the effects of human resource management practices on productivity a study of steel finishing lines the authors investigate the productivity effects of innovative employment practices using data from a sample of thirty six homogeneous steel production lines owned by seventeen companies the productivity regressions demonstrate that lines using a set of innovative work practices which include incentive pay teams flexible job assignments employment security and training achieve substantially higher levels of productivity than do lines with the more traditional approach which includes narrow job definitions strict work rules and hourly pay with close supervision their results are consistent with recent theoretical models which stress the importance of complementarities among work practices

peer pressure and partnerships partnerships and profit sharing are often claimed to motivate workers by giving them a share of the pie but in organizations of any significant size the free rider effects would seem to choke off

installed base and compatibility innovation product preannouncements and predation a good is often more valuable to any user the more others use compatible goods the authors show that this effect may inhibit innovation if an installed base exists and transition to a new standard must be gradual early adopters bear a disproportionate share of transient incompatibility costs this can produce excess inertia the installed base however is stranded if the new standard is adopted this may create excess momentum these dynamic effects have strategic implications temporary price cutting can permanently prevent entry and product preannouncements can be critical in innovation these strategic actions have ambiguous welfare effects

technological expectations and adoption of improved technology abstract attention is focused upon the adoption demand rather than the creation supply of new technology which improves from time to time based on the expected flow of technological progress over which the firm demander has no control it must decide either to adopt the current best available technology or to postpone adoption the distinguishing features of the model are that more than one technological innovation is anticipated and expectations about the likelihood of such innovations are revised as time passes since the last innovation our analysis shows that the firm will adopt the current best practice if its technological lag exceeds a certain threshold moreover as time passes without new technological advances it may become profitable to purchase a technology that has been available even though it was not profitable to do so in the past

effectiveness of policy measures in transforming the energy system abstract the effectiveness of public policy measures in creating energy impacts were investigated through 20 policy cases on renewable energy and efficient energy use the policies were grouped into subsidy type and catalyzing measures based on the use of the public financial resources the policy cost of subsidies ranged from 1 mwh up to over 100 mwh the feed in tariffs being clearly the most expensive choice the public measures that strive for catalyzing market breakthroughs lie in the range 0 1 1 mwh but some business driven and procurement type measures could come down to even 0 01 mwh the policy costs observed could decrease by 25 60 if accounting for lagging energy impacts the better policy efficiency of catalytic measures is most likely due to a stronger market and business sensitiveness understanding of market needs and focusing more on the end use sector with active stakeholder involvement the magnitude of the energy impacts were in average larger from the subsidy instruments but a few end use technologies linked to catalytic measures reached even higher effects due to the strong market penetration achieved

displaced diffusion option pricing this paper develops a new option pricing formula that pushes the underlying source of risk back to the risk of individual assets of the firm the formula simultaneously encompasses differential riskiness of the assets of the firm their relative weights in determining the value of the firm the effects of firm debt and the effects of a dividend policy with both constant and random components although this setting considerably generalizes the black scholes 1 analysis it nonetheless produces a formula via riskless arbitrage arguments that given estimated inputs is as easy to use as the black scholes formula

