bluuebunny/crossref_metadata_2025 huggingface dataset:
The Structure of Corporate Control and Ownership in a Regulatory Environment Unbiased toward One‐Share‐One‐Vote*
Authors: Gerson Jos , Barr Graham
Published: October 2006

This paper seeks to identify the determinants of corporate ownership and control that emerge in regulatory environments which do not inhibit the issue of shares with differential voting rights and/or the establishment of pyramid holding companies (which serve exactly the same purpose). [Methodologically, the paper follows the seminal study of the US corporate structure by Demsetz & Lehn (1985).] Such settings tend to produce very concentrated control structures, which contrast sharply with those of the USA, the UK and Australia, where the distribution of shareholder votes in the large public corporations is relatively diffuse. Relatively lenient listing regulations have produced in South Africa a corporate landscape dominated by pyramid holding companies and multilayered diversified corporate groupings. These structures have effectively concentrated the control of most of the large public companies in the hands of a few entrepreneurial families (as well as the two large life insurance mutuals). This setting has enabled us to advance and test hypotheses about control and ownership which would be more difficult to test in a US, UK or Australian setting. Almost all the companies in our sample were found to be under the absolute control of a single identifiable shareholder coalition (usually one or two families) but the underlying percentage shareholding of the controlling group in each company was found to vary dramatically and systematically. We sought to explain that variation and to identify the role of the market as a constraint on the ability of controlling shareholders who wish to dilute their equity stake without surrendering control for the purpose of expanding their companies (without incurring additional debt) and/or diversifying their personal wealth. Demsetz & Lehn had already identified the factors that determine the demand by shareholders for equity dilution but not those constraining their ability to do so. This paper, therefore, attempts to shed light on the way in which principal/agent problems affecting shareholders and managers are resolved when one‐share‐one‐vote is neither enforced nor encouraged by the regulatory environment.
Transnational Governance for a Global Economy
Authors: Demb Ada
Published: October 2006

As the 21st century approaches, there are many pressures prompting changes in corporate board behavior. The author characterizes the current responses as TQM (more of the same, only better) or reengineering (transformation). To respond adequately to the reality and complexities of a global economy, the author argues that approaches to both corporate governance and boards are in need of reengineering. Directions for board transformation are illustrated with a new framework based on the orientation and constitution of boards. Five new board configurations and the path of evolution are presented.
The Transformation of Boards in Corporate and Not‐for‐Profit Sectors: Diminishing Differences and Converging Contexts
Authors: Leatherwood Marya L. , O'Neal Don
Published: October 2006

This paper considers the transformations in boards of directors for the 21st century by focusing on the rich and complex set of roles and responsibilities ascribed to and assumed by board members. The differences and similarities in director selection, evaluation, and separation are also examined. The implications of these findings and future transformations in such roles and responsibilities for governing boards in both the corporate and nonprofit sectors are discussed.
Big Bang or Continuous Evolution: Why Incremental Innovation is Gaining Attention in Successful Organisations
Authors: Bessant Professor John
Published: October 2006

Considerable competitive success can be gained through a continuous stream of incremental improvements made over a sustained period of time. In the West, we have tended to look for the ‘big bang’ solution to manufacturing problems, relying on the step jumps offered by major radical innovation to improve performance. However, experience in Japan and other countries has demonstrated the significant potential of continuous improvement to enhance competitiveness across several dimensions such as productivity, quality, flexibility and responsiveness. At its heart, continuous improvement (CI) is an organisational innovation requiring the mobilisation and commitment of all employees within a firm. Experience in the UK has shown that CI can work, but its introduction and successful management is not automatic.
Kinds of Seeing in Designing
Authors: Schön Donald A. , Wiggins Glenn
Published: October 2006

How do architectural designers develop their ideas? By a kind of reflective conversation with the materials of a design situation. A workshop example of a first‐year design project is used to illustrate the process, and to suggest some of the ways in which this sort of interaction works.
Creativity and Economic Psychology
Authors: Magyari‐Beck Istvan
Published: October 2006

Traditional economics is grounded in a classical belief system central to which is the automatic human behaviour known as economic maximisation. A more recent biological metaphor of human altruism has its own conceptual difficulties. The two approaches can be transcended by a theory of economics which incorporates human creativity.
Creativity in Project Work: a longitudinal study of a product development project
Authors: Ekvall Göran
Published: October 2006

