a profile of new venture success and failure in an emerging industry abstract this study examined three types of factors 1 the characteristics of the lead entrepreneur 2 startup processes undertaken during the founding of the firm and 3 firm behaviors after start up including management practices and strategic behaviors associated with new venture success and failure the research involved a field study of 26 small young firms 13 successful and 13 less successful or failed each engaged in the distribution of fresh juices in eight metropolitan centers about 30 of the total market in the united states both quantitative and qualitative data were collected through field work at each firm location a statistical analysis of data collected in a structured questionnaire was the primary method for testing the factors case studies of all of the firms were developed to provide qualitative support for the quantitative findings of the study results from these analyses indicated significant differences between successful and unsuccessful firms in all three categories lead entrepreneurs in successful firms were more likely to have been raised by entrepreneurial parents have had a broader business and more prior startup experience and believed they had less control of their success in business than unsuccessful entrepreneurs successful entrepreneurs seek to reduce risk in their businesses they work long hours have a personal investment in the firm and are good communicators successful firms were those initiated with ambitious goals lead entrepreneurs had a clear broad business idea which provided the adaptive torque required to overcome adversity confrontation and often a troubled financial condition effective startup or purchase required broad planning efforts that considered all aspects of the industry and firm successful firms spent more time planning 237 hours than unsuccessful firms 85 hours the use of outside professionals and advisors for help in solving specific problems during startup was important for success as well as the advice and information provided by other industry participants particularly customers and suppliers most ventures did not have written business plans nearly all purchased firms failed buyers of competitively troubled firms were negatively displaced generally unemployed managers who lacked broad management experience and while often well educated had no prior experience in purchasing a business successful firms were found to be more flexible participative and adaptive organizations these firms had employees who could perform the work duties of others and were likely to be managed in a way that provided these workers with the flexibility to modify their jobs to adapt to changing industry and organizational conditions lead entrepreneurs of successful firms were likely to spend more time communicating with partners customers suppliers and employees than the lead entrepreneurs of unsuccessful firms successful firms sought to become larger firms and embarked upon sales to broad sectors of the market successful firms achieved high market shares with market shares came higher financial returns less successful firms were restricted to narrow market sectors consisting of smaller customers and those more difficult to service while customer service remained an important concern the commodity nature of fresh juices failed to support differentiation and the narrowly focused firm was typified by high product costs and unprofitable operations

beyond gdp the quest for a measure of social welfare this paper critically examines the various approaches to the measurement of individual well being and social welfare that have been considered for the construction of alternatives to gdp special attention is devoted to recent developments in the analysis of sustainability in the study of happiness in the theory of social choice and fair allocation and in the capability approach it is suggested in the conclusion that although convergence toward a consensual approach is not impossible for the moment not one but three alternatives to gdp are worth developing jel i31 e23 e01

occupational choice and the process of development this paper models economic development as a process of institutional transformation by focusing on the interplay between agents occupational decisions and the distribution of wealth because of capital market imperfections poor agents choose working for a wage over self employment and wealthy agents become entrepreneurs who monitor workers only with sufficient inequality however will there be employment contracts otherwise there is either subsistence or self employment thus in static equilibrium the occupational structure depends on distribution since the latter is itself endogenous we demonstrate the robustness of this result by extending the model dynamically and studying examples in which initial wealth distributions have long run effects in one case the economy develops either widespread cottage industry self employment or factory production employment contracts depending on the initial distribution in the other example it develops into prosperity or stagnation

natural resources national income and economic growth in africa abstract because standard measures of aggregate income such as gross domestic product gdp do not account for natural resource depletion their use as gauges of economic performance tends to exaggerate the benefits of resource extraction accounting for natural resource depletion in 18 african countries indicates different patterns of growth than those suggested by gdp figures use of the revised measures in analyses of the link between exports and growth suggests that export expansion may generate increases in measured gdp without stimulating increased production in contrast real exchange rate alignment is correlated with growth in both conventional gdp and the revised accounts

the environment and emerging development issues development economics for the most part has failed to recognize renewable environmental resources as economic goods yet the lives of the poor in developing countries are intimately tied to the fate of their local common property resources soil fuel wood water and so on ignoring the loss of common property renewable resources via degradation centralization or privatization in calculations of net national product can mask the destruction of resources available to a country s poor behind the false appearance of a growing national economy this paper describes the difference between the problem of managing local common property resources in developing countries and the problem of protecting the global commons such as the atmosphere and oceans it outlines the calculations that would include the local commons in the national income accounting of capital assets and argues that the interests of those most dependent on the increasingly scarce local commons will be best served by placing control in their hands while the central government provides infrastructure and educational support to control the pollution of the global commons on the other hand the paper sketches a plan in which most countries would have a high incentive to participate a global allocation of limited tradable permits to discharge defined pollutants

welfare equivalent nnp under distributional objectives abstract this note concerns social accounting when there are social objectives for the distribution of utility across consumers the most important result is that a suboptimal distribution across agents causes the net national product to fail as a welfare measure

venture management in japanese companies abstract this study based on a survey of reports on the subject published in japan since 1980 and an in depth analysis of 20 companies aims to understand the reasons why japanese firms have adopted western style venture management techniques and the organizational patterns they have created to implement them although they started relatively recently large japanese firms have adopted venture management methods in about the same proportion as their american counterparts the main reasons for this lie in the need to diversify out of mature industries to foster innovation to speed up new product development and to create an organizational vehicle permitting creative younger employees to develop their ideas the traditional characteristics of japanese firms have not been found suited to the latter two reasons the general pattern of organizing new venture activities was found to represent five different models ranging from company wide task forces to the creation of a separate new venture company these models constitute a decreasing order of integration of venture teams with other divisions and staff departments of the parent company the degree of integration of venture teams with the parent was found to be only partially related to the extent of diversification involved while task forces and new venture companies the two extreme categories represented increasing diversification the intermediate organizational forms were less uniformly related in separating the diversification variable into its technology and market components however a somewhat better explanatory link could be established companies in which new ventures drew upon the core technology tended to integrate their ventures with the parent more than others the other reasons for the weak link between diversification and integration was surmised to be the general trend toward encouraging entrepreneurship and speeding up the innovation process this was reflected in the authors interviews with companies and some overt behavior particularly the propensity to spin off new venture early and often the use of venture management methods in japan with its emphasis on youth and independence constitutes a partial renunciation of certain managerial policies and cultural traits that formed the strength of japanese companies in the past while certain aspects of traditional japanese management such as small group accountability shared division of labor and self organizing teams favor the implantation of venture management methods in japan others having to do with the seniority system and egalitarianism do not so far at least japanese managers have coped reasonably well with the organization frictions that one might have expected to arise partly because of the active interest and involvement of senior management the latter not only helped define the strategic context the domain of search but had venture teams report to them directly or indirectly in most cases