technology diffusion and public policy a useful typology of technological change is provided by the schumpeterian trilogy invention the generation of new ideas innovation the development of those ideas through to the first marketing or use of a technology and diffusion the spread of new technology across its potential market until recently policy schemes in most oecd countries have tended to focus predominantly on the invention and innovation or science and r d end of this technology spectrum see e g limpens et al i 992 although it is generally realised that it is the process of diffusion or use of technology that creates productive potential and competitiveness policy initiatives have largely bypassed opportunities to improve the diffusion process if this may seem misplaced emphasis it does in fact reflect the state of the academic literature which is wide ranging and extensive as it relates to policies on r d but small and fragmented as regards policies on diffusion currently a gradual reorientation of policy direction toward diffusion seems to be taking place the us and uk governments for example have recently proposed major technology policy initiatives that despite differences in emphasis both stress the importance of creating an infrastructure conducive to a rapid spread of awareness and knowledge of innovations we argue that although sensible in themselves such policies may be too limited in scope and that a broader policy stance may be needed this paper has two main objectives the first is to provide an overview of why policy intervention in the diffusion process may be desirable and what form it might take this discussion is rather long since to the best of our knowledge there is no published systematic synthesis of the diffusion policy literature though see stoneman i987 for an earlier attempt the second aim is to look at actual diffusion policies and their impacts to make the task manageable we are restricting this paper to a discussion of the diffusion of new process technologies although similar issues apply to new consumer technologies these are not explicitly addressed we also consider diffusion policy only within the context of a given institutional and macroeconomic environment although it may well be that the supply of skilled manpower the nature of the capital market animal spirits and entrepreneurship fiscal and monetary policies will all impact upon the diffusion path improvements in these areas will also impact upon a whole host of other aspects of the economy s performance to use a plea for diffusion policy as a rationale for changes in such areas would be equivalent to the tail wagging the dog and thus they fall outside the remit of this paper

innovation diversity and diffusion a self organisation model a number of features of innovation diffusion are identified appropriability diversity expectations selection learning and spillover externalities a dynamic model is formul ated to embed the diffusion question into a more general framework of disequilibrium competition the model incorporates distinct vintage structures reflecting a change in technological trajectory learning by using a nd expectations driven investment rules of thumb simulation studies reveal robust quasi logistic curves but a complicated pattern of net market share gains and losses uncertainty regarding the rationality of early or late adoption it is argued ensures that the requisite behavioral variety is present to generate these diffusion patterns copyright 1988 by royal economic society

renewable energy an efficient mechanism to improve gdp abstract this article analyzes the effects of renewable energy on gdp for 116 economies in 2003 through structural equation modeling sem approach in order to decipher the mechanism of how the use of renewables improves macroeconomic efficiency we decompose gdp by the expenditure approach although previous theory predicts positive effects of renewables on capital formation and trade balance the sem results show that renewables have a significant positive influence on capital formation only the result that renewables do not have a significant impact on trade balance implies that renewables do not have an import substitution effect thus we confirm the positive relationship between renewable energy and gdp through the path of increasing capital formation but not for the path of increasing trade balance

the demand for information and the diffusion of a new product abstract the paper examines the implications of the ability of a consumer to learn about the characteristics of a new product on the diffusion of the product over time the demand for information by the consumer is shown to generate a sigmoid diffusion curve for total sales of the product further it is shown that over time the elasticity of demand along the diffusion curve increases

job queues and the union status of workers this paper develops a model of the determination of the union status of workers that allows for the possibility of queuing for union jobs the empirical results derived using a sample from the university of michigan panel study of income dynamics are supportive of the queuing hypothesis the no queue model can be rejected using a likelihood ratio test this suggests that a simple probit or logit model for union status is misspecified because it is not based on any consistent behavioral theory an important implication of the model is that because most new entrants to the labor market prefer union jobs but cannot get them and because accrual of nonunion seniority makes workers progressively less likely to desire union jobs the union status of workers is largely determined by their success in being selected from the queue early in their working life

the determinants of technology adoption the case of the banking firm using data on the adoption of automatic teller machines by firms in the banking industry this study examines the relationship between the decision to adopt new technology and its determinants since banking firms differ considerably in terms of the competitive environments in which they operate focusing on this one innovation in this industry allows a stronger test of the relationship between market structure and the adoption of new technology than has been previously conducted using a failure time estimation procedure we find that larger banks and banks operating in more concentrated local banking markets register a higher conditional probability of adopting this new technology all else equal we also find that other results are consistent with the underlying model and that the bank s regulatory environment shapes its adoption decision in plausible ways

bose einstein dynamics and adaptive contracting in the motion picture industry audiences discover what films they like and spread the word information feedback produces bose einstein dynamics in the motion picture box office revenue distribution information cascades generate box office hits and flops the revenue distribution evolves recursively over the run as a mixture of the opening and a stochastic competition among films the motion picture run is decentralized adaptive and self organizing semistationary admission prices local information and contingency rich contracts match the film rental price and the supply of theatrical engagements to demand copyright 1996 by royal economic society