The study approaches the issue of control versus freedom in creative work. A high‐tech product development project was studied during its three year execution phase. Thirty engineers worked on the project, in three sub‐groups. The climate was measured on eleven occasions and the results fed back to the project group for common analysis. The climate was highly creative, even if it deteriorated somewhat at the end. The management of the project and the structure was loose. These organisational circumstances paved the way for a technologically advanced, spearhead, future‐directed but expensive product to come out. However, the customer wanted a less advanced and cheaper product. The goal of the customer had not been clearly communicated to the people in the project. The goal of the project leadership was to develop an advanced product for future applications as well. The goal corresponded to the needs, values and competencies of the project staff. According to the rule‐book for effective project management, the project was badly managed and it consequently became a failure. But from a creativity point of view, and in a longer time perspective, it became a success. A follow‐up three years later showed that the product had been applied in several new defence systems.
Harvesting a ‘Lost’ Investment: case study of a financial innovation
Authors: Hindle Kevin
Published: October 2006

In the field of Entrepreneurial research, financial innovations have been less studied and reported than product or process innovations. A case example is presented with implications for a large number of firms requiring financial restructuring as a precondition to attracting equity investmemnt. An insolvent asparagus exporter with high growth potential offered opportunity to test a model of financial restructuring and unlisted equity marketing, the ersatz venture capital (EVC) hypothesis. A business plan written in accordance with EVC prescriptions revealed the company's potential and attracted investors. It is argued that the approach may help solve two pressing problems of the Australian economy: re‐vitalisation of businesses rendered insolvent by excessive debt and stimulation of a depressed venture capital market.
The Greeks had a Word for it: ‘PGP‐J’, a Syllogistic Model of the Innovation Process, and a Case Example of Successful Innovation
Authors: Saxena R. K.
Published: October 2006

The processes of individual conceptual discovery and its conversion into a new product or artifact are modelled in the form of a classical syllogism. The processes are represented as cycles of interaction of three mental processes of professionalism, generalism, and philosophy, within a communication domain ‘journalism’ (‘PGP‐J’). The system is illustrated with examples including the multiple cycles of innovativeness required within the development of new generations of soil infiltrometers.
Assessing Ideational and Evaluative Skills and Creative Styles and Attitudes
Authors: Runco Mark A. , Basadur Min
Published: October 2006

This article describes the rationale for the multiphase creative problem solving process, and reports the findings from an empirical investigation conducted to facilitate the problem solving of managers. The ideational skills of the managers were assessed before and after training in a complete process of creative problem solving, along with their ideational attitudes, creative problem solving style (i.e., generator, conceptualizer, optimizer, or implementor), and evaluative skill (i.e., ability to recognize original ideas). The most important findings indicated that the training had a significant impact on the evaluative accuracy of the managers. They were significantly more accurate in their judgments about original ideas after training, both in their identification of original ideas and their recognition of unoriginal ideas. After training, the managers also gave more solutions and more original solutions to problems. Finally, several variables (e.g., the “preference for active divergence” attitude, and the conceptualizer process style) seemed to moderate the impact of training. Training was therefore effective, with specific effects that can be predicted from pre‐training individual differences in attitudes and process style.
Your Questions Answered
Authors: Wellbelove David
Published: October 2006

Question: Many organizations are introducing culture change programmes. In your experience, what practical factors have to be taken into account in the introduction of such programmes?
Promoting the Innovation Activity of SMEs; the Greek Experience
Authors: Pechlivanidis Pantelis G.
Published: October 2006

Programmes for stimulating innovation in Small and Medium Enterprise (SMEs) in Greece have been examined. Problems of innovation development, lack of funds, and marketing have been identified. The case is followed by comments from researchers with experience of entrepreneurship in various different countries.
Creativity and Entrepreneurship
Authors: Nyström Harry
Published: October 2006

Creativity is defined as the balanced unfolding and converging of experience and entrepreneurship as the management of radical change. The entrepreneur is seen ‐ in contrast to the view in mainstream economics ‐ as a visionary activist, who is able to constructively handle the often conflicting demands of unplannable emerging situations. Visions, wholistic guiding images of future possibilities, are viewed as the main guiding forces in creativity and entrepreneurship and innovation as the creation of the future. Mainly concerned with the dynamic management of image and innovation, the successful entrepreneur excels in perceiving, opening up and exploiting new technological, marketing and organizational possibilities.
Product Innovation: The Pitfalls of Entrapment
Authors: Proctor Tony
Published: October 2006

This article examines the concept of entrapment and compares it with Yang and Dougherty's (1993) theory of anchoring, each within the framework of innovation management. It is argued that entrapment can occur for different reasons. Among these are the need of executives to defend and confirm their initial decisions and judgement; the desirability of avoiding the waste of sunk costs; the possibility of providing an opportunity for the project to succeed; the treatment of negative feedback as a learning experience (a cue to revise inputs rather than cancel them); and the social costs and benefits relating to image and reputation which are at risk if a project is terminated. Suggestions have been made as to how entrapment might be avoided by making organisational adjustments.
How do Award Winners come up with Innovative Ideas?
Authors: Caird Sally
Published: October 2006

