the internally initiated ventures this striking difference stimulated the retrospective analysis reported here the author was in a position to observe the program over its entire life span and had first hand knowledge of each venture s technology markets and personnel because of the mix of venture capital and internal investments the author was also in a position to compare the two modes of investment factors affecting venture success are broadly classified as extrinsic and intrinsic extrinsic or environmental factors are those determined by the form of investment sponsorship e g corporate or venture capital and the characteristics of the investment sponsor extrinsic factors are segregated into two categories structural and procedural these factors are defined as the degree of difference between the corporate and venture environment in each category the four structural factors technology market organization and people are summed up as the overall degree of structural congruence the author postulates that the degree of congruence is directly related to venture success within the corporation to take the corporation into new markets some incongruence is required too much incongruence probably pushes the risk of failure too high the corporation s procedures for management of this incongruence will determine the degree to which it can successfully diversify its business the four procedural factors control selection of venture managers incentive compensation and financing are dealt with as differences between the corporate environment and an independent venture environment major differences in procedural factors usually exist between corporate and venture capital sponsored ventures they probably explain to some extent the relative greater financial success of the exxon venture capital investments as a group however the statistical analysis results indicate that the identified intrinsic factors are more important in explaining relative venture success intrinsic factors are those inherent to the venture itself and are subdivided into two categories product related market and technical risk levels and managerial relative experience levels each of the 37 exxon ventures was rated for success and for the intrinsic factors using a simple ordinal range of 3 to 6 values the product related risk factors showed a significant inverse correlation with financial success the level of venture managers prior experience in the venture s target market area and their level of prior general managerial experience showed an even greater correlation with financial success the sample correlation coefficient between the financial success rating sf and the sum of the ratings for prior marketing and managerial experience xs xm was 0 809 with a standard error of only 0 105 selection of the influential extrinsic and intrinsic factors is largely within the control of corporate management an approach to selection of these factors similar to that used by private venture capital fund managers should greatly improve the overall success of internal corporate ventures

university revenues from technology transfer abstract this paper analyzes the financial return of universities taking equity in their spin off companies and the prevailing attitudes toward taking equity the reasons for taking equity include the flexibility it gives licensing managers in structuring deals the possibility that the university will still hold something of value if their technology is replaced and the reduced time required to generate revenue compared to a traditional license a traditional license is preferred when the technology is not suitable for a spin off company or when the technology is one of the rare jackpot licenses that bring in millions of dollars every year the financial reward of taking equity was determined by comparing the value of equity sold in public spin off companies to the return on an average license a traditional license consists of a license issue fee between 10 000 and 250 000 and an annual royalty on sales in 1996 the average annual income from a traditional license was 63 832 the average value of equity sold in 16 university spin off companies is 1 384 242 if one assumes that half the spin offs fail before they go public the average value of equity is 692 121 this is more than 10 times the average annual income from a traditional license and is significantly higher than the amount usually received as a license issue fee the high average value of equity depends on the presence of a few million dollar equity sales if those sales are excluded the average value of equity is 139 722 which is within the range that can be received as a license issue fee there is a high correlation between million dollar equity sales and the amount of venture capital spending in the region the million dollar sales in this study all occurred in the top 11 states in the country in terms of venture capital spending in 1997 from a financial viewpoint it makes sense for licensing managers to take equity in their start up companies our data show that even if none of the start ups produces a million dollar equity sale the financial return of equity will be within the range normally received as a license issue fee taking equity leaves the door open for the occasional jackpot which will bring in significantly more money than a standard license when combined with a strong program of traditional licensing taking equity in start up companies maximizes the financial return that universities realize from their intellectual property

money and output friedman and schwartz revisited more than fifty years ago friedman and schwartz examined historical data for the united states and found evidence of pro cyclical movements in the money stock which led corresponding movements in output we find similar correlations in more recent data these appear most clearly when divisia monetary aggregates are used in place of the federal reserve s official simple sum measures when we use information in divisia money to estimate a structural vector autoregression identified monetary policy shocks appear to have large and persistent effects on output and prices with a lag that has lengthened considerably since the early 1980s

inside money monetary contractions and welfare this paper presents an explicit physical environment in which optimizing agents choose the composition of their money balances because of their choices changes in the nominal sum of inside and outside money precede changes in output nevertheless changes in the supply of fiat money do not affect subsequent out put moreover an equilibrium with a fixed supply of valued fiat money is pareto optimal despite the cyclical fluctuations of output and of the total money stock monnaie interne contractions monetaires et bien etre ce memoire definit un environne ment physique explicite dans lequel les agents economiques recherchent l optimum en choisissant la composition de leurs actifs monetaires en consequence de leurs choix des changements dans la somme nominale de monnaie interne et de monnaie externe prec dent les changements dans le niveau de production neanmoins des changements dans l offre de monnaie fiduciaire n affectent pas le niveau de production subsequent de plus l equilibre quand l offre de monnaie fiduciaire est fixe est un optimum de pareto malgre les fluctuations dans le niveau de production et dans le stock total

trading volume definitions data analysis and implications of portfolio theory we examine the implications of portfolio theory for the cross sectional behavior of equity trading volume two fund separation theorems suggest a natural definition for trading activity share turnover if two fund separation holds share turnover must be identical for all securities if k 1 fund separation holds we show that turnover satisfies an approximately linear k factor structure these implications are examined empirically using individual weekly turnover data for nyse and amex securities from 1962 to 1996 we find strong evidence against two fund separation and a principal components decomposition suggests that turnover is well approximated by a two factor linear model if price and quantity are the fundamental building blocks of any theory of market interactions the importance of trading volume in modeling asset markets is clear although most models of asset markets have focused on the behavior of returns predictability variability and information content their implications for trading volume have received far less attention in this article we derive the implications of various asset market models for volume and quantify their importance using recently available volume data for individual securities from the center for research in security prices crsp although the volume literature is voluminous 1 we hope to add to this literature in two ways first we develop the volume implications of popular asset market models rather than construct more specialized and often stylized models to