adoption and diffusion of an innovation of uncertain profitability the argument has frequently been made that the pattern of diffusion associated with most new innovations will typically have certain characteristics a diffusion curve for an innovation is usually defined as the proportion of its potential users who have already adopted as a function of time measured from the first adoption many empirical studies by both economists and other social scientists have shown that diffusion curves nearly always have two distinct characteristics i they are s shaped the proportion adopted is an increasing function of time which is initially convex but eventually becomes concave and ii they tend to be right hand skewed the inflection point occurs at a time corresponding to a proportion adopted which is less than one half so that the function is concave over the greatest amount of time in fact this skewing is occasionally severe enough to make the diffusion curve appear concave everywhere the focus of most empirical studies of innovation diffusion has centered on identification of either the major determinants of the speed of diffusion or the characteristics of firms which determine how long they delay adoption the seminal contributions are griliches 6 study of hybrid corn and mansfield s 121 study of 12 industrial innovations these studies and most of the similar ones following conclude that diffusion is faster for innovations with higher profitability and that large firms tend to be the earliest adopters some studies e g mansfield 121 herregat 71 have attempted to ascertain

integrating delta an intuitive single integral approach to pricing european options on diverse stochastic processes abstract single integral pricing formulas for european options under general stochastic dynamics are derived by integrating over an option s derivative with respect to the underlying spot price delta and with respect to the strike price delta of the strike

innovation adoption and diffusion when there are competing innovations abstract firms face a choice between two innovations without knowing which of the two is better each firm has a prior that one of the innovations is better which is updated by bayes rule as trials with the innovations are made a simple decision rule indicating which innovation should be tried given any posterior is derived and used to define an expected diffusion curve for the better innovation this curve has the commonly observed ogive shape even in the absence of any external demonstration effect when the distribution of firm priors belongs to a general class

does high involvement management improve worker wellbeing employees exposed to high involvement management him practices have higher subjective wellbeing fewer accidents but more short absence spells than like employees not exposed to him these results are robust to extensive work wage and sickness absence history controls we highlight the possibility of higher short term absence in the presence of him because it is more demanding than standard production and because multi skilled him workers cover for one another s short absences thus reducing the cost of replacement labour faced by the employer we find direct empirical support for this in accordance with the theoretical framework we find also that long term absences are independent of exposure to him which is consistent with long term absences entailing replacement labour costs and with short absences having a negative effect on longer absences

competing networks and proprietary standards the case of quadraphonic sound quadraphonic audio systems failed to replace stereo in the 1970s despite backing from all the major manufacturers and recording houses network externalities played a significant role in this episode and the author uses the installed base model of j farrell and g saloner 1986 to explain quad s failure the author finds that the introduction of competing incompatible quadraphonic systems hindered the development of a viable user base and he argues that the systems sponsors introduced their products in a technologically premature state in order to prevent one another from preemptively establishing the quad standard as a result self fulfilling consumer and retailer expectations doomed quadraphonic sound copyright 1990 by blackwell publishing ltd

the finite moment log stable process and option pricing we document a surprising pattern in s p 500 option prices when implied volatilities are graphed against a standard measure of moneyness the implied volatility smirk does not flatten out as maturity increases up to the observable horizon of two years this behavior contrasts sharply with the implications of many pricing models and with the asymptotic behavior implied by the central limit theorem clt we develop a parsimonious model which deliberately violates the clt assumptions and thus captures the observed behavior of the volatility smirk over the maturity horizon calibration exercises demonstrate its superior performance against several widely used alternatives

rank stock order and epidemic effects in the diffusion of new process technologies an empirical model in this article we construct a general duration model of technology adoption that incorporates the main factors discussed in different theories of diffusion of new process technologies the model is applied to data on diffusion of cnc in the uk engineering industry although we find strong evidence in support of rank and endogenous learning effects there seems to be little evidence in support of the stock and order effects the main factors affecting the diffusion of cnc are found to be endogenous learning firm size industry growth rates the cost of the technology and expected changes in the cost of the technology

