speculative investor behavior and learning as traders learn about the true distribution of some asset s dividends a speculative premium occurs as each trader anticipates the possibility of reselling the asset to another trader before complete learning has occurred small differences in prior beliefs lead to large speculative premiums during the learning process this phenomenon helps explain a paradox concerning the pricing of initial public offerings the result casts light on the significance of the common prior assumption in economic models

accounting rates of return many economic studies provide empirical evidence regarding cross sectional differences in firm profitability in most of these studies firm profitability is measured by an accounting rate of return net income dividend by the book value of assets hereafter arr rather than an economic rate of profit franklin fisher and john mcgowan define the firm s economic rate of profit irr as that interest rate which equates the present value of its net revenue stream to its initial outlay 1983 p 82 fisher and mcgowan examine the analytic relation between a firm s arr and its irr in a series of examples and conclude that the arr is such a bad surrogate for the irr that the results of arr based empirical studies are likely to be totally misleading p 91 william long and david ravenscraft 1984 have criticized the theoretical work of fisher and mcgowan because the nature of the analytic relationship between the arr and the irr in the context of highly simplified hypothetical examples may not be indicative of the nature of the relationship in empirical settings their criticism adopts the utilitarian view that the arr has to be treated as a suitable surrogate for the irr as long as no preferable alternative measure of profitability is available for empirical work this view has merit as long as the measurement error which is contained in the arr is random rather than systematic unfortunately the nature and extent of the measurement error which is contained in the arr in a particular empirical setting can only be determined unequivocally if the irr is unequivocally known in such a case of course there would be no need to rely on the arr at all due to this unhappy circle empirical research on firm profitability has continued to rely on the arr despite the fact that many persons reasonably believe that the results of such research may be totally misleading fisher and mcgowan g c harcourt 1965 while others reasonably believe that the results are reliable enough to form a basis for policy decisions long and ravenscraft recent work by y ijiri 1978 1979 1980 and by myself 1982 has shown that conditional irr estimates can be obtained from data in firms financial statements while these irr estimates are conditional they do abstract from certain extraneous factors that influence arrs and that differ across firms consequently the conditional irr estimates are free from some of the sources of measurement error which are known to contaminate the arr thus the conditional irr estimates can be used to provide evidence on whether these sources of measurement error have or have not affected the outcome of prior studies in which profitability was measured by the arr such evidence can help to objectively resolve the conflict between the opposing views on the reliability of arr based profitability research this paper uses conditional irr estimates to examine the properties of the measurement error in the arr in a study of the relationship between firm profitability and firm size the remainder of the paper is organized as follows in section i the theoretical work of fisher and mcgowan is used professor of accounting university of iowa iowa city ia 52242 i gratefully acknowledge the comments of william albrecht dan dhaliwal gary fethke franklin fisher scott linn william r kinney jr and the participants of a workshop at the university of florida on earlier versions of this paper 1 some authors for example william long and david ravenscraft 1984 have used the sales margin ratio earnings sales as a measure of profitability however if one views profitability as return per unit of sacrifice the sales margin ratio is not a profitability measure since it ignores the sacrifice or investment required to generate a dollar of sales consequently this paper does not attempt to shed any insight into prior studies that have relied on the sales margin ratio as a measure of profitability

strategic goals perceived uncertainty and economic performance in volatile environments an untested proposition in the normative strategic management literature is that strategists should make decisions based on accurate assessments of their external environments empirical organization theory literature holds the assumption that high levels of perceived uncertainty are detrimental to performance both literatures assume goal consensus to be important to effectiveness this study investigated the relationship between top management perceptions of uncertainty corporate goal structures and industry volatility in explaining economic performance in 20 firms findings suggested that attempts to avoid true environmental uncertainty and to seek high levels of goal congruence may be dysfunctional

intraindustry structure and the ease of strategic change there has been considerable recent work in industrial organization emphasizing the importance of group stratification within industries the thrust of this literature is that in empirical work and in particular in investigating public policy problems differences across firms within an industry may be crucial this paper is intended as a contribution to the empirical literature of group structures in this paper i examine patterns of strategic group membership in a number of industries and analyze changes in the strategies used by firms in particular i provide a series of rather simple exploratory tests of the importance of intraindustry strategic differences in a number of industries