a dynamic perspective of internal fit in corporate venturing abstract managers of corporate parents and their ventures have long been faced with the question of how closely to tie the parent and venture a close connection may enable a venture to capitalize on the competencies and resources of the parent however venture autonomy could prevent corporate inertia and bureaucracy from constraining venture growth the lack of consensus on this issue leads us to the first of two complementary research questions that we address in this paper what is the effect of internal strategic fit between a corporate parent and its venture on venture performance we suggest that a tight fit is positively associated with venture performance because of the venture s access to its parent s resources managers and researchers alike have often observed that growing enterprises are dynamic entities in the case of corporate ventures this implies that the relationship between parent and venture evolves over time our second research question directly addresses this issue by asking does the relationship between a corporate parent and its venture s evolve over time and if so how we identify two dimensions of the fit between corporate parents and their ventures relational and economic a relational fit reflects organizational culture and structure while an economic fit is a function of the needs of the venture and the resources of the parent we develop a series of hypotheses and test them with survey data from 97 canadian corporate ventures for the purposes of this study we define success as the ability of a firm to meet internal milestones on schedule we find that the degree of fit between a corporate parent and its venture does affect the success of a venture and that success is associated with high levels of awareness commitment and connection further the relational dimension of the parent venture interface appears to have a greater association with venture success than does the economic dimension our data support the idea that the parent venture relationship is dynamic in nature as ventures in our sample generally lessened their economic connections with their parents as they matured or vice versa we did find however that the relational bonds remained more or less intact the exceptions to these general trends were an increasing emphasis on financial targets along with decreasing ceo involvement as ventures matured both of these findings make intuitive sense greater financial independence is accompanied by greater financial accountability and as a venture gains in both independence and accountability there is less need for the ceo to provide air cover these two issues aside the basic model of enduring relational ties and diminishing economic ties was supported as well the increasing accountability is consistent with our expectation that a close connection is preferable to high venture autonomy

the origin of spin offs a typology of corporate and academic spin offs we provide a typology of corporate and academic spin off types distinguishing spin offs involving new ventures from those that concern existing activities we summarize the papers published in this special issue relating them to the typology we develop we conclude by developing an agenda for further research on spin offs

optimal central bank intervention in the foreign exchange market abstract we consider a currency with exchange rate dynamics modeled as a geometric brownian motion the objective of the central bank is to keep this exchange rate as close as possible to a given target so there is a running cost associated to the difference between the exchange rate and the target additionally there are also fixed and proportional costs associated with each intervention the objective of this paper is to find the optimal level of intervention and the optimal sizes of the interventions so as to minimize the total cost we solve this problem by applying the theory of stochastic impulse controls journal of economic literature classification numbers c61 d81 f31 g15

transactions costs and portfolio choice in a discrete continuous time setting abstract this paper makes the following observation concerning a new formulation of the consumption and portfolio choice model of merton 1971 with transaction costs suppose an investor observes his or her current wealth only when making a transaction that transactions are costly and that decisions to transact can be made at any time based on all current information if at each transaction the agent is charged a fixed fraction of current portfolio value an optimal policy exists and the optimal interval of time between transactions is fixed independent of time and current wealth

fostering corporate entrepreneurship cross cultural comparisons of the importance of individualism versus collectivism this study reports on results of a cross cultural empirical investigation designed to assess the impact of individualism collectivism upon organizational entrepreneurship the findings indicate individualism collectivism is an important factor in understanding entrepreneurial behavior in the firm implications of these findings are discussed

optimal consumption and investment strategies with liquidity risk and lifetime uncertainty for markov regime switching jump diffusion models abstract in this paper we consider the optimal consumption and investment strategies for households throughout their lifetime risks such as the illiquidity of assets abrupt changes of market states and lifetime uncertainty are considered taking the effects of heritage into account investors are willing to limit their current consumption in exchange for greater wealth at their death because they can take advantage of the higher expected returns of illiquid assets further we model the liquidity risks in an illiquid market state by introducing frozen periods with uncertain lengths during which investors cannot continuously rebalance their portfolios between different types of assets in liquid market investors can continuously remix their investment portfolios in addition a markov regime switching process is introduced to describe the changes in the market s states jumps classified as either moderate or severe are jointly investigated with liquidity risks explicit forms of the optimal consumption and investment strategies are developed using the dynamic programming principle markov chain approximation methods are adopted to obtain the value function numerical examples demonstrate that the liquidity of assets and market states have significant effects on optimal consumption and investment strategies in various scenarios

admissible monetary aggregates for the euro area we use the fleissig and whitney fleissig a r whitney g a 2003 a new pc based test for varian s weak separability conditions journal of business and economics statistics 21 1 133 144 weak separability test to determine admissible levels of monetary aggregation for the euro area we find that the euro area monetary assets in m2 and m3 are weakly separable and construct admissible divisia monetary aggregates for these assets we show that real growth of the admissible divisia aggregates enters the euro area is curve positively and significantly for the period from 1980 to 2005 out of sample we show that divisia m2 and m3 appear to contain useful information for forecasting euro area inflation

optimal consumption and portfolio policies when asset prices follow a diffusion process abstract we consider a consumption portfolio problem in continuous time under uncertainty a martingale technique is employed to characterize optimal consumption portfolio policies when there exist nonnegativity constraints on consumption and on final wealth we also provide a way to compute and verify optimal policies our verification theorem for optimal policies involves a linear partial differential equation unlike the nonlinear partial differential equation of dynamic programming the relationship between our approach and dynamic programming is discussed we demonstrate our technique by explicitly computing optimal policies in a series of examples in particular we solve the optimal consumption portfolio problem for hyperbolic absolute risk aversion utility functions when the asset prices follow a geometric brownian motion the optimal policies in this case are no longer linear when nonnegativity constraints on consumption and on final wealth are included by these examples one can see that our approach is much easier than the dynamic programming approach