There is surprisingly little research on how innovators in small high‐technological companies come up with their innovative ideas. This paper is based on the results of both qualitative and quantitative interviews which were conducted with twenty four winners of the U.K. Government sponsored Small Firms Merit Award for Research and Technology (SMART). This research explored the perceptions of SMART winners on: the nature of invention and innovation as a creative process; the sources of innovative ideas and their importance for commercial outcomes; the conditions responsible for the commercial success of innovative projects. An interesting finding from this research is that having good ideas is often not a problem to the award winners. As one participant said the hardest thing is to say no to ideas. The big question is which ideas have market potential, not whether you have an idea.
The Paradigm Shift Process
Authors: Prince Frank A.
Published: October 2006

The quality movement has generated a proliferation of philosophies and approaches to quality practices and techniques. Once businesses successfully solved some of their problems using one of these methods, they would use this method of solving problems as the new model for solving other problems. This ‘paradigm’ then became their model for how to be successful. The word ‘paradigm’ comes from the Greek word paradeigma, meaning model, pattern or example. Management is currently very interested in their existing paradigms. However, a new pattern is beginning to emerge. Companies are finding that their efforts to generate significant results have fallen short of expectation and they now see themselves as having hit a ‘plateau’. These companies are now searching for the next step in moving their business to higher levels. Paradigm shifts can represent leaps of significant change to organizations and may be the necessary ‘next step’ in keeping businesses successful. A paradigm shift process offers an applied approach to making changes as an individual or an organization to move beyond existing paradigms.
The Manager as Pirate: An Inspection of the Gentle Art of Bootlegging
Authors: Augsdorfer Peter
Published: October 2006

Bootlegging is a special type of innovation involving covert research without the explicit approval of the responsible manager. It incorporates a dimension of secrecy as this research does not appear on project sheets drawn up by the management of firms. But it might also incorporate the dimension of conspiracy if the innovative activity is pursued by a research team, and perhaps with wider tacit support. Bootlegging exists as a phenomenon in a large number of companies. Interview findings suggest that the attitudes of management towards bootlegging are determined by prevailing perceptions of uncertainty and knowledge about the nature of decision processes.
Creativity in Japanese Society
Authors: Schwarz‐Geschka Martina
Published: October 2006

‘The Japanese are not creative, they just copy….’ This prejudice often crops up when you ask Western people about the creativity of the Japanese. However, Japanese industry is at the leading edge in many industrial sectors and one cannot adhere to this prejudice any longer. Japanese creativity is interesting from two points of view. First, Japanese industry is very competitive and the success cannot be explained by a single factor, like low wages or production costs. Secondly, there is a big difference between Japanese and western civilization and a comparison shows cultural influences on creativity in understanding and practice. However, the cultural specialities which are labelled as Japanese are mostly characteristic of other East Asian cultures as well.
The Emerging Political Perception of Organizations: Two Paradigms
Authors: Banner David K.
Published: October 2006

This article examines the premise that increasing concentration of power in large, multinational organizations will eventually necessitate the political control of such organizations to ensure the interests and well‐being, however defined, of their host countries. This view assumes that centralized control is necessary to prevent abuses of power by private organizations who are not necessarily concerned with the public good. Another view is the anarchist paradigm, where it is assumed that people and groups, left to sort things out among themselves, will eventually produce outcomes beneficial for the whole. Aligned with this approach is the transformational or emerging paradigm. I will examine the assumptions that underlie each paradigm and leave the reader to decide their relative validity.
Entrepreneurial Innovation: Beyond Schumpeter
Authors: Ise Masafumi
Published: October 2006

The Schumpeterian model of entrepreneurial action has been deeply influential in the study of entrepreneurship. This article examines the response to this model of the Indian researcher Mathew Manimala, published in Creativity and Innovation Management, Volume 2, number 3 and links it to the ‘value chain’ concept advocated by Michael Porter. This provides a scheme for stimulating intrapreneurship (entrepreneurial activities within large corporations), which requires the loosening of traditional boundaries between professional departments, and an acceptance of multi‐function team processes.
Job Satisfaction and Creativity Style: An Unexpected Empirical Finding
Authors: Gryskiewicz Nur , Taylor Sylvester , Fleenor John
Published: October 2006

The purpose of this study was to explore whether or not a relationship exists between managerial job satisfaction and creativity styles of U.S. and European managers. Data were obtained from a sample of 8,621 U.S. managers attending leadership development programs at the Center for Creative Leadership‐U.S. and from another sample of 127 European managers attending leadership development programs at the Center for Creative Leadership‐Europe. The results suggest that there is no relationship among various job satisfaction measures as derived from the Managerial Job Satisfaction Questionnaire and creativity style preference as measured by the Kirton Adaptation Innovation Inventory. Implications are discussed.
Process: Implementation as a Form of Institutional Innovation
Authors: Rickards T. , De Cock C. , Moger S. , Pearson A.W. , Roberts H. , Salt H.
Published: October 2006