a comparison of japanese and u s firms completing initial public offerings abstract we set out to examine firms breaking into the top tier of for profit companies in the u s and japan to find differences across the two groups to accomplish this we conducted a questionnaire survey of companies that had recently undergone an initial public offering ipo in each country and compared them on characteristics frequently associated with new firms as we expected even when the different sizes of the two economies were taken into account there were considerably fewer listings in japan than in the u s one reason for this is that the listing requirements for young japanese firms although not stricter are much more strictly enforced hence fewer japanese firms are able to list our results show that the japanese firms were markedly different from their u s counterparts on several characteristics they tended to be older and larger which is consistent with more stringent listing requirements in japan they were also much more often led by their original founders this is a surprising result given that the japanese firms being older had longer to lose their founders when a successor to the founder was president it was much more often a relative of the founder than in the u s the japanese founders rated themselves higher on relatively emotional characteristics such as aggressiveness paternalism and charisma than did either the u s presidents or the japanese nonfounder presidents the japanese firms relied solely on the president for decision making prior to the ipo more often than the u s firms did however the japanese firms also moved in greater numbers to group decision making around the time of the ipo the post ipo investment strategies of the japanese firms were characterized by a focus on new product development an increase in r d spending and investment in the company s capital plant in contrast the u s firms reported more interest in exploiting their existing market and buying other companies usually leaving r d spending at its pre ipo level overall it is surprising that on many characteristics the japanese ipos tended to fall more to the extreme associated with new companies than did the u s firms they were dominated by founder influence the founders were apparently highly emotional their management style was initially autocratic and their strategies targeted innovation and internal development as avenues to growth this pattern is consistent with a prior hypothesis that the lack of structural support for new firms in japan results in only the most extreme personalities pursuing and succeeding in company formation for researchers a significant implication of this research is that japanese ventures may not behave according to the same rules as u s ventures research samples that fail to distinguish nationality may obscure cross regional variations for practitioners the major lesson is that a japanese venture is likely to be much different from one in the u s dealing with one is probably even more unlike dealing with an established company than working with a u s start up might be

veblen effects and their impact on the new european community and some of their trading partners abstract this paper seeks to examine the impact of the interdependence of consumer markets in the eec countries on consumer behavior we also wish to measure potential taste shifting effects these veblen effects arise from the impact that prices and income have directly on the utility function largely because consumers seek to emulate each others behavior this paper provides estimates of a demand system for seven of the eec countries which takes these veblen effects into account as well as comparable estimates for some non eec european countries

national product related welfare measures in the presence of technological change externalities and uncertainty the purpose of this paper is to discuss under what conditions welfare can be measured by observables related to the national product or hamiltonian along the optimal trajectory under nonattributable technological or environmental change welfare will depend on time itself meaning that the hamiltonian along the optimal trajectory will be a biased measure of welfare this result will also hold if we make the time dependence of welfare endogenous by replacing technological change will externalities that are not internalized during optimization on the other hand if we take the externalities fully into account then the hamiltonian will represent the appropriate measure of welfare similar results also hold in the case of uncertainty where we show that a generalized hamiltonian provides a welfare measure and that the deterministic measures are special cases of their stochastic counterparts

sustainability and technical progress a rigorous model connects together the following three basic concepts 1 sustainability meaning the generalized future power of an economy to consume over time 2 green nnp meaning a current measure of national income that subtracts off from gnp not just depreciation of capital but also more generally depletion of environmental assets evaluated at current efficiency prices 3 technological progress meaning a projection onto the future of the so called solow residual a simple general formula is derived some crude calculations suggest a possibly strong effect of the residual which hints that our best present estimates of long term sustainability may be largely driven by predictions of future technological progress

macroeconomic implications of conspicuous consumption a sombartian dynamic model this chapter presents a dynamic general equilibrium model in which consumers have status preference i investigate the manner in which capital accumulation is impeded by conspicuous consumption a la corneo and jeanne j public econ 66 55 71 1997a following the literature social norms are given as either bandwagon type or snob type i then show that when the economy is characterized by a bandwagon type social norm capital accumulation exhibits interesting patterns those patterns include for example an oscillating convergence path the rise of the economy feeds its decay through conspicuous consumption and that decay suppresses conspicuous consumption and engenders prosperity as predicted by sombart liebe luxus und kapitalismus reprinted 1967 deutscher taschenbuch verlag munchen 1912

implementing carbon credits for forests based on green accounting abstract this paper presents a carbon accounting method for forests that is implementable in the sense that it makes use of observable information the valuation of the effects of carbon dioxide is based on asset values rather than rental values with minor differences due to the treatment of such accidents as fires and pestilence the method corresponds to the flow method of the physical carbon accounting literature the stock change method of carbon accounting however is incompatible with economic principles rather than set carbon values to their optimal levels in the pigovian tradition we use current societal standards we also present a discussion of how to implement the scheme in the face of uncertainty

social accounting and welfare measurement in a growth model with human capital this paper addresses social accounting and welfare measurement in an economy where human capital is an important factor in the economic system human capital accumulation depends on the time consumers spend in education however human capital is also a separate argument in the production function facing firms which gives rise to a production externality in a command optimum where the externality is internalized we show that an augmented nnp measure is the appropriate welfare indicator we also discuss the taxtransfer system required for the decentralized economy to reach a command optimum

economic growth pollution and renewable resources abstract this paper first analyzes a model of economic growth with stock pollution allowing smooth substitution between emissions and reproducible capital when emissions are optimally controlled the steady state consumption is lower than without pollution control but the optimal steady state equilibrium may not exist if the marginal productivity of capital is bounded the steady state is shown to be a local saddle point independent of the rate of discount if pollution is not controlled a competitive economy moves along a stable growth path toward a too heavily polluted steady state next a growth model in which pollution affects the growth of renewable resources is presented the conditions for the existence and saddle point property of the steady state are given and the consequences of nonoptimal externality taxes are discussed when renewable resources are included higher than optimal pollution may decrease steady state consumption contrary to the case where renewable resources are ignored