the birth and growth of toshiba s laptop and notebook computers a case study in japanese corporate venturing abstract this case study presents the under the table birth accelerated growth and ultimate success of two major technological and market innovations 1 the toshiba laptop computer a project vetoed twice by corporate headquarters and 2 the notebook computer a project hidden from headquarters because of the vision persistence and championing efforts of a team of passionate japanese corporate entrepreneurs a new business was created that is now part of toshiba s mainstream operations and that has become a significant contributor to the growth and profitability of the corporation we follow the evolution of this corporate venture from initial failures in 1978 to the success of the laptop computer first in europe 1985 then in the united states and finally in japan this was followed by the reincorporation of the venture in the corporate mainstream 1987 the worldwide success of the notebook computer 1989 and the continued growth of the business in parallel with repeated promotions of the entrepreneurs first a framework is presented for interpreting the case within current theories and practices of the management of innovation and the processes of championing innovative corporate ventures this framework is expanded to include recent studies on how major corporations have achieved worldwide leadership in high tech markets second using the analogy of human life from conception to adulthood the key phases events and entrepreneurial actions of toshiba s pc business are summarized in table 1 third the theoretical framework is applied to a discussion of the unusual aspects of this case fourth we analyze the business strategy and the technology strategy developed by toshiba finally we summarize the cultural and organizational context of toshiba as well as other critical factors that contributed to the enduring success of this corporate venture there are four aspects in addition to the international setting that make this case interesting for both scholars and practitioners 1 the under the table development of both the laptop and notebook 2 the unexpected success of the first product followed by a second success 3 the evolution of champi oning at various organizational levels and 4 the continuity of the strategic vision for toshiba s information systems business from 1978 to the present and how this vision was translated into specific business and technological strategies from the perspective of management of innovation the successes of both the laptop and the notebook computers were due to the back to the future market research and design process summarized in table 2 this process where market requirements drive the design process was developed by the lead entrepreneur tetsuya mizoguchi after repeated failures of the conventional process where the results of rd executive champion mizushima orchestrated the difficult transition of the venture into a corporate mainstream operation the evolution of the championing process is summarized in table 3 using the venkatamaran et al model 1992 we conclude that the most appropriate model for interpreting this case is a combination of the day and venkatamaran et al models which emphasizes both multiple championing roles and the transfer of the lead role from one champion to another during the corporate entrepreneurship process the business strategy and market and technological strategies developed by toshiba for achieving worldwide leadership in the portable pc market are summarized in figures 1 and 2 more broadly the process and critical factors that determined toshiba s success can be visualized according to figure 3 the corporate entrepreneurs and champions were driven away from mainframes by a vision of distributed and interconnected computing that compelled them to focus on personal computers this focus determined the winning business strategy fully compatible portable units which in turn determined the technological and market strategies miniaturization and complementarity to ibm at the same time this focus allowed the entrepreneurs to concentrate their scarce resources on the back to the future design process and develop unique core competencies this coupling of winning strategies with unique core competencies made possible toshiba s potential leadership in the marketplace actual leadership was achieved through continuous step by step learning by doing and through market feedback that further reinforced the adopted strategies and enhanced the core competencies six critical factors contributed to the long term success of the corporate venture 1 the venture had the potential to achieve worldwide leadership in a mainstream area of the corporation 2 the pc market in europe and the united states but not initially in japan was fragmented and highly receptive to unique innovations 3 the corporate entrepreneurs were driven by a long range vision of the business with focused strategies and well defined objectives 4 the entrepreneurs were persistent and undeterred by repeated failures in the marketplace and by the distrust and hostility of headquarters 5 the organizational context because of slack internal controls allowed the diversion of funds and manpower to the under the table venture and finally 6 the role of entrepreneurs evolved from underground innovators to product executive and corporate champions in order to reinforce broaden and implement their vision

a model of monetary policy shocks for financial crises and normal conditions in their classic 1999 paper monetary policy shocks what have we learned and to what end christiano eichenbaum and evans cee investigate one of the most widely used methods for identifying monetary policy shocks of its time unfortunately their approach is no longer viable at least not in its original form a major problem stems from the recent behavior of two key variables in their model the fed funds rate and non borrowed reserves we develop a new identification scheme that remedies these diculties but maintains the basic cee framework our empirical specification is motivated by a standard new keynesian dsge model augmented by a simple financial structure the model provides theoretical support for variables we use in place of certain variables that were used in the classic var approach outlined in cee one significant innovation is our use of divisia m4 the broadest monetary aggregate currently available for the united states as the policy indicator variable we obtain four major empirical results that support the use of a properly measured broad monetary aggregate as the policy variable first policy shocks have significant eects on output and on the price level even when an interest rate is included in our model contradicting the new keynesian argument that monetary aggregates are redundant second we develop a model that is not subject to the output price or liquidity puzzles common to this literature contradicting the view that using the interest rate as the policy indicator generally yields more reasonable responses than a monetary aggregate third during normal conditions policy shocks from our divisia based model have similar eects on variables to those found in the fed funds model of monetary policy and where there are dierences our model with divisia m4 obtains results that are more consistent with standard economic theory fourth our preferred specification produces plausible responses to a monetary policy shock in samples that include or exclude the recent financial crisis

incomplete information and the liquidity premium puzzle we examine the problem of an investor who trades in a market with unobservable regime shifts the investor learns from past prices and is subject to transaction costs our model generates significa

the own price of money and a new channel of monetary transmission traditionally the effects of monetary policy actions on output are thought to be transmitted via monetary or credit channels real business cycle theory by contrast highlights the role of real price changes as a source of revisions in spending and production decisions motivated by the desire to focus on the effects of price changes in the monetary transmission mechanism this paper incorporates a direct measure of the real own price of money into an estimated vector autoregression and a calibrated real business cycle model consistent with the rbc view of the monetary transmission mechanism both approaches reveal that movements in the own price of money are strongly related to movements in output