human capital information and the early adoption of new technology when producers are uncertain or have imperfect information about the profitability of adopting new technology their adoption behavior depends on the endowment of human capital and the investment in adoption information this study analyzes the role of education experience and information acquisition in the decision to be an early adopter the findings support the hypothesis that adoption decision making is a human capital intensive activity the econometric evidence presented suggests that education and information reduce adoption costs and uncertainty and thereby raise the probability of early adoption adoption behavior is also shown to vary significantly across firm size

internationalization as a strategy to overcome industry barriers an assessment of the marine energy industry abstract research on conditions to develop new innovations within emerging renewable energy industries is often done with a national focus however recent research on international entrepreneurship has revealed that firms operate on international levels very early in their life time thus based on former research on international entrepreneurship and case examples we build the propositions that firms in the marine energy industry use internationalization as a strategy to overcome industry barriers our primary source of data is a unique dataset from a global survey of all the companies in the marine energy industry who are aiming to commercialize a wave or tidal energy device this paper is organized in two steps first we identified the most challenging industry barriers perceived by companies second we use these to form propositions which we assess through empirical data the two most challenging barriers perceived by the companies are need for capital and need for supportive political schemes our findings reveal that internationalization certainly is a common strategy to access capital and attractive support schemes in foreign countries the early internationalization has implications for researchers managers and policy makers

learning from the behavior of others conformity fads and informational cascades learning by observing the past decisions of others can help explain some otherwise puzzling phenomena about human behavior for example why do people tend to converge on similar behavior why is mass behavior prone to error and fads the authors argue that the theory of observational learning and particularly of informational cascades has much to offer economics business strategy political science and the study of criminal behavior

the provision of incentives in firms i ncentives are the essence of economics despite many wide ranging claims about their supposed importance there has been little empirical assessment of incentive provision for workers the purpose of this paper is to critically overview existing work on the provision of incentives since the interests of workers and their employers are not always aligned a large theoretical literature has emphasized how firms design compensation contracts to induce employees to operate in the firm s interest this literature has reached into many areas of compensation and has pointed to a multitude of different mechanisms that can be used to induce workers to act in the interests of their employers these include piece rates options discretionary bonuses promotions profit sharing efficiency wages deferred compensation and so on my objective here is to evaluate this literature in the light of a growing empirical literature on compensation where possible i will address the literature from two perspectives first an underlying assumption of this literature is that individuals respond to contracts that reward performance accordingly i consider whether agents behave in this way and whether these responses are always in the firm s interest second i address whether firms write contracts with these responses in mind in other words do contracts look like the predictions of the theory incentives are provided to workers