a note on social accounting and unemployment abstract this note concerns the implications of unemployment for social accounting the main result is that unemployment invalidates the welfare interpretation of static indices related to the net national product

the role of technological progress in testing adjusted net savings evidence from oecd countries abstract in this paper we investigate the relationship between comprehensive measures of savings and changes in future consumption in oecd countries this relationship is at the basis of the interpretation of adjusted net savings as a weak sustainability indicator and so evidence of its validity provides support to the use of this indicator we construct various measures of comprehensive savings for 20 oecd countries to include depletion from non renewable resources human capital investment and technological progress given their importance especially for rich countries we focus on the role of technical progress and human capital in the form of changes in education level we do not find strong evidence in favor of including green adjustments in the conventional net savings however we find compelling evidence for the inclusion of technological progress since this involves a forward looking term the above result suggests that to construct an indicator of weak sustainability from conventional net savings some estimate of future technological progress is needed

samuelson and neoclassical economics this is not a festschrift but a study of the prodigious samuelson phe nomenon his history making contributions to and impact on the econom ics of our age and the intricate often perplexing and divergent trends in modern economics all intensely controversial subjects that will be argued scrutinized and periodically reassessed by economists of various strands and traditions for years to come for as samuelson wrote of pigou immortality does have its price a scholar with such an out standing body of contributions must expect other men to swarm about it 1966 p 1233 subject it to scholarly scrutiny and challenge it although paul samuelson was 65 on may 15 1980 and our best wishes go out to him for long life and continued enrichment of economics this is neither a birthday party nor a gathering of only the good fairies for as he himself has said of marx a great scholar deserves the compliment of being judged seriously and critically 1972 p 268 in accordance with the rule of roman law audiatur et altera pars i have invited representative scholars of widely divergent perceptions to offer their critical evaluation of the age of samuelson while the response was by and large gratifying some scholars were unable to meet the deadline ix x preface and with much compunction i have had to expand my own essays to partly fill the gaps

new ventures and employment growth abstract the research studied the extent to which the employment size of a new firm is set the start how many subsequently grow and whether those that survive and grow have any identifiable characteristics answers to these questions would help to determine whether future assistance programs aimed at improving the performance of new firms should concentrate on the actual start up process or on the first few years of trading the study was pan of a series conducted in st joseph county indiana a county that had experienced the same economic decline as the rest of the midwest rust belt of the united states it formed part of a community effort named project future to develop a strategy for industrial regeneration the series first examined the characteristics of the new firm population during the years 1976 1982 birley 1985 1986 and two results emerged that were pertinent to this study first 92 of the firms that ceased trading in the first two years were the smaller ones employing less than 20 people second the entrepreneur in the county tended to use only the informal networks of family and friends when gathering the resources of the firm rather than the formal networks of accountants lawyers realtors and banks the question that remained therefore and which formed the basis of this article was the extent to which it was possible to identify and thus focus the strategy upon those firms or industrial sectors that exhibited growth characteristics three research questions were posed how many tended to grow during the first few formative years what was the rate of growth and on what dimensions did it occur and when did growth occur were there differences in the growth of firms of different ages the primary measure of growth used was that of employment for both the start of the firm and at the time the questionnaire was administered 1983 data were collected on the number of owners part time and full time and on the number of employees both part time and full time and on their level of skill financial data included sales level profits level and forecast sales trend indicators of possible change were either an altered legal structure or a move of premises control variables included incubator characteristics industry and supplier and customer geographic base the results of the study show that for the majority of the firms employment size was set at the start no aggregate growth occurred in either full time or part time jobs nor was there any apparent age effect during the six years studied firms that had increased the number of employees were of all ages those firms that grew sales during the early years did so by increasing the customer base and without generating further jobs analyzing growth by industry only one significant result emerged entrepreneurs from smaller companies tended to set up in competition with their incubator firm while those from larger firms tended to start firms with no apparent relationship to their previous employment the major inference from this study is that growth would appear not to be a primary objective of the entrepreneur further research to test these results is clearly necessary should they be replicated elsewhere however future strategies to improve the job generation capabilities of new firms would be most fruitful if directed at building a solid foundation for all firms rather than trying the impossible task of picking winners such assistance can only be provided at the time that the resources necessary for the successful launch of the firm premises equipment orders employees money are being assembled since almost all of these firms are local in nature strategies that devise specific schemes tailored to meet local needs and using local people are most appropriate by contrast the small number of high growth firms should be easily identifiable in the community and assisted individually

new firms societal contribution versus survival potential abstract new business firms are now considered a major source of new jobs economic growth technical innovation and economic flexibility they may provide a major strategic advantage for the united states in world competition a more complete precise understanding of the dynamics of new firm development their societal contributions and factors affecting their survival has considerable policy and managerial significance a study of new firm contributions and survival was completed to determine whether the same factors would account for both they do not the research began with a substantial body of descriptive information on 551 new firms initiated in minnesota between 1978 and 1984 the initial data were collected in the summer of 1984 a one year follow up was completed in 1985 to determine new firm survival the sample was representative of all major industry sectors and all regions of the state about 60 were located in the minneapolis st paul urban area attempts to predict current 1984 contributions indicated that age was not a significant factor older new firms did not contribute more than younger new firms the developmental pattern primarily the average annual growth rate was highly related to sales or jobs provided in 1984 next most significant was the industry of the new firm manufacturing distributive services and business producer service new firms provided more significant contributions the one year follow up was able to determine the survival status of 548 of the 551 firms slightly less than 10 48 had not survived major factors related to survival appeared to be age high death rates at 2 3 years and attention to financial matters

wealth seeking reconsidered abstract if individuals are interested in their relative wealth position they engage in contests for wealth this leads to a steady state with overaccumulation in a simple growth model it is shown that if some individuals are engaged in wealth seeking activity but others are not the latter might benefit however wealth seeking is not welfare enhancing under usual assumptions concerning production technology the steady state equilibrium is characterized by a marginal productivity of capital that is below the steady state rate of time preference and by emergence of a class structure