relatedness and corporate venturing does it really matter abstract although many studies have focused on the issue of relatedness in corporate venturing it is still unclear whether high or low levels of relatedness between a new venture and the parent firm leads to success as measured by venture performance in this study we raise the question of whether or not relatedness plays a determinant role in affecting success at the venture level the study analyzes data on 88 new industrial product corporate ventures from str4 the corporate start up database of the pims project based on a review of the strategic management and corporate entrepreneurship literature this study generates five hypotheses concerning the relationships among relatedness the intangible assets of the parent firm the entry strategy of the new venture and the venture s market share two rival hypotheses on the general impact of relatedness on venture performance are generated theoretical and empirical evidence suggest that highly related ventures benefit from existing resources exploiting corporate know how and sharing experience effects this leads to the first hypothesis which states that high related ventures achieve higher market shares relative to low related ventures on the other hand the disadvantages generally associated with high levels of relatedness such as higher coordination costs political problems associated with resource sharing appear to negatively affect the profitability e g r01 or the direct costs of the venture leading to the rival hypothesis results indicate that there are no significant differences in the market shares achieved by high medium and low related ventures and that therefore relatedness does not affect venture performance the third hypothesis predicts that given the parent firm has developed high levels of intangible assets high related ventures achieve higher market shares than low related ventures prior research has shown that intangible assets have a positive effect on venture performance high related ventures make possible higher levels of exploitation of the intangible assets held by the parent firm than low related ventures other things being equal if well managed these assets can neutralize the negative effects of high relatedness thus a positive interaction between relatedness and intangible assets should take place results support the hypothesis and show that the highest market shares are achieved by those ventures with high levels of relatedness and high levels of intangible assets two rival hypotheses concerning relatedness and its effects on the aggressiveness of entry strategy of the venture as measured by relative price relative promotional effort and relative product quality are generated the first hypothesis states that the more related the venture the more aggressive the entry strategy high relatedness implies high levels of resource sharing that should decrease the incremental costs needed to launch the venture thus high related ventures have greater amounts of resources to be used for aggressive entry strategies than low related ventures the rival hypothesis states that the less related the venture the more aggressive the entry strategy there is empirical evidence that increased resource sharing is associated with increased direct costs thus as compared with low related ventures high related ventures might be handicapped in pursuing aggressive entry strategies results indicate that there is no significant relationship between relatedness and the aggressiveness of the entry strategy overall this study suggests that the decision concerning the degree of relatedness does not explain by itself venture performance nor does it explain the entry strategy chosen at the venture level only when combined with the intangible assets held by the firm at the corporate level does relatedness appear to determine venture success implications for practioners are top management cannot decide a priori whether or not a new corporate venture should be highly related to the parent firm high image firms should only venture in highly related businesses building image at the corporate level pays if various high related ventures are present suggestions for further research are also offered

consuming durable goods when stock markets jump a strategic asset allocation approach in this paper we show the impact of considering jumps in the return process of risky assets when deciding how to invest and consume throughout time agents derive their utilities from consumption over time we consider an agent that invests in the financial market and in durable and perishable consumption goods assuming that there are costs for transacting the durable good we show that an agent who does not consider the possibility of jumps will make suboptimal decisions not only regarding the fraction of wealth invested in the stock market but also with respect to the timing for trading on the durable good furthermore we also show that jumps cause a non obvious asymmetric impact on the thresholds that lead the consumer to trade the durable good even when the jump distribution is symmetric

inside money output and causality the authors present an explicit general equilibrium model consistent with these observations 1 innovations in the nominal money stock are positively correlated with and precede granger cause innovations in output 2 these innovations in the nominal money stock represent innovations in inside not outside money and 3 when interest rates are included in vector autoregressions their innovations not money s are seen to precede output changes in the money stock represent an endogenous reaction to some third factor and do not cause subsequent changes in output therefore a change in the current fiat money stock will not lead to any change in output copyright 1991 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

technology strategy and new venture performance a study of corporate sponsored and independent biotechnology ventures abstract new ventures companies eight years or younger play a major role in the development of an emerging high technology industry corporate sponsored new ventures those supported by an established corporation and independent ventures those founded by independent entrepreneurs frequently battle for industry leadership and financial success whereas both venture types use technology to achieve financial and market success little is known about the differences in their technology strategies technology strategy is the plan that guides a new venture s decisions on the development and use of technological capabilities this strategy covers six major areas the first is selecting the pioneering posture where a venture decides whether or not be among the industry s first companies to introduce new products technologies to the market the second is determining the number of products to be introduced to the market the third is choosing the extent of a venture s use of internal and external r d sources internal sources usually refer to in house r d activities external sources may include purchasing or licensing of technology from other companies or joining strategic alliances to acquire that technology the fourth is deciding the level of r d spending the fifth is selecting the combination portfolio of applied and basic research projects whereas basic r d advances science applied r d leads to new products and technologies the sixth and final dimension is the venture s use of patenting to protect any competitive advantages it might gain from its r d activities this article reports the results of a study that explored the differences in the technology strategies and performance of corporate and independent ventures the biotechnology industry was chosen to test the study s hypotheses using 112 ventures seven of the study s hypotheses focused on the potential variations in technology strategy between corporate and independent ventures independent ventures ivs were expected to surpass corporate ventures cvs in pioneering new products technologies using internal r d and emphasizing applied r d cvs were expected to surpass ivs in introducing new products using external r d sources spending on r d and patenting the study s remaining three hypotheses covered possible variations in new venture performance nvp and their sources the results showed that ivs focused more on pioneering pursued a more applied r d portfolio and emphasized internal r d more than cvs cvs utilized external technology sources spent more heavily on r d stressed basic r d and used patenting more intensively than ivs these results were consistent with the hypotheses however contrary to expectations there were no significant differences between cvs and ivs in the frequency of new product introductions probably because most ventures were at the invention rather than the commercialization stage the results on the nvp of cvs and ivs were counter to expectations ivs outperformed cvs probably because of the high motivation of the iv owners who reaped the rewards of growth and profitability also whereas cvs may have greater access to the resources of their sponsors political conflicts and rigid corporate controls might have reduced their ability to achieve competitive advantages the results also indicated that cvs and ivs appeared to gain competitive advantages from different technological choices pioneering a focus on applied r d and extensive use of the internal r d sources were also positively associated with the performance of ivs heavy r d spending the use of both internal and external r d sources frequent product introductions and patenting were positively associated with the performance of cvs finding that technology strategies significantly impacted nvp should encourage executives to consider pursuing a formal technology strategy likewise the finding that different dimensions of technology strategy influenced the performance of cvs and ivs in different ways has practical implications cv managers can learn from their higher performing iv rivals also because established companies frequently acquire ivs information about their technology strategies can be valuable in assimilating the acquired ventures overall the results show that technology strategy is an important factor in enhancing new venture performance