This paper deals with two related studies of IT implementation. The action research component involved the setting up of ‘creativity club’ workshops to support implementation of IT projects in four organisations. The dynamics of these clubs are examined within an interpretive paradigm. The second component collected data on the wider implementation characteristics of the four projects and those of a ‘matched’ set of projects in four additional organisations. It is proposed that the studies support a reconceptualisation of implementation as a form of institutional innovation within which creativity can be regarded as a process of meaning creation and social learning.
Press: Measurement of the Climate for Creativity in IS Organizations
Authors: Couger J. Daniel
Published: October 2006

The Work Environment Inventory (WEI) instrument was used to measure the climate for creativity for a representative set of IS organizations. The results were compared to those for non‐IS organizations, revealing significant differences. Specific areas of deficiency were identified. IS management can concentrate on those factors to leverage budget and effort to enhance the climate for creativity.
Technology Rules O.K.? A Review of Technological Determinism and Contingency Theory
Authors: Watts Tim
Published: October 2006

How much freedom is there for a firm to choose its technology without being misled by economic forces? This article reviews the competing theories of technological determinism and contingency approaches. The author argues that, however unappealing to managers, the case against technological determinism remains non‐proven. There remains considerable scope to explore this thought provoking area of research.
Advertising Agency Creative Reputation and Account Loyalty
Authors: Michell Paul C.N. , Cataquet Harold , Mandry Gordon D.
Published: October 2006

We relate an advertising agency's reputation for creativity to its ability to retain client loyalty. The data base consists of ten years of UK data on account switching trends and comprises 1,145 advertising accounts and 13 variables. The analysis identifies three agency creativity variables, three client organisation variables and three account‐specific variables as fundamental factors for explaining the switching behaviour of clients. “Creative” agencies are found to be more successful at retaining clients, individual accounts, and portfolios of accounts.
Quiet Change ‐ Big Bang or Catastrophic Shift: At What Point Does Continuous Improvement Become Innovative?
Authors: Coldwell Jon Barry
Published: October 2006

Bessant (1992) argues that continuous improvement programmes which support small incremental innovations are an effective means of gaining competitive success. This paper argues that Bessant does not sufficiently distinguish improvement from innovation and that his failure to explore the relationship between improvement and innovation detracts from his argument. Bessant's paper implies that innovation is the result of a continuous function arising out of aggregated small improvements. The current author argues that this is an insufficient explanation. Innovation is described as a dynamic and discontinuous stochastic process that can only be modelled using techniques which reflect these qualities. Catastrophe theory (Thom, 1972), is a model that has been successfully used to describe a wide variety of discontinuous processes. An example drawn from catastrophe theory (the cusp catastrophe) is used to extend Bessant's theses. It is argued that the resulting model adds to existing definitions of innovation by pointing to the importance of the relationship between improvement, creativity, innovation and competitive advantage.
TARIFF FORMATION IN A MULTIDIMENSIONAL VOTING MODEL*
Authors: Mayer Wolfgang , Riezman Raymond
Published: October 2006

The theory of endogenous trade policy formation argues that tariffs emerge from the political process. This occurs because of conflicting economic interests trying to redistribute income in their favor through the adoption of suitable trade policies. Mayer and Riezman (1987) questioned this view arguing that if individuals differ only in factor ownership they would always prefer some tax/subsidy policy to tariffs. Here we allow individuals to differ not only with respect to factor ownership, but also with respect to consumption preferences and income tax treatment. We show that tariffs might be the social decision even though nobody's individual preferences suggest tariffs as the best choice.
THE PARALLEL MARKET IN CENTRALLY PLANNED ECONOMIES
Authors: Panagariya Arvind
Published: October 2006

This paper presents some general‐equilibrium models of the parallel market in centrally planned economies. The models are based on the hypotheses that private firms can operate more efficiently than bureaucratically‐run state enterprises and that Soviet‐type economies are characterized by price controls and quantitative allocations. The state's enforcement policy is explicitly modeled. Although the welfare implications of the parallel market for workers are ambiguous in general, under a variety of circumstances they turn out to be negative. For instance, responding to the shortage created by price controls, illegal firms divert resources from the official economy into the parallel market. The result is a higher price in the parallel market without any increase in the total supply of the good.
LONG WAVES IN ECONOMICS AND POLITICS
Authors: Kindleberger Charles P.
Published: October 2006

Paul Kennedy, The Rise and Fall of Great Powers: Economic Change and Military Conflict from 1500 to 2000, New York: Random House, 1987; and Joshua S. Goldstein, Long Cycles: Prosperity and War in the Modern Age, New Haven: Yale University Press, 1988.
TAX‐PRICE REFORM WITH DIRECTLY UNPRODUCTIVE PROFIT‐SEEKING (DUP) ACTIVITIES*
Authors: Mitra Pradeep K.
Published: October 2006

This paper explores the extent to which insights available from existing writings on directly unproductive profit‐seeking (DUP) activities in international trade modify rules of tax and tariff reform in normative public economics and examines in what way these should affect advice on tax policy usually given to developing countries.