one sided sustainability tests with amenities and changes in technology trade and population abstract if an economy with multiple consumption goods including environmental amenities uniquely maximises present value with constant discounting it is unsustainable at some time if either of two measures augmented net investment or the change in augmented green net national product are zero or negative then augmented denotes that time is treated as a productive stock which includes in each measure the value of future exogenous changes in technology or terms of trade adjustments are found to make each measure a test for individual sustainability when population grows exogenously the practical and philosophical rationale for testing sustainability in a present value maximising and therefore fully prescribed development path is discussed

pollution tax design and green national accounting abstract this paper concerns social accounting when pollution gives rise to a consumption externality the purpose of the paper is to reconcile the willingness to pay technique as a means of collecting information put forward in earlier studies with the growth theoretical approach to social accounting this is accomplished by designing approximations of pigouvian emission taxes on the basis of currently available willingness to pay information the paper analyses the welfare effects of these taxes as well as to what extent they can be used to measure approximately the value of depletion of environmental capital in the national accounts

on relative wealth effects and the optimality of growth abstract we present a model of endogenous growth in which a desire for social status lead individuals to care about their relative wealth the growth rate of the economy is socially optimal if the status motive is sufficiently important but the presence of status seeking may also lead to excessive growth

international versus domestic entrepreneurship new venture strategic behavior and industry structure abstract international entrepreneurship is defined in this study as the development of international new ventures or start ups that from their inception engage in international business thus viewing their operating domain as international from the initial stages of the firm s operation one hundred and eighty eight new venture firms in the computer and communications equipment manufacturing industries are classified according to the percentage of their sales in the international market ventures with no sales derived from international activities are considered domestic new ventures and ventures with sales from international activities comprising greater than 5 of total sales are considered international new ventures the strategy and industry structure profiles of international new ventures are significantly different from domestic new ventures the internationals pursue much broader market based strategies seeking a strategy of broad market coverage through developing and controlling numerous distribution channels serving numerous customers in diverse market segments and developing high market or product visibility the internationals also emphasize a more aggressive entry strategy building on outside financial and production resources to enter numerous geographical markets on a large scale securing patent technology is also an important component of their strategy this suggests that the internationals compete by entering the industry on a large scale seeking to penetrate multiple markets with the recognition that external resources are necessary to support such an entry whereas both the domestics and the internationals characterize domestic competition as being relatively intense the international new ventures compete in industries with higher levels of international competition it is not clear from this research whether the new venture selects an industry with a high degree of international competition and therefore responds with an international orientation or because the new venture has an international orientation it perceives or recognizes a higher degree of international competition another industry structure difference is the internationals perceived higher degree of restrictiveness due to government regulation it is unclear whether this restrictiveness motivates new ventures to seek less regulated international environments or if it indicates that when competing internationally the new venture is confronted with increased regulatory requirements domestic new ventures are distinguished by their emphasis on a production expansion strategy and customer specialization strategy the production specialization strategy consists of focusing on limited geographical markets maintaining excess capacity and pursuing forward integration the customer specialization strategy incorporates the production of a specialty product that is purchased infrequently thus for both of the domestic strategies a consistent closeness between the producer and consumer is implied this may be an important basis underlining the new venture s decision to compete in an exclusive domestic context this study offers initial support for the notion of international entrepreneurship by its findings that there are significant differences between new venture firms competing domestically and new ventures choosing to also enter international markets

net national product as an indicator of sustainability net national product nnp can potentially serve several objectives among others to measure value added and to be an indicator of welfare in the aftermath of the world commission on environment and development however it also seems important to investigate whether the concept of nnp can serve as an indicator of sustainability my point of departure following hicks 1946 ch 14 is therefore to require that nnp should measure what can be consumed in the present period without reducing future consumption possibilities and in line with this to argue that the nnp should equal the maximum per capita consumption level that can be sustained if sufficiently many facilitating assumptions are made then a concept of nnp that serves as an exact indicator of sustainability can easily be constructed for instance for a closed economy with a constant population a stationary technology and with only one capital good it follows that the present does not reduce future consumption possibilities if and only if it does not decrease the stock of the single capital good hence under the assumption that the one capital good k is identical to the one consumption good x nnp defined as y x k measures the maximal sustainable consumption at time t because then x y is equivalent to k the purpose of this note is to establish that with multiple capital goods it is not in general possible to construct an exact indicator of sustainability on the

measuring preference variation across north america this paper utilizes the generalized fechner thurstone direct utility function to see if relative price changes in neighboring countries affect the preference structure of the host country the authors analyze the case of canada mexico and the united states they utilize the generalized fechner thurstone functional form because it allows them to detect changes in preferences when parameters such as prices change they find evidence of veblen effects for both canada and the united states across almost all goods under consideration in mexico the changes in relative prices in canadian and u s goods appear to be much less significant copyright 1988 by the london school of economics and political science

discount rates natural resources and the measurement of aggregate economic growth in africa abstract over the last decade there has been a growing interest in depreciation of natural capital in national income accounts within this literature there has been limited discussion of the sensitivity of measurement to the choice of discount rate and the effect of using depreciated measures of growth in empirical analyses without attempting to estimate or justify a specific discount rate this paper presents alternative sets of growth data for 18 african countries based on different assumptions of the appropriate discount rate to apply to natural capital the data sets are then used in a statistical test of the causes of economic growth results of the statistical analysis indicate sensitivity to the choice of discount rate

national accounts and environmental resources in the paper optimal growth theory is used to derive the appropriate definition of the net national product concept when there are environmental resources and environmental damage to take into account the basic conclusions are that conventional defined np should be corrected by deducting environmental damage and adding the value of the net change of all resources

on the welfare significance of national product under interest rate uncertainty abstract this paper examines the effects of uncertainty on the relationship between comprehensive nnp and sustainable equivalent consumption it is shown that the classical identity continues to hold in expectations when the discount factor is a stochastic diffusion process taking the form of geometric brownian motion with drift such a result may be useful as a point of departure for classifying the effects that various forms of uncertainty have on the welfare significance of national product