a longitudinal study of the competitive positions and entry paths of european firms in the u s pharmaceutical market this paper combines the statistical insights of dynamic strategic group analysis with the qualitative richness of historical analysis to explore the modes of entry expansion paths and competitive postures of european firms in the u s pharmaceutical market patterns of entry and market development over a 20 year period are analyzed the roles of strategic assets and competencies in determining both the entry strategy and the final competitive posture of these firms in the u s market are discussed

strategic group formation and performance the case of the u s pharmaceutical industry 1963 1982 the focus of this paper is on three major questions 1 what is the theoretical rationale for the strategic group concept 2 does strategic group membership have performance implications and 3 are strategic groups and membership in strategic groups stable characteristics of industries a statistical procedure is proposed to longitudinally identify strategic groups the empirical setting is the u s pharmaceutical industry over the period 1963 82 while performance differences are found in terms of market share profitability differences between groups are not observed neither are differences found in terms of risk and risk adjusted performance these results are attributed to the existence of performance variation within each strategic group a dynamic model of competitive repositioning is proposed which helps integrate the findings from the study

who is against immigration a cross country investigation of individual attitudes toward immigrants abstract this paper empirically analyzes economic and noneconomic determinants of individual attitudes toward immigrants within and across countries the two survey data sets used covering a wide range of developed and developing countries make it possible to test for interactive effects between individual characteristics and country level attributes in particular theory predicts that the correlation between pro immigration attitudes and individual skill should be related to the skill composition of natives relative to immigrants in the destination country skilled individuals should favor immigration in countries where natives are more skilled than immigrants and oppose it otherwise results based on direct and indirect measures of the relative skill composition are consistent with these predictions noneconomic variables also are correlated with immigration attitudes but they don t alter significantly the labor market results

cointegration of firm strategies within groups a long run analysis of firm behavior in the japanese steel industry this paper uses cointegration analysis to study the competitive interaction among firms within the integrated and minimill groups in the japanese steel industry the use of cointegration analysis overcomes some of the limitations associated with prior attempts at modeling firm behavior within groups and allows us to model strategies that take considerable time to adjust results indicate that several strategies displayed slow adjustment characteristics all of the strategies that displayed these properties were cointegrated within the group finally over the long run the rate of strategic response to shocks in the system varied across members and strategies some converged while others diverged from the group relationship we conclude by discussing the relevance of our findings to research on strategic groups and competitive dynamics among firms thus the paper contributes to the literature on strategic groups and competitive dynamics and illustrates the use of cointegration analyses to study the competitive behavior of firms copyright 2002 john wiley sons ltd

is tourism firm competitiveness driven by different internal or external specific factors new empirical evidence from spain abstract the quest to understand the multilevel antecedents of competitiveness has led to a separation of approaches on one side of the question are the environment theories that analyze the structural characteristics of the general and competitive environment on the other side are the resource based view and its extensions that highlight firm specific resources and capabilities as the main basis of firms competitiveness however in recent years the nature of competition and shifting economic conditions have given rise to new theoretical approaches that complement the assumptions underlying both environmental and firm theories specifically this study contributes by examining the regional environment effect the district effect and the strategic group effect through a study of 364 spanish tourism firms this research explores the relative importance of distinct external forces such as the general environment or country effect the regional effect the competitive environment or industry effect the district effect and internal factors such as the firm s tangible resources capabilities and strategy selection the results demonstrate that firms capabilities are more important than environment effects and tangible resources

innovation and strategic divergence an empirical study of the u s pharmaceutical industry from 1920 to 1960 today firms employing two distinct survival strategies 1 innovation and 2 imitation coexist in the u s pharmaceutical industry history indicates that this intraindustry heterogeneity did not exist prior to 1940 this study empirically investigates the origin of this strategic divergence by focusing on changes in firms r d inputs and outputs it finds that some u s pharmaceutical firms responded to the opportunity presented by the discovery of antibiotics in the 1940s by investing more in r d while many others did not over time the innovators dominated in developing new drugs and the gap between innovators and imitators steadily increased these findings also shed light on the genesis of strategic groups a phenomenon that is not yet well understood