The analysis proceeds by developing two models. The first incorporates revenue seeking directly into a standard open economy public finance model and examines whether analysis of policy reform and economic costs of distortionary tariffs must be modified. The second includes a political component in the form of lobbying for subsidies – the expenditure side of the budget – as well as a normative economic component that raises taxes – the revenue side – to finance the social costs of such lobbying. The model can be used to determine the effects of politically determined expenditures on tax setting.

The analysis shows that the grammar of welfare‐theoretic arguments that underlies the reform and design of tax and tariff structures is robust to the inclusion of DUP activities of the type considered here. In particular, the latter lend no presumption in favor of uniformity in tax and tariff structures. It is argued that existing policy advice on tax and tariff reform derived from models where DUP activities have traditionally played no role continues to be appropriate when account is taken of formal treatments of DUP‐type phenomena extant in the current literature.
THE ROLE OF INSTITUTIONS IN THE REVIVAL OF TRADE: THE LAW MERCHANT, PRIVATE JUDGES, AND THE CHAMPAGNE FAIRS
Authors: Milgrom Paul R. , North Douglass C. , Weingast* Barry R.
Published: October 2006

A good reputation can be an effective bond for honest behavior in a community of traders if members of the community know how others have behaved in the past – even if any particular pair of traders meets only infrequently. In a large community, it would be impossibly costly for traders to be perfectly informed about each other's behavior, but there exist institutions that can restore the effectiveness of a reputation system using much less extensive information. The system of judges used to enforce commercial law before the rise of the state was such an institution, and it successfully encouraged merchants (1) to behave honestly, (2) to impose sanctions on violators, (3) to become adequately informed about how others had behaved, (4) to provide evidence against violators of the code, and (5) to pay any judgments assessed against them, even though each of these behaviors might be personally costly.
DIMENSIONS, TRANSACTIONS COSTS AND COALITIONS IN LEGISLATIVE VOTING*
Authors: Koford Kenneth
Published: October 2006

Dimensional studies of Congressional voting have found a single dominant “ideological” dimension, while regression estimates find that constituency variables and party are dominant. Koford (1989b) recalibrated the dimensional studies, and found that several dimensions are important. This study reviews those findings, and then considers additional reasons why dimensional studies might understate the number of dimensions. It then examines the regression estimates for biases that overstate the number of dimensions. Overall, fewer dimensions are found than seem consistent with the wide variety of constituents' preferences on issues.

A model is developed in which the transactions costs of building coalitions reduces the number of dimensions visible on roll‐call votes below the underlying dimensionality of preferences in the issue space. When legislative parties build internal coalitions to pass and defeat bills, voting on randomly drawn bills has a single party‐oriented dimension. Natural ideological dimensions are reinforced when parties write bills and logroll along natural lines of cohesion. Numerical examples suggest that these effects could be important, and suggest lines for empirical investigation of the underlying issue space.
ALTRUISM, EGOISM, AND THE ROLE OF SOCIAL CAPITAL IN THE PRIVATE PROVISION OF PUBLIC GOODS*
Authors: Chirinko Robert S.
Published: October 2006

The economic approach to understanding human behavior has encountered serious difficulties when attempting to explain the private provision of public goods, such as voting and charitable contributions to large organizations. To gain insights into these important issues, this study takes an interdisciplinary approach. The individual is modeled formally in terms of dual egoistic/altruistic utilities, and the recursive relation between altruism and the existence and production of social capital is developed. The model is analyzed as a non‐cooperative game between the egoistic and altruistic selves. The socialized rational actor that results from the combination of social capital, dual utilities, and non‐cooperative behavior resolves a number of public goods paradoxes. Comparative statics and the dynamics of social capital formation are explored.
SPURIOUS INJURY AS INDIRECT RENT SEEKING: FREE TRADE UNDER THE PROSPECT OF PROTECTION*
Authors: Leidy Michael P. , Hoekman Bernard M.
Published: October 2006

In the literature on directly unproductive profit seeking or rent seeking, intervention‐seeking by labor and industry groups is generally restricted to direct lobbying activity. However, import‐competing producers may have an additional instrument to influence the decision to grant protection. Under well‐established injury criteria for protection import‐competing producers have an incentive, either collectively or individually, to feign injury. To the extent that the free‐rider problem can be overcome, orchestrating the appearance of injury is an intervention‐seeking activity that may be complementary to DUP lobbying. When the established indicators of industry well‐being include variables controlled by the prospective beneficiaries, therefore, free trade under the prospect of protection is potentially accompanied by a concomitant spurious‐injury distortion. Some of the positive and welfare implications of the theory of spurious injury are investigated in both a partial equilibrium framework and in the Heckscher‐Ohlin model.
WAGES, PROFITS AND CAPITAL FLIGHT*
Authors: Velasco Andrés , Tornell Aarón
Published: October 2006