the effect of firm formation and growth on job creation in the united states abstract this paper demonstrates the importance of new firm formation to economic growth it begins by providing data that describe the united states as having had greater employment growth than most developed nations of the world over the last 25 years and focuses upon why job growth in the united states has exceeded that of other nations job creation by firm size we first examine the data on the relative contribution of small and large firms to u s job growth by summarizing research that is uniformly expressed in two year periods and defines small firms as those with less than 100 employees conclusive evidence emerges that small firms are the major sources of net new creation firm entry exit rates and economic growth further understanding of small firm job creation is obtained when we examine firm entry and exit data here we find that firm entry rates vary considerably from period to period range 10 4 12 5 whereas exit rates remain relatively stable from period to period range 9 6 10 4 thus variation in entrepreneurial activity the formation of new firms is the major cause of net increases in the number firms in both the united states and the united kingdom net firm increases are positively related to overall economic activity firm entry exit and job creation further exploration of this correlation can be conducted by examining job creation and loss defined by source entries expansions exits and contractions the data for 1976 through 1984 shown here demonstrate that new entries account for 74 0 of the 50 8 million new jobs created expansions of existing firms accounted for 26 0 small firms less than 500 employees produced 54 6 of the entry jobs and 56 8 of the expansion jobs on the other hand job losses totaled 33 8 million 79 0 due to exits and 21 0 to contractions small firms account for 53 6 of the jobs lost from exits and 47 8 of those lost from contractions overall small firms account for 60 5 of the 17 0 million net new jobs given the data that show correlation between net firm formation rates and economic growth the finding that entry rates vary more than exit rates and the finding that new entries create most of the new jobs it can be concluded that firm formation especially small firm formation is a significant factor in economic growth increases in small firm formation rates have a significant effect on net job creation schumpeter s model and observed market turbulance another finding from this data on job creation by entry expansion exit and contraction is the large amount of job creation and destruction activity taking place for the period studied three jobs were created and two jobs destroyed for each net new job created this describes a turbulent job market with many workers moving from job to job the labor markets are much less stable that normally envisioned this observed phenomenon fits well with schumpeter s theory of capitalism he proposes that capitalistic growth occurs because entrepreneurs use innovations to form new firms which enter existing markets when successful these growing new firms destroy existing market structures causing decline of established firms while creating increased demand and producing overall economic growth if schumpeter is correct one would expect to find high rates of firm formation and failure and large numbers of jobs created by new firms while many jobs are lost by exits and contractions of established firms the findings reported here show this government policy affects on entry exit our results also show that formation of small new firms is a necessary requirement for economic growth historically however government policy has not considered small firm entry as a central issue thus government policies can and have had a negative effect on entry rates and therefore upon economic growth rates furthermore high rates of new firm formation cause a great deal of turbulence in labor markets with three jobs created and two lost for every one net new job such labor turbulence may be seen by policy makers as undesirable as it entails considerable worker movement from job to job as such policy makers have recently proposed policies to protect workers from job loss due to contractions and exits however such protection policies as demonstrated in recent european experience will also construct barriers to entrepreneurial entry the result may be a decline in small firm entry and a decline in economic growth instead of protecting specific jobs appropriate policies are those that facilitate movement of workers from job to job adequate unemployment compensation for short term unemployment fully vested and portable pension plans and retraining programs are examples of policies that allow the labor market to remain flexible while reducing the negative effect on those who lose jobs

the welfare economic theory of green national accounts this paper takes a critical look at the literature on green national accounts the problem studied is to find a linear index of economic variables that responds to perturbations in the same direction as social well being the thesis of a large literature that net national product which is a flow is that index in closed economies is shown in some interpretations to be simply false and in others to suffer from deep estimation problems it is argued that capital depreciation using shadow prices should certainly be included in national accounts but that the right welfare index is a comprehensive measure of wealth defined as the shadow value of an economy s stock of all capital assets it is shown that comprehensive wealth is usable as a criterion for policy evaluation as well as for determining sustainable economic development

relative income effects on subjective well being in the cross section abstract recent work suggests that a person s subjective well being swb depends to a large degree on relative income focusing on the underlying identification this paper makes four contributions to this literature it describes the aggregation problem with past studies implements an estimation strategy to overcome this problem finds micro level evidence in support of the hypothesis that relative income does matter in individual assessments of swb and uses cross section estimates to replicate the aggregate time series the evidence further indicates that relative income effects may be smaller at low income levels the results are obtained from ordered probit techniques and the general social survey gss

marketing control and performance in early growth companies this article examines the relationship between market performance and marketing control systems used by early growth electronic component and instrument manufacturers essentially marketing control means keeping things on track long pushed aside by the excitement of planning and organizing business ventures controlling operations particularly marketing operations has received little attention this is regrettable because control is the only mechanism which ensures that resources are allocated efficiently and that strategic objectives are met also for the early growth high tech company which is already in a state of flux developing an appropriate marketing control system is essential to its ability to meet and respond to the recurring challenges brought about by the pace at which change is occurring in this article the author examines the issue of marketing control from a theoretical as well as an empirical perspective first the author presents a framework for evaluating the marketing control system within a company the core of the framework presents the essential elements of marketing control feedback and corrective action bounding the core is 1 1 the formal marketing organization delimits the company s capability to enact the control processes 2 2 marketing culture the subjective interpretive aspect of organizational life which determines what control components and marketing structure are valued in the company the framework is used to analyze the marketing control systems of 20 early growth high tech manufacturing companies four hierarchical configurations of the control system elements are identified and the companies assigned to one of the following configurations 1 i seeking some sales 2 ii making good on sales 3 iii seeking profitable sales 4 iv making profitable sales four companies possessed none of the elements of control there were merely operations which produced results as a consequence the companies were judged to be generally unsuccessful in focusing their resources on the markets that they wished to serve in addition the market performances of these firms relative to others in the sample were poor ten stage ii companies in their attempts to expand sales and to remedy logistical problems associated with making deliveries on sales had developed formal sales departments unlike the four companies which were placed in stage iii these companies put little emphasis on the financial accountability of sales and marketing consequently their abilities to evaluate or steer profit performances mitigated against their achieving high levels of market performance only two companies were judged sufficiently different from other companies to warrant placement in stage iv these companies focused on developing marketing structures and reporting procedures which provided real time feedback on market performances because of this they appeared able to identify market opportunities that were defensible in the long run and in which they could exercise control over profits in conclusion the findings indicate that greater control of marketing operations correlates with stronger market performances when performance is measured in terms of absolute sales sales growth cumulative cashflow and profitability companies with more evolved marketing control systems perform noticeably better than do others in the sample