the future of capitalism a consideration of alternatives the article reviews three entry points into a discussion of alternatives to today s neoliberal capitalism the first examines the need for a green new deal from mostly uk based think tanks positioning the household as central to the economy posing new core values for the economy that respect the environment the social economy as well as the possibilities offered by web based technologies for new economic and political community relations the second entry point is a review of feminists search for alternatives to mainstream economics and global development processes with calls for a transition to place based socio economic practices built on the ethics of care gender justice the centrality of social reproduction and community livelihoods the last section examines the alternatives to global development and neoliberal capitalism emerging from latin america examining buen vivir intercultural pluriversal political and economic practices and lessons from latin american indigenous women and decolonial feminist movements

testing the present value relation for housing prices should i leave my house in san francisco abstract we examine the efficiency of residential housing markets by examining price rent and cost of capital indices generated from a transactions level data base for alameda and san francisco counties in northern california we can reject both constant and nonconstant discount rate versions of the housing price present value relation in the short run long run results are consistent with the housing price present value relation when we adjust the discount factor for changes in both tax rates and borrowing costs that characterize our 1970 1988 sample period our preferred explanation for the short run rejection of but long run consistency with the present value model is the high transaction costs that characterize the housing market however we cannot rule out the possibility that deviations of actual and present value price are due to asset market bubbles or nonrational expectations

superstition and real estate prices transaction level evidence from the us housing market we investigate the impact of superstition on prices paid by chinese american home buyers chinese consider 8 lucky and 4 unlucky lacking explicit buyer ethnicity identifiers we develop a binomial

gender and the stability of consumption a feminist contribution to post keynesian economics alan coddington critiques post keynesians for their use of fundamental uncertainty he argues that fundamental uncertainty should also affect the consumption function undermining the case for keynesian macroeconomic policies this paper shows how contemporary feminist theory provides post keynesians with a compelling response to coddington it uses the concept of gender as an effect of heteronormativity to integrate the household the institution that undertakes consumption spending into post keynesian economics this gives us a more robust analysis of the sources of consumption stability in a world marked by the fundamental unknowability of the future

selection on observed and unobserved variables assessing the effectiveness of catholic schools in this paper we measure the effect of catholic high school attendance on educational attainment and test scores because we do not have a good instrumental variable for catholic school attendance we develop new estimation methods based on the idea that the amount of selection on the observed explanatory variables in a model provides a guide to the amount of selection on the unobservables we also propose an informal way to assess selectivity bias based on measuring the ratio of selection on unobservables to selection on observables that would be required if one is to attribute the entire effect of catholic school attendance to selection bias we use our methods to estimate the effect of attending a catholic high school on a variety of outcomes our main conclusion is that catholic high schools substantially increase the probability of graduating from high school and more tentatively attending college we find little evidence of an effect on test scores

residential buildings and the cost of construction new evidence on the efficiency of the housing market present value studies of asset market efficiency are controversial because they compare asset prices to unobserved discounted streams of future rents as an alternative if housing markets are efficient then the price of residential capital or buildings should satisfy the following two conditions i deviations between new building prices and construction costs should disappear faster than construction lags and have no effect on construction and ii temporary building price shocks should dissipate at a similar rate for different vintage buildings results from an error correction model support both hypotheses for single family housing in vancouver british columbia this implies that the implicit market for residential buildings is efficient and that any inefficiencies in the housing market must lie in the market for land itself

strategic orientations incentive plan adoptions and firm performance evidence from electric utility firms this study examines the performance implications of the fit between strategic orientations and incentive plan characteristics research hypotheses are based on a framework that draws upon managerial discretion and agency theories to identify the links between firm strategy managerial motivation and control managerial risk bearing and incentive plan characteristics a pooled cross sectional time series research design is used to test hypotheses in a sample of 50 electric utility firms consistent with theory results indicate that annual bonus plans that use cash incentives and accounting measures of performance lead to better performance among firms with defender strategic orientations in contrast firms with prospector strategic orientations realize performance benefits when they adopt stock based incentive plans and use market measures to evaluate managerial performance 1997 john wiley sons ltd

generational technological change effects of innovation and local rivalry on performance we tested the effects of innovation and market complexity on firm performance generational technological change a major advance within a technology regime fosters the emergence of niches and local