We model capital flight as the outcome of a non‐cooperative differential game between workers (who control the wage share) and capitalists (who control investment at home and abroad). There are three equilibria for such a game. Along the interior equilibrium, the domestic economy becomes “decapitalized” as investors build up their holdings of foreign assets, in a situation reminiscent of the experience of several developing countries.
PROBLEMS IN MODELING COMPLEX DYNAMIC INTERACTIONS: THE POLITICAL REALIGNMENT OF THE 1850s*
Authors: Fogel Robert William
Published: October 2006

This paper argues that a model of sequential choice is superior to the standard rational choice model in explaining a process as complex and dynamic as the political realignment of the 1850s. Part 1 sketches the facts and processes that need to be encompassed by a model and identifies key branching points. Part 2 describes an appropriate model of sequential choice and discusses procedures for estimating transition probabilities and the impact of key variables on these transition probabilities. Part 3 identifies implicit assumptions of rational choice theory that limit its usefulness.
TWO POLITICIANS, A PAC, AND HOW THEY INTERACT: TWO EXTENSIVE FORM GAMES*
Authors: Edelman Susan A.
Published: October 2006

Two sequential games of the interactions among a PAC and two politicians contesting the same office are developed, and their subgame perfect equilibria are characterized. The politicians have distinct ideal points in policy space, and this drives the result that the policy platforms they campaign on are not identical. The PAC always contributes only to the politician whose platform is closest to the PAC's ideal point, who is the politician whose ideal point is closest to the PAC's ideal point; as a result, both politicians’policy platforms are closer to the PAC's ideal point. The sequence of play does not qualitatively affect the outcome, but the PAC has a second mover advantage. Exogenous shocks to the probabilities of winning only modify the basic outcome.
THE TRANSITION TO EUROPEAN MONETARY UNION AND THE EUROPEAN MONETARY INSTITUTE
Authors: VON HAGEN JÜRGEN , FRATIANNI MICHELE
Published: October 2006

The European Monetary Institute (EMI) will prepare a framework for European Monetary Union (EMU) monetary policy during the transition to the EMU. This involves a trade‐off between deepening financial market integration and harmonizing central bank instruments, a choice between centralized and decentralized monetary strategies with significant welfare implications, and a trade‐off between expected welfare and certainty of policy outcomes. As a result of being dominated by national central bankers and of the conflict between the core and the periphery of the European Community (EC), the EMI is biased toward an inefficient solution. Enlargement of the EC by the European Free Trade Area (EFTA) group would raise the probability of a more efficient, two‐track EMU, which initially would involve only the core group.
BEYOND EMU: THE PROBLEM OF SUSTAINABILITY
Authors: COHEN BENJAMIN J.
Published: October 2006

A common currency, as envisioned in the Maastricht treaty, is thought to be the surest way to “lock in” commitments to monetary cooperation among sovereign states. But historical evidence suggests otherwise. Comparative analysis of six currency unions demonstrates that while economic and organizational factors are influential in determining the sustainability of monetary cooperation, interstate politics matters most. Compliance with commitments is greatest in the presence of either a locally dominant state, willing and able to use its influence to sustain monetary cooperation, or a broad network of institutional linkages sufficient to make the loss of monetary autonomy tolerable to each partner.
THE POLITICAL CHOICE OF THE EXCHANGE RATE REGIME*
Authors: RULAND L. J. , VIAENE J.‐M.
Published: October 2006

The purpose of this paper is to present a model in which the choice of the optimal exchange rate regime is envisaged in a political setting. We consider a country whose voting population comprises three types of agents, importers, exporters and speculators, who select their position on exchange rate policy according to welfare maximization. As a result, well‐defined interest groups are shown to emerge. Each coalition makes contributions to one of two political candidates running for political office in support for their optimal policy intervention. When policy pronouncements by the two candidates are made in terms of exchange rate volatility, the equilibrium consists of two extremes: a fixed versus flexible exchange regime, the latter with bounded volatility [JEL D72, F31].
RENT SEEKING CAN PROMOTE THE PROVISION OF PUBLIC GOODS*
Authors: Cowen Tyler , Glazer Amihai , McMillan Henry
Published: October 2006