the relation between narrative and money market indicators of monetary policy this paper studies the relation between narrative based indicators of monetary policy and widely used money market indicators of monetary policy three principal findings emerge first changes in monetary policy as measured by the narrative based policy indices are associated with persistent changes in the levels of m2 and the monetary base in contrast changes in the narrative policy indicators lead to transitory changes in short term interest rates nonborrowed reserves and the spread between the six month commercial paper rate and the three month treasury bill rate third these findings are generally robust across different narrative based policy indices

an exact solution to a dynamic portfolio choice problem under transactions costs the presence of any friction in financial markets qualitatively changes the nature of the optimization problem faced by an investor it requires one to either act or do nothing an issue which of course does not arise in frictionless situations the investor considered here accumulates wealth without consuming until some terminal point in time when he consumes all his objective is to maximize the expected utility derived from that terminal consumption we postpone the terminal point far into the future to obtain a stationary portfolio rule the portfolio policy is in the form of two control barriers between which portfolio proportions are allowed to fluctuate we show how to calculate them

when does corporate venture capital investment create firm value abstract over the past decade billions of dollars have been invested by established companies in entrepreneurial ventures what is often referred to as corporate venture capital yet there is little systematic evidence that corporate venture capital investment creates value to investing firms scholars have suggested that established firms face underlying challenges when investing corporate venture capital namely structural deficiencies inherent in corporate venture capital may inhibit financial gains however firm value may still be created as a result of other benefits from investing primarily providing a window onto novel technology in this paper we propose that corporate venture capital investment will create greater firm value when firms explicitly pursue corporate venture capital to harness novel technology using a panel of cvc investments we present evidence consistent with our proposition the findings are robust to various specifications and remain unchanged even after controlling for unobserved heterogeneity in investing firms our results have important implications for corporate venture capital in particular and technology strategy in general

venture capital investing for corporate development objectives abstract there is a significant new player emerging in the venture capital world whose participation is changing the way that the venture business is done domestic and foreign corporations have discovered that investing in venture capital adds a new dimension to their corporate development strategies and can also make an outstanding return on investment armed with serious amounts of cash aware of the value of an association with their name and frequently possessing marketing power that a small company covets corporations are competing with venture capitalists for the best deals obtaining a corporate partner is now an accepted part of a small company s financing strategy for the corporate development executive this activity provides a useful tool to widen the spectrum of participation in new technologies while retaining the entrepreneurial drive and reducing the cost and exposure of new ventures however it is not a panacea for growth and caution should be exercised to avoid creating unrealistic expectations both entrepreneurs and venture capitalists welcome this source of later stage capital providing it minimizes equity dilution and assists in product development marketing and liquidity for their investment however it is a competitor for the venture capitalists in sourcing deals and a potential adversary for the entrepreneur when objectives clash additionally entrepreneurs and venture capitalists often are suspicious of the corporation in the small company s boardroom the objective of most corporations is the strategic benefits that can result from venture capital investing such as acquisitions technology licenses product marketing rights international opportunities and a window on technology however this objective is frequently mixed with a financial return objective and can lead to a confused strategy participation by corporations can take many different forms but usually begins with investments in several venture capital funds as a limited partner and evolves into direct investments in venture companies formation of a venture development subsidiary by the corporation is a demonstrated way to maximize the strategic rewards if financial return is the only objective then a stand alone venture fund is the best vehicle the most important factors for the strategic success of a corporate program are the creation of a high quality deal stream and the use of outstanding people to interface between the corporation and the venture capital world in addition there has to be a long term commitment active involvement and a carefully devised internal communications strategy to promote and protect the program creation of a formal venture development subsidiary is probably the best way to maximize the strategic objectives lubrizol enterprises operates as such a subsidiary of the lubrizol corporation and utilizes venture capital investing acquisitions partnerships and contract research to develop strategic business units based on leading edge technologies

money and output a test of reverse causation this paper attempts to explain the correlation between money and output at various leads and lags with a model in which money is largely neutral and endogenously responds to output money is endogenous because both monetary policy and deposit creation are endogenous parameters are selected according to the simulated moments estimation technique while the estimated model succeeds along some dimensions in matching properties of postwar u s data its failure to match key patterns of lead lag correlations seems to cast doubt on the ability of endogenous money determination by itself to quantitatively account for the observed money output correlations copyright 1996 by american economic association

corporate versus independent new ventures resource strategy and performance differences abstract this study examines differences between independent ventures ivs which are established by individual entrepreneurs and corporate ventures cvs which are controlled by larger companies it focuses on differences between these ventures related to the resources strategies and performance of firms in the computer and communications equipment manufacturing industries thus the findings increase the understanding of the different challenges faced by each venture type and provide insight into how each venture type should be managed the study finds that managers of cvs and ivs emphasized different resources and strategies specifically cvs emphasized the following resources internal capital sources proprietary knowledge and marketing expertise ivs emphasized external capital sources technical expertise and development of brand identification they also differed in their strategies ivs pursued greater strategic breadth more customer service and focused more on specialty products the findings that cvs had less strategic breadth was surprising in that cvs emphasized resources such as internal capital sources which could make pursuing broad strategies more feasible for cvs it is possible that some cvs do not pursue broad strategies because they may be infringing upon someone else s turf within the corporation and thus may be discouraged in spite of finding significant strategy and resource differences the study found that ivs and cvs did not differ in performance and that resources were not directly related to performance based on the concept of equifinality it follows that both venture types can be equally successful even if they follow different roads to success success may be less a function of the different resources ivs and cvs have and more a function of what strategies the firms choose based upon their resources strategy variables did relate to performance a low cost strategy lowered performance regardless of venture type and the influence of an aggressive strategy i e wide strategic breadth on performance depended upon venture origin managers pursuing a low cost strategy may have had lower performance if they became penny wise and pound foolish missing opportunities in their efforts to lower costs this suggests that regardless of venture type managers of new ventures in these industries and perhaps in other volatile industries may need to be opportunistic this study indicates that pursuing broad strategies increased the performance of ivs and decreased the performance of cvs this finding was surprising in that cvs had greater resources which one might think would lead to successful implementation of aggressive strategies in securing enough resources to pursue aggressive strategies from their parents cvs may lose the freedom of action they need to cope with the dynamism of high technology industries this suggests that managers of cvs within the computer and communications equipment manufacturing industries should either not pursue broad strategies or if pursuing broad strategy they should maintain their flexibility in contrast ivs that pursued broad strategies achieved higher performance indicating that perhaps ivs unencumbered by the bureaucracy that characterizes cvs may be able to pursue aggressive strategies while simultaneously maintaining flexibility thus this study offers iv and cv managers several valuable insights first it argues that managers of each type of venture may need to pursue different strategies to increase venture performance and make optimal use of their unique resources furthermore it suggests that cv managers encounter difficulties in applying resources to strategies and not in accessing resources whereas political obstacles may occur cv managers may primarily encounter these difficulties when trying to implement strategies rather than when accumulating resources from the parent suggesting a pitfall that managers of cvs and their parents need to avoid although this study has indicated that both venture types can be equally successful it suggests that they may face different obstacles and follow different roads to success

