In this article, I explore the following issue: Can differences in the way firms are organized be explained in terms of the underlying information structures? Alternatively stated, what are the consequences of changes in the nature and precision of performance measures for the optimal firm structure, that is, the optimal number of workers and the resulting workers' contributions to the production process?
This paper extends the analysis of transactions cost models of vertical integration to multilateral settings. Its main focus is on supply assurance concerns which arise when several downstream firms are competing for inputs in limited supply. Integration reduces supply assurance concerns for an integrating firm but it may increase them for others. Therefore, to explain the scope of any firm, one must consider the overall network of production and distribution relations.
This paper assesses policies of mass privatization in Germany, Czechoslovakia, Hungary and Poland. A central concern stemming from the analysis is that, in view of the fiscal crisis facing economies in transition, it is crucial for governments to try to maximize the proceeds from the sale of state assets. Because of the low initial level of private wealth, it is important, in this respect, to let potential buyers borrow from the government or issue claims on future revenues (obtained with the privatized assets) to the government in order to pay for the privatized firms.
We analyze incomplete long-term financial contracts between an entrepreneur with no initial wealth and a wealthy investor. Both agents have potentially conflicting objectives since the entrepreneur cares about both pecuniary and non-pecuniary returns from the project while the investor is only concerned about monetary returns.
The paper first characterizes the predictable components in excess rates of returns on major equity and foreign exchange markets using lagged excess returns, dividend yields, and forward premiums as instruments. Vector autoregressions (VARs) demonstrate one-step-ahead predictability and facilitate calculations of implied long-horizon statistics, such as variance ratios. Estimation of latent variable models then subjects the VARs to constraints derived from dynamic asset pricing theories.
This note shows that in environments without externalities or aggregate feasibility constraints, extremely simple mechanisms can be used to approximately ("virtually") implement social choice functions in iteratively strictly undominated strategies.
Four groups are identified among 113 Fortune 500 manufacturers that approach innovation quite differently. The groups are based on 27 measured elements of formal and informal organization, corporate strategy, and corporate environment. Both financial performance and product innovation differ significantly among the groups. A group of 42 firms that invest heavily in innovation perform the best financially, with a smaller group of firms that are not innovative but which follow a strategy of acquisition performing nearly as well financially.
Alternative ways of conducting inference and measurement for long-horizon forecasting are explored with an application to dividend yields as predictors of stock returns. Monte Carlo analysis indicates that the Hansen and Hodrick (1980) procedure is biased at long horizons, but the alternatives perform better. These include an estimator derived under the null hypothesis as in Richardson and Smith (1991), a reformulation of the regression as in Jegadeesh (1990), and a vector autoregression (VAR) as in Campbell and Shiller (1988), Kandel and Stambaugh (1988), and Campbell (1991).
This article examines how organizations participate in shaping the cultural environments of the nations that they inhabit. Cultural environments, we argue, emerge in a primarily unintended fashion as a consequence of routine, network interactions among organizations in four overlapping yet analytically distinct sectors: government, the mass media, educational institutions, and the business community. Differences in the structure of these national networks condition dynamic patterns of change in nations' cultural environments.