Public officials often have little incentive to spend time and effort proposing policies that benefit others. When, however, some public policies generate rents to these officials, rent seeking in politics can motivate them to provide public goods. We consider the motivational effects of rent seeking on (i) policy, (ii) the the role of agenda‐setting in social choice theory, (iii) the effects of graft and corruption in government, and (iv) the validity of cost‐benefit analysis.
THE PROFITABILITY OF COLONIAL INVESTMENT
Authors: Grossman Herschel I. , Iyigun Murat F.
Published: October 2006

This paper develops a model for studying colonial investment in which the metropolitan government restricts the amount of investment in the colony in order to maximize the net profits earned in the colony. The model explicitly includes the threat of subversive activity by the indigenous colonial population. The analysis suggests why historically some countries but not others became colonies and why many colonies that were initially profitable subsequently become unprofitable and were abandoned. The model also has implications for the amount of investment in colonies, the allocation of indigenous colonial labor between production and subversive activity, and the distribution of income between colonial firms and the indigenous population.
CAPITAL CONTROLS AND CONFLICT OF INTERESTS
Authors: Checchi Daniele
Published: October 2006

This paper is a normative analysis of the legal restrictions on international financial movements based on a formal model which analyzes the empirical observation that the degree of financial protectionism is associated with changes in the distribution of welfare among agents. The strategic interactions among four types of agents (a trade union, a firm manager, a financial investor and a government) are analyzed, and the optimal amount of capital control is derived as a Nash perfect equilibrium of a non‐cooperative game with imperfect information. I conclude that a financial liberalization proposal can be supported by different coalitions of agents, according to the covariance of domestic and foreign returns and the degree of profitability of domestic industrial projects.
ANTIDUMPING POLICY IN THE EUROPEAN COMMUNITY: POLITICAL DISCRETION OR TECHNICAL DETERMINATION
Authors: Eymann Angelika , Schuknecht Ludger
Published: October 2006

This paper demonstrates the prominent role of antidumping laws as an instrument of endogenous trade policy in the EC. In contrast with the U.S. where anti‐dumping decisions are largely subject to technical determination and trade barriers result from protectionist rules, the EC application of antidumping laws provides protection through administrative discretion and political influence on administrators. Whereas political influence seems to have increased over time in the U.S., the results of our empirical analysis of the EC antidumping decisions in the 1980 to 1990 period indicate that it has been curbed by the increased formalization of the antidumping investigation in the EC in this period. The estimation results show, however, that the tightening impact of each of the three institutional changes during this period faded within two years.
EXPLORING POTENTIAL ARMS RACES
Authors: Seiglie Carlos
Published: October 2006

Defense spending accounts for a larger share of national output in most countries than many of the other allocative decisions, both public and private, which the majority of economic research aims at explaining. Yet with notable exceptions, most economists have ignored this topic and relegated to political science the task of explaining how resources are allocated to this sector. This paper aims at contributing to this literature by economists. A theoretical model is developed to explain the dynamics of the arms acquisition process. Within this framework, defense expenditures are governed by the expenditures of potential adversaries if these exist. Then the model is empirically tested using a sample of countries or dyads which have been proposed to be adversaries. The direction of the prima facie causal relationship between the military expenditures of these dyads is investigated using parametric causality tests. The results indicate that some of these country's expenditures seem to reflect an arms race while other proposed dyads seem not to be adversaries, i.e., their expenditures are independent and therefore, seem to be governed by other than an external threat.
POLITICS WITH AND WITHOUT POLICY†
Authors: Garfinkel Michelle R. , Glazer Amihai
Published: October 2006

When strategic complementarities lead to the existence of multiple equilibria, a change in control of government may lead to changes in economic behavior by consumers or firms even if the different parties pursue the same policies. The existence of multiple equilibria, however, is not necessary to predict partisan effects. Furthermore, electoral uncertainty is not necessary to generate partisan effects; indeed, such uncertainty can dampen the cycle.
Interest rate linkages within the EMS and bank credit supply
Authors: Chen Andrew H. , Mazumdar Sumon C.
Published: October 2006

The exchange rates between the currencies of European Monetary System (EMS) members are essentially fixed between narrow bands mandated by the Exchange Rate Mechanism (ERM). the intent of such a fixed rate regime is to enhance policy co‐ordination within the EMS. However, it has instead led to German policy dominance within the system according to several recent studies. We examine the optimal dynamic credit policy of a bank in an EMS country that is subject to such German ‘dominance’. Our stochastic control model reveals conditions under which German monetary policies can influence domestic bank lending behaviour. It also suggests that banks may be able to hedge such risk exposure by increasing in size. the model offers ‘credit supply' based explanations for recent regulatory reforms in Europe towards unified banking and the attempts of several EMS members to de‐link their policies from that of the German Bundesbank.
Persistence and mean reversion in UK stock returns
Authors: Poon Ser‐Huang
Published: October 2006