corporate entrepreneurship and financial performance the case of management leveraged buyouts executive summary leveraged buyouts lbos have created much controversy in the literature centering on their potential effect on a company s ability to innovate engage in new ventures and support entrepreneurial projects some believe that post lbo debt reduces the financial resources available for entrepreneurial activities conversely others argue that despite the burden of debt some lbos provide executives with an opportunity to innovate and take risks malone 1989 however past studies have focused primarily on changes in r d spending and ignored other corporate entrepreneurship ce activities a firm might pursue additionally these studies have not documented the changes in ce after a management led lbo thus past studies offer only a snapshot of the effect of lbos on ce finally earlier studies did not directly examine the association between changes in entrepreneurial activities after the lbo and changes in performance to address these shortcomings this study adds to the literature in three ways first it compares a company s pre and post lbo commitment to corporate entrepreneurship ce measured along two dimensions innovation and venturing second the study compares pre and post company performance levels third the study shows how changes in a company s entrepreneurial activities impact performance therefore the following hypotheses were tested h1 a company s commitment to ce activities increases after an lbo h2a company performance will be higher after an lbo than before the transaction h2b post lbo company performance will surpass that of the firm s industry average h3 changes in post lbo ce activities venturing and innovations are positively associated with company financial performance data were collected from 47 lbo companies data were gathered from secondary sources to augment and validate interview data data collected from two executives per firm were averaged and the mean was then used in all analyses data covered the three years immediately before and three years immediately after the lbo companies in the sample were selected based on three criteria first at least 25 of the value of the lbo should have been paid by the firm s senior executives vice presidents and higher second the firm must have gone through a single lbo and must have remained private through the period of the study that eliminated reverse lbos from consideration finally the firm must have undergone its lbo at least three years before data collection this provided an opportunity to observe changes in a company s ce and performance multivariate analysis of covariance mancova analysis of covariance ancova and multiple regression were used to test the study s hypotheses the results supported h1 showing that lbo companies increased their commitment to developing new products placed greater emphasis on commercializing their technology enhanced the quality and size of their rd and intensified their new venture efforts however r d spending did not change significantly after the lbo the results also showed that post lbo company performance was significantly higher than pre lbo levels and the industry s average thus supporting h2a and h2b finally as stated in h3 changes in a company s ce activities were significantly associated with changes in post lbo company performance leveraged buyouts lbos have created considerable controversy among scholars executives and public policy makers concern centers on the potential impact of an lbo on a company s willingness to innovate and engage in entrepreneurial ventures to date little empirical research has been devoted to documenting the changes that occur in a company s entrepreneurial behavior after an lbo and to linking these changes to company performance using data from 47 lbos this study s results lead to three conclusions first companies reported increases in their product development technology related alliances r d staff size and capabilities and new business creation activities moreover these firms did not change their r d spending or the focus of r d projects second post lbo company performance was higher than pre lbo levels third changes in corporate entrepreneurship activities after lbos were significantly and positively associated with changes in company performance

the governance and control of voluntary corporate spin offs we investigate the role that a voluntary corporate restructuring can play in the design of efficient internal corporate control mechanisms to this end we examine the post restructuring internal control practices in 78 voluntary corporate spin offs that were completed between 1972 and 1987 we find that the selection of the new ceos the design of their compensation contracts and the staffing of the boards of directors and their compensation committees in the spun off firms can be seen as ex ante efficient these governance and control practices however are not strongly related to the observed positive market reactions to the spin off announcements the results indicate that equity reorganizations facilitate the implementation of efficient internal governance and control practices but that other factors must influence the share price reactions to the announcement of such voluntary corporate restructurings

selling university technology patterns from mit many research universities engage in efforts to license inventions developed by university affiliated inventors however no systematic explanation of the conditions under which university inventions will be licensed or commercialized has been provided drawing on transaction cost economics i provide a conceptual framework to explain which university inventions are most likely to be licensed commercialized and generate royalties and who will undertake that commercialization i test this framework on data on the 1 397 patents assigned to the massachusetts institute of technology during the 1980 1996 period the results showthat 1 university inventions are more likely to be licensed when patents are effective 2 when patents are effective university technology is generally licensed to noninventors 3 when patents are effective licensing back to inventors increases the likelihood of license termination and reduces the likelihood of invention commercialization and 4 the effectiveness of patents increases royalties earned for inventions licensed to noninventors the implications of these findings for innovation management and strategy entrepreneurship and university technology commercialization are discussed

a model of competitive stock trading volume a model of competitive stock trading is developed in which investors are heterogeneous in their information and private investment opportunities and rationally trade for both informational and noninformational motives i examine the link between the nature of heterogeneity among investors and the behavior of trading volume and its relation to price dynamics it is found that volume is positively correlated with absolute changes in prices and dividends i show that informational trading and noninformational trading lead to different dynamic relations between trading volume and stock returns