do dragons have better fate i introduction traditionally the chinese believe that the timing of one s birth according to the signs of the chinese zodiac determines the fate of that individual based on this belief some parents plan the births of their children according to the chinese zodiac to give the child an extra endowment of capital indeed some previous studies have confirmed that the chinese tend to plan the birth of their child according to the lunar calendar 1 goodkind 1991 1996 studied the timing of birth for several asian economies including china and hong kong he found that the chinese tended to plan more for the birth of their offsprings in dragon years a similar story was found in hong kong the plot of birth rates in hong kong for the past 20 years shows that birth rates were higher in dragon years viz 1988 and 2000 figure 1 see yip et al 2002 for a statistical discussion of this phenomenon figure 1 omitted several recent news reports also suggested the investment motive in the choice of birth timing the far eastern economic review 24 june 1999 reported that 2000 a dragon year would be a banner year for births in china it pointed out that many chinese would consider the combination of a dragon year and the millennium a double whammy of good fortune consequently many couples plan to give their cherished only child a head start in life by getting pregnant in 1999 so their babies would be born in 2000 a dragon year this report pointed out that there was indeed an increase in the number of pregnancies in beijing hospitals during 1999 with due dates in 2000 other reports suggested that dragons i e individuals born in dragon years might have better fortune forbes magazine 1 november 2002 www forbes com reported the percentage of the 400 richest american businessmen who were born under each sign of the chinese zodiac it showed that 43 of these 400 richest businessmen nearly 11 were born in dragon years making the dragon the most populous sign in this group of 400 successful individuals among these peers when compared to the 11 other zodiac signs 2 such reports supporting the belief that dragons have a better fortune suggest that they are either luckier or more capable of using their inborn human capital more productively than individuals born in other years there are many reasons why dragons may have better earnings even if the superstition is incorrect first superstition about birth timing may simply be self fulfilling if for example employers believe that workers born in a dragon year tend to be more productive they may be willing to pay a higher salary to hire dragons workers receiving a higher salary may work harder based on an argument similar to the efficiency wage hypothesis carmichael 1989 alternatively dragons may have more pride because of this superstitious belief try to be more successful and thus earn more during their careers second higher earnings may result because parents who for example carefully planned their child s birth in a dragon year are also more likely to invest more in their child s future through better education although higher expectations from parents of children born in dragon years may drive the children to spend more years studying some investments by dragons and their parents may not be as readily available as schooling on the contrary it is not difficult to see the opposite side of the coin that is dragons may end up with lower earnings if many parents believe in the superstition the reason is that if there is a larger number of individuals born in a dragon year this may result in keener competition among them for limited resources such as schooling and during their working years job opportunities see welch 1979 for an illustration of how cohort size might affect earnings in the literature only a handful of studies have investigated various cultural superstitions from an economic perspective

room in the kitchen for the melting pot immigration and rental prices this paper studies the response of housing markets to immigration shocks following card 1990 i examine the changes in rental prices in miami and three comparison groups after the mariel boatlift this exogenous immigration shock added an extra 9 to miami s renter population in 1980 i find that rents increased from 8 to 11 more in miami than in the comparison groups between 1979 and 1981 by 1983 the rent differential was still 7 rental units of higher quality were not affected by the immigration shock units occupied by low income hispanic residents in 1979 experienced an extra 8 differential hike with respect to other low income units relative housing prices moved in the opposite direction from rents in the short run

antecedents of convergence and divergence in strategic positioning the effects of performance and aspiration on the direction of strategic change this paper investigates drivers of convergence and divergence in strategic positioning in terms of resource allocation decisions the study based on the behavioral theory of the firm suggests two unexplored kinked curve relationships between performance gaps and strategic convergence divergence first the study suggests a negative relationship between a focal firm s performance relative to aspiration levels and strategic convergence divergence where the slope is steeper when performance is above the aspiration level second it suggests a positive relationship between a target firm s performance relative to a focal firm s performance and strategic convergence divergence where the slope is steeper when a target firm s performance is below a focal firm s performance empirical analysis of dyad level data in the u s food processing industry reveals that the direction of a firm s strategic change is shaped by its aspiration level its performance level and the performance gap between it and the firm it selects as a model this study contributes to the current literature by offering preliminary indications of when and how a firm moves closer to or further away from other competing firms in its strategic position