This paper re‐examines the issue of persistence and mean reversion in UK stock returns in the light of new developments published in Chow and Denning (1993) the random walk hypothesis is tested using multiple variance ratios for returns on the Financial Times All Share Index and 330 individual stocks for the period January 1965 to June 1994. There is no evidence of reversion in the UK stock market. Persistence only exists in high frequency data and is less strong in more recent times. Moreover, it is a portfolio phenomenon and is related to firm size. There is a possibility that persistence/reversion is also industry‐related.
Sovereign risk assessment and agency credit ratings
Authors: Cantor Richard , Packer Frank
Published: October 2006

Sovereign ratings are gaining importance as more governments with greater default risk borrow in international bond markets. However, while the ratings have proved useful to governments seeking market access, the difficulty of assessing sovereign risk has led to agency disagreements and public controversy over specific rating assignments. Recognising this difficulty, the financial markets have shown some scepticism toward sovereign ratings when pricing issues.
Equity rights issues: Signalling vs issue price irrelevance hypothesis
Authors: Tsangarakis Nickolaos V.
Published: October 2006

This study examines the relationship between common stock returns and the subscription price level of equity right offerings in Greece during the period 1981–90. the findings show that the associated stock returns are independent of the issue price. This evidence does not support the view that the issue price serves as a signal of the stock's true value.
Trade Transparency and the London Stock Exchange
Authors: Board John , Sutcliffe Charles
Published: October 2006

On the London Stock Exchange the publication of large trades is delayed to give the market‐maker concerned time to unwind the change in their inventory. Using trade and quotations data on 42 stocks for two years, a number of different effects are investigated. These include the association between trade size and the traded bid‐ask spread, the inventory control policies of individual market‐makers around large trades, the size and speed of the price impact of large trades whose publication is delayed, and the effects of delayed publication on the volume and spreads of the traded equity options market.
MONITORING AND AUDITING VALUE FOR MONEY IN THE UK: THE SCOPE FOR QUANTITATIVE ANALYSIS ‐ A REPLY
Authors: Anand Paul
Published: October 2006

In reply to Tomkins, this author notes that the importance of integrated decision support systems (IDSSs) is the way in which they develop the system of decision conferencing. Comments on the role of quantitative techniques and legislation as the basis of audit are made. Finally, some remarks are made on the development of management and audit teaching and research.
From “New Institutionalism” to “Institutional Processualism”: Advancing Knowledge about Public Management Policy Change
Authors: BARZELAY MICHAEL , GALLEGO RAQUEL
Published: October 2006

Research on public management reform has taken a decidedly disciplinary turn. Since the late 1990s, analytical issues are less often framed in terms of the New Public Management. As part of the disciplinary turn, much recent research on public management reform is highly influenced by the three new institutionalisms. However, these studies have implicitly been challenged by a competing research program on public management reform that is emphatically processual in its theoretical foundations. This article develops the challenge in a more explicit fashion. It provides a theoretical restatement of the competing “institutional processualist” research program and compares its substantive findings with those drawn from the neoinstitutionalisms. The implications of this debate about public management reform for comparative historical analysis and neoinstitutional theories are discussed.
The Politics of Social Learning: Finance, Institutions, and Pension Reform in the United States and Canada
Authors: BÉLAND DANIEL
Published: October 2006

Because the traditional concept of social learning has faced significant criticism in recent years, more analytical work is required to back the claim that the lessons drawn from existing institutional legacies can truly impact policy outcomes. Grounded in the historical institutionalist literature, this article formulates an amended concept of social learning through the analysis of the relationship between finance, social learning, and institutional legacies in the 1990s debate over the reform of earnings‐related pension schemes in the United States and Canada. The article shows how social learning related to specific ideological assumptions and policy legacies in the public and the private sectors has affected policymaking processes. At the theoretical level, this contribution stresses the political construction of learning processes, which is distinct from the technocratic model featured in the traditional literature on social learning. This article also distinguishes between high‐ and low‐profile social learning while emphasizing the impact of private policy legacies on learning processes.
Rituals of Reform, Policy Transfer, and the National University Corporation Reforms of Japan
Authors: GOLDFINCH SHAUN
Published: October 2006

In 2004, Japan restructured the state‐directed public university system to create the national university corporations (NUCs). Proponents of the reforms made explicit mention of agentification in the United Kingdom, changes to university management structures elsewhere, and reforms in the wider Japanese public sector. As such, the NUC reforms are an example of policy transfer. Despite rhetoric to the contrary, however, the Ministry of Education, Culture, Sports, Science and Technology (MEXT) has not surrendered the large degree of control it had manifested over the university system. Rather the means of control have changed from largely direct ones to largely indirect ones. Policy transfer provided a means by which MEXT could legitimate its policy stance by referring to developments elsewhere, show it was responding to pressure for reform by adopting its rhetoric and superficial forms, but use this to capture the policy agenda to its own ends.