pay technology and the cost of worker absence i introduction the complexity of patterns of worker absence is well known but is yielding reluctantly to studies that use highly detailed information about individual workers and their work environments to date these studies have focussed on how specific contractual details affect worker absenteeism rates 1 in this paper we instead take an equilibrium perspective where we assume heterogeneous firms and heterogeneous workers participate in a competitive labor market by understanding why firms with different technologies may have different policies toward absenteeism we can begin to explain observed differences in absenteeism rates across workers and firms the empirical framework is based on coles and treble 1996 which considers an equilibrium assignment model with heterogeneous firms and workers the standard assignment framework 2 assumes that each filled job is characterized by one machine of quality q and one employee with skill level s a competitive equilibrium yields a wage schedule w and an assignment rule q where a worker of skill s is hired at wage w w s by a firm holding machine q q s coles and treble 1996 do not assume that workers are differently skilled instead workers have different propensities to go absent also instead of a one worker one machine production process firms utilize different production technologies some use an assembly line technology where output requires that a sufficient number of workers show up for work and others use a linear production technology in which there are constant marginal returns to labor for reasons that will become clear a competitive equilibrium yields a wage schedule and an assignment rule that depend on worker propensities to go absent specifically workers with a lower propensity to go absent earn a higher wage and are employed in firms using assembly line technologies the key insight is that firms who operate assembly line technologies have a different shadow cost of absenteeism from those which operate a linear technology as in weiss 1985 and coles and treble 1993 in the latter technology an absence by one particular worker does not affect the marginal productivity of other workers at the firm this is not true in an assembly line firm or in production functions where labor inputs are strict complements as in kremer 1993 coles and treble 1996 consider a market equilibrium in which workers are also heterogeneous say workers have different family responsibilities in this case a competitive labor market implies equilibrium sorting by firms and workers assembly line firms require a low level of absenteeism and pay a relatively high wage to compensate workers for attending work reliably we refer to this as the shadow cost of absenteeism workers who have a comparative advantage in attending work reliably say those who do not have to look after children when the children are sick take employment in assembly line firms and enjoy the wage premium attached to employment there we refer to this as the shadow price of absenteeism conversely those who appreciate greater flexibility in work attendance take employment in the linear technology firms and in equilibrium earn a lower average wage rate although absenteeism may be costly to firms observed absenteeism rates are not necessarily inefficient the worker who misses a day at work to look after sick children or enjoy a sports event is expressing a trade off between workplace production and home production where home productivity is perhaps subject to idiosyncratic shocks efficient contracting implies that firms and workers agree to an acceptable absenteeism rate and a compensating wage differential efficient sorting implies that those workers who can commit to attending work reliably accept employment in assembly line occupations and so earn a wage premium reflecting the shadow price of absenteeism our goal is to identify and measure this shadow price using a unique data set from france

a dynamic analysis of the adoption of a new technology the case of optical scanners two p roportional hazard models are used to investigate the differingeffects of marke t structure variables on the conditional probabilityof a firm initially adoptin g the new technology of optical scanners as the innovation spreads through the f ood store industry during the early stage leading firms with large average sto re size which are not members of chains and which operate in less concentrated m arkets with higher incomes and wage rates tend to adopt scanners sooner later on differences in seller concentration market share and size become less impo rtant as other firms follow prior adoptions copyright 1987 by mit press

the effect of network structure in industrial diffusion processes abstract the development and diffusion of innovations involves groups of organizations with many different roles who interact with each other suppliers adopters third parties etc this paper examines the nature of the communication networks that exist between adopting organizations and from third parties and suppliers to adopters quantitative models of diffusion often assume that information about innovations flows along pre existing links that this information flows from adopters to non adopters directly and that there is perfect mixing in the population i e every actor has an equal chance of communicating with every other actor these are strong assumptions which should be subject to testing we investigate the impact of differing network topologies of communications and alternative models of social contagion on observed adoption patterns network topologies are also extended beyond the focal industry to include suppliers consultants and other customers we use a simulation model to test the effect of departures from traditional assumptions on the diffusion pattern and undertake an empirical field study to examine the prevalence of those departures in one specific industry our simulation findings suggest that network structure can have a substantial effect on the manner in which innovations diffuse while innovation specific communication links and communication through third parties does not change the shape of the penetration trajectory as much as it alters the places in the process where salesforce effort can offer the most leverage the empirical study shows strong evidence of imperfect mixing that both pre existing and innovation specific communication links are used and that communication through third parties may be as important to the diffusion process as direct links from adopters to potential adopters

the price of worker reliability abstract worker absenteeism is costly to firms that use assembly line production processes this paper shows why an assembly line firm may prefer to pay higher average wages and reduce sick pay entitlement relative to firms with constant returns

technology adoption learning spillovers and the optimal duration of patent based monopolies abstract the paper analyses an often overlooked aspect of the patent system namely that a monopoly franchise for production of a new good could lead to a second best welfare optimum event when there was no future prospect of inventions being induced by the patent it is shown that a paten may improve economic welfare relative to a regime of competitive supply when there are learning externalities or spillovers from experience in the process of production comparative statics show that stronger learning effects at low levels of experience tend to strengthen the case for ex post grant of a monopoly franchise