adjusting green nnp to measure sustainability weitzman provides a foundation for nnp as the stationary equivalent of a wealth maximizing path when there is a constant interest rate and no exogenous technological progress here the implications of weitzman s foundation are explored in a case encountered in resource models i e the case of non constant interest rates in a setting that allows for exogenous technological progress an expression for nnp is obtained that adjusts green nnp for anticipated capital gains and interest rate effects to produce a measure that indicates sustainability this result is important when measuring the relative sustainability of resource rich and resource poor countries i introduction how should net national product nnp be adjusted for the depletion of natural and environmental resources a prerequisite for examining this problem is to decide on an underlying notion of income at the personal level hicks 1946 defines income as the consumption that if kept constant would yield the same present value as a person s actual future receipts since market prices are not influenced by any single person this notion of income equals a person s maximal sustainable consumption at the national level national income can likewise be defined as the consumption that if kept constant would yield the same present value as the actual future consumption path unless the nation is a small open economy faced with given international prices this notion of national income will exceed

a measure of sustainable national income for the netherlands abstract we present calculations on the sustainable national income sni indicator first proposed by hueting which corrects net national income nni for the costs to bring back environmental resource use to a sustainable level using an applied general equilibrium age model specifying 27 production sectors we calculate different variants of sni for the netherlands in 1990 given a set of pre determined sustainability standards the age model is extended with emissions and abatement cost curves based on large data sets for nine environmental themes the model combines the advantages of a top down approach the age model with the information of a bottom up approach the environmental data and data on emissions reductions costs the presented numerical results show that in 1990 dutch sni is about 50 below nni though many uncertainties are still present in the data and the model the enhanced greenhouse effect is the most expensive environmental theme

transitional impacts of environmental policy in an endogenous growth model to explore the link between a tighter environmental policy and economic growth the authors employ an endogenous growth model with endogenous technological progress in abatement technologies the environment which is modelled as a renewable resource acts both as a public consumption good and as a public input into production the entire transition towards a new balanced growth path after a tightening of environmental policy is computed analytically the authors find sharp contrasts between short run and long run effects whereas the level and the growth rate of output may decline in the short run income growth may improve in the long run copyright 1996 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

incorporation of risk in regional forest resource accounts abstract to be an appropriate indicator of sustainability a net income measure projected into the future should consider risk several authors have demonstrated how risk can be formally incorporated into welfare measures like green net national product nnp however the resulting measure can be considerably more complex than its deterministic counterpart a practical alternative to formally incorporating risk is to use simulations of the type outlined in this paper to provide information about the expected impact of risk this information can be used to apply a stochastic version of a sustainability rule that requires that the expected value of net income be non declining this paper discusses the importance of risk and uncertainty to welfare measurement and more specifically the measurement of net income from forest services in a region of northern alberta two different approaches to valuing resource extraction are compared the depreciation approach and the wealth based approach provide very different projections of net income we demonstrate that when a renewable resource is subject to risk the wealth based approach provides a more appropriate measure of the influence of resource use on future consumption possibilities and the sustainability of net income

green accounting in imperfect market economies the idea of measuring the national welfare level by using the green nnp net national product has gained much attention lately this paper summarizes the research on social accounting in imperfect market economies by putting the results into a unified framework the main contribution of the paper is to relate the form of the national welfare measure to the functioning of the economic system and therefore to explicitly address the informational requirements implicit in social accounting

factors influencing japanese entrepreneurs in high technology ventures abstract in this study reporting on a survey of the founders of japanese high technology firms various factors affecting the entrepreneurial event are examined the sample was drawn from the nikkei press group which publishes in japanese an annual directory of over 1 700 high technology venture business firms a close examination of this directory reveals that there are only between 100 and 200 firms that are both high technology and less than 10 years old from this list 100 firms were selected for a single mailing of a japanese language questionnaire forty six completed questionnaires were returned the survey consisted of eight questions six of where were multipart questions while the push of a displacing event seems to be relatively unimportant among japanese high technology entrepreneurs there appears to be a strong relationship between social marginality and entrepreneurs with a perception that they had no alternative but to form a new venture the pull of opportunity was mostly related to a specific deal or a niche ignored by former employers the importance of friends in the decision to launch a venture appears to be quite strong reflecting the strong group spirit of japanese society the dominant element in the motivation of high technology entrepreneurs in japan seems to be related to a drive for self actualization the following five variables generated the strongest affirmative reactions create an opportunity for myself create an organization that reflects my values reached a critical point in my life create an opportunity to grow and develop my talent unable to exercise my full creativity in previous position this may reflect that basic human needs are well met by the japanese economy and the centuries of japanese social and ethnic continuity it is not entirely clear from this study where japanese high technology entrepreneurs find role models only a few had fathers who were entrepreneurs although 43 had fathers who were either entrepreneurs farmers or otherwise self employed observing colleagues or others form companies played only a limited role however 83 of the founders acknowledged that their firm was a spin off from their previous employer the founders of these spin off ventures were predominantly employed in r d and sales and marketing holding a position of authority was strongly associated with spin off ventures in japan about as many high technology entrepreneurs came from large companies over 1 000 employees as from small 250 employees or less firms while it is commonly perceived that the cultural environment of japan restrains entrepreneurship most of these entrepreneurs saw their environment as favorable which may reflect the japanese will to endure hardship or a universal optimism among entrepreneurs

renewable resources and economic sustainability a dynamic analysis with heterogeneous time preferences abstract in recent years there has been increasing interest in the study of economic sustainability and its relationship with natural resources this paper attempts to shed some light on the issue by taking into account the individual variations in time preferences for consumption and resource amenity we characterize the long run steady state analyze its asymptotic stability and explore the transational dynamics from any initial state the welfare implications of the optimal path are also discussed