intrapreneurship construct refinement and cross cultural validation abstract intrapreneurship entrepreneurship within existing organizations has been of interest to scholars and practitioners for the past two decades intrapreneurship is viewed as being beneficial for revitalization and performance of corporations as well as for small and medium sized enterprises the concept has four distinct dimensions first the new business venturing dimension refers to pursuing and entering new businesses related to the firm s current products or markets second the innovativeness dimension refers to the creation of new products services and technologies third the self renewal dimension emphasizes the strategy reformulation reorganization and organizational change finally the proactiveness dimension reflects top management orientation in pursuing enhanced competitiveness and includes initiative and risk taking and competitive aggressiveness and boldness while differing somewhat in their emphasis activities and orientations the four dimensions pertain to the same concept of intrapreneurship because they are factors of schumpeterian innovation the building block of entrepreneurship the pursuit of creative or new solutions to challenges confronting the firm including the development or enhancement of old and new products and services markets administrative techniques and technologies for performing organizational functions e g production marketing sales and distribution as well as changes in strategy organizing and dealings with competitors are innovations in the broadest sense intrapreneurship theory and measures have an american basis while being considered universal their generalizability has been limited because their cross cultural testing has been extremely limited two main measures of intrapreneurship the entrescale and the corporate entrepreneurship scale were developed independently but lack validity for cross national comparisons and do not tap all four dimensions of intrapreneurship when used independently in order to fill the gaps in previous research these two scales are integrated into a four dimensional measure of intrapreneurship refinement and validation was done by using two samples from two distinct economies slovenia a small transition economy from central and eastern europe with a short entrepreneurship tradition and the united states a large developed and advanced economy that is a leader in entrepreneurship research and practice the refined multidimensional measure of intrapreneurship was developed to be cross culturally generalizable because its refined dimensions scales include only cross culturally comparable items the refined intrapreneurship construct measure showed reasonably good convergent and discriminant validity as well as good nomological validity in terms of expected positive relationships to its antecedents organizational and environmental characteristics and consequences growth and profitability across the two samples that included large medium sized and smaller firms from a variety of different industries manufacturing consumer and industrial goods consumer and business services trade and construction in addition to the generalizability of the refined intrapreneurship construct measure the results of this study support the notion that intrapreneurship is an important predictor of firm growth in terms of absolute growth growth in number of employees and in total sales and relative growth growth in market share in comparison to competition firms that nurture organizational structures and values conducive to intrapreneurial activities are more likely to grow than organizations that are low in such characteristics open and quality communication existence of formal controls intensive environmental scanning management support organizational support and values all help an organization become more intrapreneurial intrapreneurial organizations are those that engage in new business venturing are innovative continuously renew themselves and are proactive in transition economies which are adapting their economies to more developed economies standards of doing business and where growth may not yet be the primary goal intrapreneurship may be even more important for the growth and profitability of existing organizations

money and velocity during financial crises from the great depression to the great recession abstract this study models the demand for a broad monetary aggregate m2 from the great depression through the great recession key to the model is the interaction between a measure of time variation in economic agents perceived financial risk and an index of the cost of portfolio adjustment the finding of a useful money demand relationship suggests that skepticism regarding the indicator role of a broad liquid money aggregate as a policy guide may be exaggerated further our model provides some guidance for policymakers who face the challenge of unwinding large balance sheets as risk premia return to normal and velocity adjusts

illiquidity position limits and optimal investment for mutual funds we study the optimal trading strategy of mutual funds that face both position limits and differential illiquidity we provide explicit characterization of the optimal trading strategy and conduct an extensive analytical and numerical analysis of the optimal trading strategy we show that the optimal trading boundaries are increasing in both the lower and the upper position limits we find that position limits can affect current trading strategy even when they are not currently binding and other seemingly intuitive trading strategies can be costly we also examine the optimal choice of position limits

how money affects real output this paper decomposes the money stock into constituent parts to examine the relationship between monetary variables and real economic activity using vector autoregression for 1954 to 1979 the first decomposition reveals that innovations in money multiplier growth rates are approximately three times more influential in determining real output growth than are monetary base growth innovations the second decomposition includes components of the money multiplier to identify the importance of actions of the public the banking community and the monetary authority the results suggest that the public and the fed had a significant impact on influencing real output growth copyright 1989 by ohio state university press

nonparametric tests of utility maximization and weak separability for consumption leisure and money some of the most fundamental assumptions of economics are utility maximization and weak separability of the arguments in the represen tative consumer s utility function this paper contains results from nonparametric tests of these assumptions about consumer behavior the authors find that quarterly per capita data on consumption goods le isure and monetary assets are consistent with utility maximization further consumption goods and leisure meet necessary and sufficient conditions for weak separability additionally one grouping of relat ively liquid monetary assets meets the necessary conditions for weak separability they also test and find no evidence of homothetic prefe rences copyright 1987 by mit press

the alliances of spin offs versus start ups social ties in the genesis of post soviet alliances this paper links the alliance strategy of emergent firms to the structural relations in the network of new firm organizers data gathered in russia from 1991 to 1993 on nine post soviet commodity exchange markets demonstrate how the difference in internal social structure between spin off and startup exchanges shapes the strategy of their inter firm networks and initial performance the way in which managers come together structures their diversity and openness to the outside environment in turn the social structure internal to the firm affects the ran ge and scope of their ties to other organizations i show how the high range of overlap among the ties between spin off founders has a more concentrated connection to the outside environment than the exchanges created by more loosely linked startup founders the relational costs of the more concentrated ties increases the cost of search however it lowers the cost of malfeasance thus the model suggested proposes that the relative advantage of investing in relational capital is a double edged sword which poses constraints along with its particular advantages finally the model also brings to question the relative merits of concentrated alliances supposedly advantageous to new firms in particular by suggesting that conditions of transition and institutional instability may under cut the relative advantage of familiarity and specialization found in western settings

transaction costs and asset prices a dynamic equilibrium model in this article we study the effects of transaction costs on asset prices we assume an overlapping generations economy with a riskless liquid bond and many risky stocks carrying proportional transaction costs we obtain stock prices and turnover in closed form surprisingly a stock s price may increase in transaction costs and a more frequently traded stock may be less adversely affected by an increase in transaction costs calculations based on the marginal investor overestimate the effects of transaction costs for realistic parameter values transaction costs have very small effects on stock prices but large effects on turnover