entry exit and diffusion with learning by doing early entry has the advantage of higher revenues per unit of output early on late entry has the benefit of learning from the experience of earlier entrants and hence lower production costs the advantages are balanced off in a continuous time perfect foresight equilibrium competition generates s shaped diffusion and staggered entry and exit a monopolist will innovate less than a competitive industry but the innovation that he does do he will do sooner copyright 1989 by american economic association

models of technology diffusion abstract the literature on new technology diffusion is vast and it spills over many conventional disciplinary boundaries this paper surveys the literature by focusing on alternative explanations of the dominant stylized fact that the usage of new technologies over time typically follows an s curve the most commonly found model which is used to account for this model is the so called epidemic model which builds on the premise that what limits the speed of usage is the lack of information available about the new technology how to use it and what it does the leading alternate model is often called the probit model which follows from the premise that different firms with different goals and abilities are likely to want to adopt the new technology at different times in this model diffusion occurs as firms of different types gradually adopt it there are actually many ways to generate an s curve and the third class of models which we examine are models of density dependence popularized by population ecologists in these models the twin forces of legitimation and competition help to establish new technologies and then ultimately limit their take up finally we look at models in which the initial choice between different variants of the new technology affect the subsequent diffusion speed of the chosen technology such models often rely on information cascades which drive herd like adoption behaviour when a particular variant is finally selected

the diffusion of new technology and the market for an innovation this article shows that the diffusion of a capital embodied process innovation results from a pattern of decreasing incremental benefits and adoption costs for later adoptions strategic behavior is inessential to this finding we develop a method for comparing diffusion rates for different market structures in the capital equipment market we consider cases with market power on the seller s side of the market and on the buyers side of the market a case with no market power and the welfare optimal case we find that a joint venture adopts an innovation more slowly than other market regimes to protect existing capital investments and that the adoption rate is slower than is socially optimal a monopoly supplier on the other hand adopts at a rate faster than is socially optimal this result is usually also the case when there is no market power finally we show that the monopoly supplier accelerates adoptions faster than in the case where there is no market power but retards later adoptions market power thus makes a difference in diffusion rates and on which side of the market that power lies makes a considerable difference

on the diffusion of new technology a game theoretic approach this paper is an attempt at a rigorous albeit not exceedingly general analysis of the diffusion of new technology in particular consider an industry composed of two firms each using the current best practice technology the firms are assumed to be operating at nash equilibrium output levels generating a market price given demand and profit allocations when a cost reducing innovation is announced each firm must determine when if ever to adopt it based in part upon the discounted cost of implementing the new technology and in part upon the behavior of the rival firm if either firm adopts before the other it can expect to make substantial profits at the expense of the other firm on the other hand the discounted sum of purchase price and adjustment costs may decline with the lengthening of the adjustment period as various quasi fixed factors become more easily variable therefore although waiting costs the firm more in terms of foregone profits it may save money on the cost of purchasing the new technology thus the firm must weigh the costs and benefits of delaying adoption as well as take account of its rival s strategic behavior

teams teamwork and absence we argue that firms with interdependent worker productivity team production have a higher cost of absence and as a consequence spend additional resources on monitoring absence as a result firms with team production should have lower absence rates we estimate the determinants of absence for blue collar workers using a sample of german manufacturing establishments workplace teams are used as a proxy for team production the estimates reveal that firms with teams have lower absence rates as do smaller establishments the size effect however is unique to establishments with teams which fits prior theoretical work that has not been previously tested

demand and supply in new markets diffusion with bilateral learning i explore the endogenous joint evolution of demand and supply in new markets firms and consumers learn in a bayesian fashion by observing the behavior of other firms and consumers respectively as a result endogenous information diffusion takes place on both sides of the market in equilibrium entry occurs in waves and its level depends on two distinct informational effects the model identifies an externality that provides a natural explanation for s shaped diffusion paths entry reveals information to the consumers about the value of the new product and thus early waves of entry affect the expected profitability of subsequent entry