social norms savings behavior and growth we argue that many goods and decisions are not allocated or made through markets we interpret an agent s status as a ranking device that determines how well he or she fares in the nonmarket sector the existence of a nonmarket sector can endogenously generate a concern for relative position in for example the income distribution so that higher income implies higher status moreover it can naturally yield multiple equilibria it is thus possible to explain differences in growth rates across countries without recourse to differences in underlying preferences technologies or endowments different social organizations lead to different reduced form preferences which lead to different growth rates

evaluating projects and assessing sustainable development in imperfect economies we are interested in three related questions 1 how should accounting prices be estimated 2 how should we evaluate policy change in an imperfect economy 3 how can we check whether intergenerational well being will be sustained along a projected economic programme we do not presume that the economy is convex nor do we assume that the government optimizes on behalf of its citizens we show that the same set of accounting prices should be used both for policy evaluation and for assessing whether or not intergenerational welfare along a given economic path will be sustained we also show that a comprehensive measure of wealth computed in terms of the accounting prices can be used as an index for problems 2 and 3 above the remainder of the paper is concerned with rules for estimating the accounting prices of several specific environmental natural resources transacted in a few well known economic institutions

genuine savings leading indicator of sustainable development abstract the world bank recently began publishing estimates of countries genuine savings a comprehensive measure of net investment across all forms of capital natural and human as well as produced this article presents the first empirical investigation of the consistency of the bank s estimates with the hypothesis that net investment should equal the difference between a country s average future consumption and its current consumption results show that the bank s estimates are consistent only with weak versions of this hypothesis and then only for developing countries moreover a simple autoregressive integrated moving average arima model outperforms any net investment measure comprehensive or conventional as a predictor of the difference between current and future consumption in sum the bank s net investment estimates tend to move in the same direction as the difference between current and average future consumption in developing countries but they have little value for predicting the mag

capital stock management during a recession that freezes credit markets abstract this paper considers the problem of how to price a conspicuous product while maintaining liquidity during a recession which both reduces demand and freezes credit markets reducing price would help maintain cash flow but low prices can erode brand image and hence long term sales the paper extends earlier work of the same authors by explicitly deriving a firm s optimal cash management behavior taking into account that a too low cash level results in bankruptcy there are different sets of initial conditions for which qualitatively different solution trajectories are optimal we distinguish mild and severe recessions with mild recessions bankruptcy can be avoided for sure when the brand image is large enough in case the recession is of intermediate strength it can be optimal to throttle forward then back how aggressively one spends down cash reserves with the associated state constraint alternately being non binding binding non binding then binding in such a way that the firm ceases operation

accounting for the wealth of nations the net versus gross output controversy and its ramifications there has been a longstanding controversy over the use of net versus gross measures of national product in accounting for economic growth most recently reflected in several papers which have examined the role of environmental variables it is argued in this paper that the two measures are not substitutes but complements which reveal different aspects of the growth process gross product is the correct output concept for estimating the structure of production while net product is the correct concept for measuring the welfare consequences of economic growth an alternative to the conventional solow growth accounting framework is then presented in which the change in national wealth is decomposed into its component elements copyright 1992 by the editors of the scandinavian journal of economics

national account of timber and forest environmental resources in sweden this paper outlines an extension of the national account of income from forest resources in sweden 1987 incorporating changes in timber inventories production of nonmarketed timber and nontimber goods and depletion or improvement in vital environmental stocks such as soil nutrients biodiversity and carbon sinks the total net value added provided by forest resources and forestry labour 1987 is estimated to 22 billions sek this is one third more than the contribution of forestry to ordinary gnp

against parsimony three easy ways of complicating some categories of economic discourse economics as a science of human behavior has been grounded in a remarkably parsimonious postulate that of the self interested isolated individual who chooses freely and rationally between alternative courses of action after computing their prospective costs and benefits in recent decades a group of economists has shown considerable industry and ingenuity in applying this way of interpreting the social world to a series of ostensibly noneconomic phenomena from crime to the family and from collective action to democracy the economic or rational actor approach has yielded some important insights but its onward sweep has also revealed some of its intrinsic weaknesses as a result it has become possible to mount a critique which ironically can be carried all the way back to the heartland of the would be conquering discipline that the economic approach presents us with too simpleminded an account of even such fundamental economic processes as consumption and production is the basic thesis of the present paper this abstract was borrowed from another version of this item

measuringincome and measuring sustainability we examine what interpretation can be given to inclusive income understood to be consumption plus the value of the net increase in all relevant capital stocks we introduce the concept of instantaneously constant value income defined as the maximum amount the economy can consume at a moment of time and keep the expected present value of utility of current and future generations constant we argue that this income concept captures some of the concerns underlying sustainability our main result is that inclusive income equals instantaneously constant value income we show that this result holds in a very general setting and in particular carries over to models incorporating technological progress when such progress can be captured by augmented stocks of knowledge an important implication of our main result is that it provides a very simple method for deriving inclusive income which does not involve any linearization of the hamiltonian

natural resources national accounting and economic depreciation abstract the current value hamiltonian in an aggregate optimal growth problem with heterogeneous capital stocks including exhaustible renewable and environmental stocks is the nnp function routine substitutions reveal that the using up of natural resource stocks is representable as easy to interpret economic depreciation magnitudes we obtain true nnp inclusive of natural resource stock diminution implications for actual national accounting practices are also discussed

keeping one step ahead of the joneses status the distribution of wealth and long run growth assuming that the utility of each agent depends on its relative wealth position in the society this chapter constructs an endogenous growth model it is shown that even if the subjective discount rates differ across agents there exists a unique balanced growth equilibrium in which each agent owns a positive share of the world wealth it is also shown that if the agents are identical then an increase in savings incentives always raises the long run growth rate but if they are heterogeneous then an increase in savings incentives may lower the long run growth rate

capital gains and net national product in open economies it is shown within a given framework that with the world economy following an egalitarian path the aggregate capital gains being positive is equivalent to the interest rate tending to decrease this result is of importance for the concept of net national product in open economies in particular with positive aggregate capital gains an open economy cannot sustain consuming the return on its capital stocks since some part of the return must be used to augment the country s national wealth it is established that a country s share of world wide sustainable consumption equals its share of worldwide wealth