how do we know that real wages are too high it is common belief that the wages that we observe are above the level that would prevail in a competitive labour market and also it is common to believe that wage moderation should be encouraged as a way to keep unemployment down this paper considers whether we can have confidence in these beliefs it presents a number of models designed to cast doubt on the conventional wisdom first we show that in an efficiency wage model in which there is involuntary unemployment a binding minimum wage may increase employment we then present a general equilibrium matching model in which there is involuntary unemployment but wages are below market clearing levels and raising wages can reduce unemployment we then consider the empirical evidence on employment and wage determination to argue that it is just as consistent with this model as with models in which wages are at or above market clearing levels

deficient foresight a troublesome theme in keynesian economics the fact that john maynard keynes had made a distinguished contribution to the theory of probability 1921 no doubt predisposed many of his readers to imbue with great significance his subsequent remarks on the related topic of uncertainty in economic decision making among those who have provided commentaries on his work there are those who have singled out this uncertainty theme not only for its special importance but also for its potential for analytical subversion the purpose of this paper is to scrutinize the ideas involved in this particular aspect of keynes work together with the lines of argument that have emerged from those commentators who have pursued it the result of this scrutiny will be to call into question the idea that there is anything peculiarly subversive in the analytical consequences of broaching problems of uncertainty in economic decision making i shall argue rather that as an analytical issue it is depending on how it is handled either innocuous or else quite indiscriminately destructive

strategic leaders or strategic groups a longitudinal data envelopment analysis of the u s brewing industry abstract this paper builds on strategic group theory which was originally introduced to help explain the observed variation in firm profitability across an industry this paper applies data envelopment analysis dea to identify both strategic leaders the best practice players in the industry and strategic groups to examine which are the source of the most sustained heterogeneity in the performance of u s brewers contrary to the prevalent research approach in strategy and organization research which places a premium on empirical analyses that maximize explanation of average behavior daft and lewin 1990 this paper examines extremal observations as a means of studying or inducing theories about best practice such as best strategies or most effective organization design lewin and minton 1986 the paper argues that significant insights new knowledge and unexpected theories can arise from studying the best or worst of a population the paper applies dea to a longitudinal reanalysis of u s brewing data to demonstrate its usefulness for obtaining new insights from identifying and studying industry outliers the paper raises important questions about the construct of strategic groups and illustrates how competing theories can be deduced and analyzed for explaining performance heterogeneity in the u s brewing industry

strategic risk an ordinal approach strategic management researchers have shown increasing awareness of the importance of the concept of risk at the strategic level in recognition of this interest this research adopts a commonly used conceptualization of risk and shows how this conceptualization leads to a new measure of risk based upon the chance of loss of relative position within a set of firms this framework is shown to be particularly appropriate for strategy research information contained in probability distributions describing the relative positions of sets of firms over time is shown to be partitionable on the basis of gain or loss in position as well as on firm identity leading to the derivation of a new measure of strategic risk for an individual firm this development also provides a hierarchical quantification of risk at the levels of the industry group and individual firm the ordinal risk measure is applied to both hypothetical data for illustration and to data on the u s airline industry

rethinking research methods for the resource based perspective isolating sources of sustainable competitive advantage an exploration of traditional perspectives and contemporary propositions regarding sustainable competitive advantage points to the conclusion that the locus of advantage is located specifically within organizational effects the key issue emerges that research investigating sources of sustainable competitive advantage must be done not only on organizations but also in organizations the fallout from this conclusion is however that the research methodologies traditionally used in strategy research will not unambiguously uncover these sources of sustainable advantage using organizational culture as an example of a possible source of sustainable advantage within a resource based paradigm a four step research framework is suggested for isolating these organizational effects copyright 1999 john wiley sons ltd

superstition in the housing market we provide the first solid evidence that chinese superstitious beliefs can have significant effects on house prices in a north american market with a large immigrant population using real estate data on close to 117 000 house sales we find that houses with address number ending in 4 are sold at a 2 2 discount and those ending in 8 are sold at a 2 5 premium in comparison to houses with other addresses these price effects are found either in neighborhoods with a higher than average percentage of chinese residents consistent with cultural preferences or in repeated transactions consistent with speculative behavior jel d03 r2 z1

strategic group dynamics a longitudinal study was conducted of strategic group dynamics over periods of economic stability growth and decline in international offshore oil drilling some changes in group strategy were ob