corporate entrepreneurs and privatized firms in russia ukraine and belarus abstract this paper provides a preliminary examination of the development of corporate entrepreneurship in privatized firms in russia belarus and ukraine three countries with a common background as part of the soviet union but with different incentives and constraints on entrepreneurship since the beginning of transition using large scale surveys of newly privatized companies the paper shows that there are differences in the nature and extent of entrepreneurship in established businesses in the three countries the paper utilizes representative samples of general directors in 105 privatized russian enterprises 100 privatized ukranian enterprises and 68 privatized enterprises in belarus evidence is presented that suggests that russian privatized firms have lower insider stakes greater outside ownership less employee voice and greater managerial power within the firm than is the case in belarus and ukraine the active monitoring of managers by outsiders may be an important aspect of the transformation of russian firms to efficient commercially viable entities in ukraine and belarus a lack of outside involvement in corporate governance may lead to managerial opportunism and low incentives to attract outside strategic investors including foreign partners russia appears to be building a stronger platform for the future development and effectiveness of entrepreneurship than is the case in ukraine and belarus the findings provide evidence of the importance of direct involvement and the development of relationships to counteract the shortcomings of the legal infrastructure and financial reporting mechanisms in general the findings of the study for russia show that in the current hostile and rapidly changing environment entrepreneurial priorities and actions so far have primarily focused on controlling cash flow seeking new markets and redefining businesses through retrenchment and restructuring although it is as yet too early to examine the longer term effects of the changes in entrepreneurial conditions the paper presents the first large scale comparative evidence of the indications of a divergence in entrepreneurial development between the three countries there was a greater incidence of turnover among the senior management team in russia managers in ukraine and belarus had more diverse strategic objectives in contrast to those in russia where managers have behaved in a more realistic fashion by focusing on retrenchment for academics the study s findings suggest further research is needed to examine the longer term nature and effects of corporate entrepreneurship compare entrepreneurship in new start ups in the three countries and compare with corporate entrepreneurship elsewhere in emerging markets and the barriers to the development of corporate entrepreneurship for practitioners and policy makers the study highlights the need to develop and enforce an appropriate regulatory framework which strengthens the rules of the game under which corporate entrepreneurship operates

growth and inventiveness in technology based spin off firms abstract this study focuses on technology based spin off firms that have had their initial product idea originated in the previous employment of the founder such entrepreneurial spin offs esos arise when an entrepreneur leaves an organisation to start a firm of his own using the data from 60 small swedish technology based firms 30 such entrepreneurial spin offs are identified it was found that as many as two thirds of the spin offs had originated in private firms and only one sixth from universities in this paper the background and the performance in terms of growth and inventiveness are compared for the spin off and the non spin off firms it was found that after an initial ten year period the spin offs were growing significantly faster than the non spin offs however no significant difference in the inventiveness was found between the two groups neither the growth nor the inventiveness could be explained by pre spin off variables but it is speculated that the earlier employment within the spin off parent has indirectly influenced the performance of the spin off firms

encouraging university entrepreneurship the effect of the bayh dole act on university patenting in the united states abstract universities are seen as a source of technology development that is useful to entrepreneurial activity as a result policy makers often consider mechanisms to stimulate technology commercialization at research universities as a way to encourage entrepreneurial activity in a region however the transfer of technology from universities to the private sector requires the exploitation of markets for knowledge which are fraught with difficulty arrow k 1962 economic welfare and the allocation of resources for inventions in nelson r ed the rate and direction of inventive activity princeton nj princeton univ press this article examines the effect of one u s public policy initiative the bayh dole act in the united states on one aspect of technology commercialization university patenting specifically the article explores the university share of patents from 1969 through 1996 across 117 lines of business and shows that the effectiveness of licensing in a line of business is significantly correlated with university share of patents in the post bayh dole period but not in the pre bayh dole period these results suggest that the bayh dole act provided incentives for universities to increase patenting in those fields in which licensing is an effective mechanism for acquiring new technical knowledge the paper discusses the implications of this shift in patenting for research and public policy

high profit strategies in mature capital goods industries a contingency approach high profit and low profit strategic gestalts in two different types of mature capital goods industries are examined multiple avenues to high profits are found within both types but they differ

financing technology based small firms in europe what do we know this paper reviews the evidence on financing technology based small firms tbsfs in europe european tbsfs finance new investments by relying primarily on internal funds due to capital market failures induced by asymmetric information european venture capital has caught up with us venture capital but this is mainly because of the growth in uk venture investments it is unclear whether european venture capital has been able to certify the quality and enhance the growth of funded companies compared with the nasdaq there is little development of trading in high tech stocks in europe the so called new markets established in the 1990s collapsed in the wake of the internet bubble crash public venture capital and research and development r d tax incentives seem to have positively affected high tech firms

consumer theory and the demand for money the following sections are included introductionthe definition of moneythe microeconomic theory of a monetary economythe aggregation theoretic approach to money demandindex number theorythe links between aggregation theory index number theory and monetary theoryunderstanding the new divisia aggregatesthe optimal level of monetary subaggregationeconometric considerationsapproximating the monetary services subutility functionan exampleempirical dimensionsempirical comparisons of index numbersempirical results for the demand system approachextensionsconclusions this abstract was borrowed from another version of this item

which iron cage endo and exoisomorphism in corporate venture capital programs through an inductive study of six corporate venture capital programs we unravel how new organizational units resolve competing forces from two different institutional environments the data suggest that the organizational structure of units that enter a new environment depends on whether they focus their isomorphism internally toward the parent endoisomorphism or externally toward the industry exoisomorphism the focus of isomorphism depends on whom the units seek legitimacy with and on the professionalization of their top management teams we discuss implications of the findings for institutional theory corporate venture capital and corporate venturing more generally

portfolio choice under transitory price impact abstract we consider a portfolio optimization problem for a short term investor who faces an illiquid stock market the illiquidity of this market results from a transitory price impact that is captured by the transaction costs that are convex in the number of shares traded by an investor the linear component in these costs defines a no trading zone while the nonlinear component does not allow trading the stock at an arbitrary rate the portfolio choice problem is solved when the stock path is continuous and when the stock may crash we find that an economy could be in states where the conditional liquidity premium is of the same order of magnitude as the historical risk premium of the stock market if the illiquid stock undergoes crashes then in many states an investor demands a premium for crashes that is much higher than that in the liquid market finally we study the shape of the no trading zone when the nonlinearity in the transitory price impact is strong or moderate we find that this shape is significantly different from that when the transitory price impact is linear