sustainability of an economy relying on two reproducible assets evaluating the sustainability of a society requires a system of shadow or accounting values derived from the sustainability objective as a first step toward the derivation of such shadow values for a maximin objective this paper studies an economy composed of two reproducible assets each producing one of two consumption goods the effect of the substitutability between goods in utility is studied by postulating in turn neoclassical diminishing marginal substitutability perfect substitutability and perfect complementarity the degree of substitutability has strong effects on the maximin solution affecting the regularity or non regularity of the program and on the accounting values this has important consequences for the computation of genuine savings and the sustainability prospects of future generations

welfare measurement green accounting and distortionary taxes this paper concerns welfare measurement in the presence of distortionary taxes one purpose is to explain why the traditional green nnp measure fails as a welfare indicator when distortionary taxes are present another is to derive a green nnp analogue in a second best environment in the second best optimum the efficiency cost of taxation will affect both the form of the national welfare measure and the proper principles of accounting for pollution

conspicuous consumption snobbism and conformism abstract we develop a model in which consumers purchase a conspicuous good in order to signal high income and thereby achieve greater social status in equilibrium the signalling value of conspicuous consumption depends in an identifiable way on the number of consumers and consumer behaviour is characterized by either snobbism or conformism the market demand curve for the conspicuous good may exhibit a positive slope if consumers are conformist we derive some unconventional policy implications concerning the taxation of luxuries and the voluntary provision of public goods

sustainability in uncertain economies a stochastic growth model with a list of capital assets i e reproducible capital non renewable resources the knowledge base and institutions is studied to evaluate the effects of different sources of uncertainty on sustainability it is also discussed which measure can serve as an index of intergenerational welfare to evaluate sustainable development under uncertainty the aim is to consider a more comprehensive setting than is usually explored in the literature and to generalize arrow dasgupta and maler results to the case of uncertainty

on the role of green taxes in social accounting this paper addresses social accounting numerically in a dynamic generalequilibrium model the main purposes are to study i whether emissiontaxes based on static willingness to pay information can be used to improvethe welfare level and ii whether these taxes provide close enoughapproximations of the correct pigouvian emission tax to be useful in thecontext of social accounting the results indicate that if environmentalquality is relatively linear with respect to pollution the approximation ofthe pigouvian emission tax will bring the economy close to the sociallyoptimal solution and at the same time provide a close approximation of thevalue of net investments in environmental capital

on the welfare significance of green accounting as taught by parable abstract green nnp is a national accounting concept that subtracts off from gnp not just depreciation of capital but also depletion of environmental assets for a time autonomous technology green nnp has a rigorous welfare interpretation as an exact measure of the economy s future power to consume the present paper extends the standard framework to cover the case of labor augmenting technological progress for this special case of time dependence a powerful conceptual parable applies it is as if the conclusion from a simple minded welfare story told by the standard neoclassical one sector growth model covers a far more general situation involving any number of different types of capital any convex production possibilities set and fully optimizing behavior implications and applications are discussed

the spirit of capitalism and stock market prices in existing theory wealth is no more valuable than its implied consumption rewards in reality investors acquire wealth not just for its implied consumption but for the resulting social status max m weber 1958 refers to this desire for wealth as the spirit of capitalism the authors examine both analytically and empirically implications of weber s hypothesis for consumption savings and stock prices when investors care about relative social status propensity to consume and risk taking behavior will depend on social standards and stock prices will be volatile the spirit of capitalism seems to be a driving force behind stock market volatility and economic growth copyright 1996 by american economic association

integrating the valuation of ecosystem services into the input output economics of an alpine region traditional economic accounting mostly ignores the benefits provided by nature and thus falls short in giving incentives for improving the way the economy uses natural resources in this study we develop a general framework for integrating the value of ecosystem services into an input output table in particular we integrate regionally valued ecosystem services on the supply side of an input output table to quantify what natural resources offer to economic development using several different indicators we show the benefits of the ecosystem services under the status quo and a scenario for regional development our results suggest that economic activities should be encouraged to use the ecosystem services more intensively while landscape development should aim at providing the required services we conclude that such an approach can provide a platform for decision makers to learn quantitatively about the dependency of the regional economy on natural services

veblen effects in a theory of conspicuous consumption the authors examine conditions under which veblen effects arise from the desire to achieve social status by signaling wealth through conspicuous consumption while veblen effects cannot ordinarily arise when preferences satisfy a single crossing property they may emerge when this property fails in that case budget brands are priced at marginal cost while luxury brands though not intrinsically superior are sold at higher prices to consumers seeking to advertise wealth luxury brands earn strictly positive profits under conditions that would with standard formulations of preferences yield marginal cost pricing the authors explore factors that induce veblen effects and they investigate policy implications copyright 1996 by american economic association

new business entrepreneurship in the japanese economy abstract this article presents the results of a study focused on the role of new business entrepreneurship in the japanese economy particular attention is paid to the activities of various government agencies in relation to new business entrepreneurship and to the barriers to this activity in japan new business entrepreneurship was defined as the formation and rapid growth of a business enterprise through unique approaches to the firm s activities in contrast to the american stereotype of japan as an economy of a few large interconnected firms it is in fact characterized by small and medium sized enterprises over 99 of all japanese enterprises are categorized as small or medium and over 80 of all employed japanese are employed by such firms however very few of these firms are entrepreneurial in nature the vast majority are small firms that are either subcontractors to a single larger firm or small retail wholesale or restaurant establishments the start up rate for all types of businesses in japan has been declining for the past 10 to 15 years more importantly the rate of start up s for independent firms as opposed to firms started by a larger firm to serve primarily as a subcontractor declined even more sharply this indicates a significant weakness in japan s otherwise strong economy the low and declining rate of new business entrepreneurship in japan is a function of structural governmental and cultural barriers structural barriers include an acute long term labor shortage high financial start up costs due in large part to high land prices and a shortage of venture capital funding government barriers include red tape financial and other support for small firms that is withdrawn as they enter rapid growth and the persistent protection of inefficient industry structures cultural barriers involve japan s strong group collective orientation the traditional career path in japan bounds on creativity and the fact that entrepreneurship is not assigned a high social value while the government provides an extensive well developed network of services for small and medium sized firms these programs are not designed to facilitate rapid growth into the large firm phase the japanese experiences and programs offer useful insights for policy and tactics by other governments

genuine saving and positional externalities much evidence suggests that people are concerned with their relative consumption yet positional externalities have so far been ignored in savings based indicators of sustainable development this