2718 research outputs found
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The Indirect Effect of Entrepreneurship on Pay Dispersion: Entry Cost Reduction, Mobility Threat and Wage Redistribution within Incumbent Firms
Full text linkPast research has examined the link between initiatives promoting entrepreneurship and compensation, but scholars have predominantly focused on earnings of individuals directly engaged in the founding process, such as founders, cofounders, and start-up employees. Shifting our focus to incumbent workers, we instead propose that a decline in the cost of entrepreneurship increases the variance in pay among incumbent workers who are not involved in entrepreneurial activities. We posit that, as entrepreneurship becomes a more attractive career option, due to institutional changes, the outside option value of entrepreneurship increases. The resulting increase in mobility threat will disproportionately benefit high earners or those employees who are more difficult to replace: As their bargaining power increases, incumbents will disproportionately reward these workers, especially when they are systematically more inclined to leave for entrepreneurship. We explore these arguments using a difference-in-differences methodology, based on the enactment of an entry reform that reduced the cost of entry in Portugal between 1995 and 2009. We find that an exogenous decrease in the administrative costs of establishing a new venture led to high earners capturing disproportionate rewards relative to low earners. We further show that this relationship was especially pronounced among high earners who (a) exhibited a higher ex ante propensity to transition into entrepreneurship; (b) had fewer credible outside options in paid employment; and (c) operated in industries with decentralized wage bargaining arrangements. By documenting the impact of institutional changes that promote entrepreneurship on incumbent workers’ pay, our study contributes to recent debates about the impact of entrepreneurship on individual earnings
Ask a Local: Improving the Public Pricing of Land Titles in Urban Tanzania
Full text linkInformation on willingness-to-pay is key for public pricing and allocation of services but not easily collected. Studying land titles in Dar-es-Salaam, we ask whether local leaders know and will reveal plot owners' willingness-to-pay. We randomly assign leaders to predict under different settings then elicit owners' actual willingness-to-pay. Demand is substantial, but below exorbitant fees. Leaders can predict the aggregate demand curve and distinguish variation across owners. Predictions worsen when used to target subsidies, but adding cash incentives mitigates this. Finally, we demonstrate that leader-elicited information can improve the public pricing of title deeds, raising uptake while maintaining public funds
The circular economy: a transformative service perspective
No full textThe rising awareness of climate challenges and resource constraints has strengthened interest in the circular economy (CE), characterized as an economic system aimed to minimize the depletion of the world’s natural resources through processes of value retention and value regeneration. Because CE research originated in the engineering field, studies to date have mostly focused on technical and management-related topics. However, due to increasing demands from customers, investors, governmental institutions, and regulatory bodies, companies are increasingly considering how to effectively implement the CE. Despite its increasing importance, the CE is yet an uncharted area of transformative service research (TSR), and little is known about how the CE can support change for greater well-being among individuals and collectives. To fill this research gap, we integrate notions of the CE with TSR and research on value co-creation. The purpose of this paper is to expand research on CE and services by taking a TSR perspective to delineate how value retention and regeneration processes for different levels and spheres in services can effect change for greater individual and collective well-being
Analyst reaction to war-related language: source domains and the role of market structure and market share
Full text linkCorporate executives often use metaphors, particularly those derived from war imagery, when communicating their strategic intentions. This study examines the influence of metaphorical framing in corporate communication, particularly its effect on analyst reactions to firms’ acquisition announcements. We theorize and analyze the impact of metaphor families that either emphasize or downplay competition, whilst considering the diverse source domains from which these metaphors originate. We propose a theoretical framework that integrates conceptual metaphor theory with the risk-as-feelings perspective, suggesting that certain metaphors can evoke visceral perceptions of danger. Our findings reveal that using metaphors in acquisition announcements generally elicits negative reactions. Notably, metaphors from the competition family, especially war-related ones signifying competitive aggression, evoke stronger adverse reactions. The detrimental impact of war language substantially diminishes in contexts where aggressive competition is expected. We contribute to strategic communication research by highlighting the nuanced influence of metaphorical framing on audience reactions, emphasizing the importance of metaphor families, source domains, and contextual factors
Landmines and Spatial Development
Full text linkLandmines affect the lives of millions in many conflict-ridden communities long after the end of hostilities. However, there is little research on the role of demining. We examine the economic
consequences of landmine removal in Mozambique, the only country to transition from heavily contaminated in 1992 to mine-free in 2015. First, we present the self-assembled georeferenced catalog of areas suspected of contamination, along with a detailed record of demining operations. Second, the event-study analysis reveals a robust association between demining activities and subsequent local economic performance, reflected in luminosity. Economic activity does not pick up in the years leading up to clearance, nor does it increase when operators investigate areas mistakenly marked as contaminated in prior surveys. Third, recognizing that landmine removal reshapes transportation access, we use a market-access approach to explore direct and indirect effects. To advance on identification, we isolate changes in market access caused by removing landmines in previously considered safe areas, far from earlier nationwide surveys. Fourth, policy simulations reveal the substantial economywide dividends of clearance, but only when factoring in market-access effects,
which dwarf direct productivity links. Additionally, policy counterfactuals uncover significant aggregate costs when demining does not prioritize the unblocking of transportation routes. These
results offer insights into the design of demining programs in Ukraine and elsewhere, highlighting the need for centralized coordination and prioritization of areas facilitating commerce
The Diffusion of New Technologies
No full textWe identify phrases associated with novel technologies using textual analysis of patents, job postings, and earnings calls, enabling us to identify four stylized facts on the diffusion of jobs relating to new technologies. First, the development of economically impactful new technologies is geographically highly concentrated, more so even than overall patenting: 56% of the most economically impactful technologies come from just two U.S. locations, Silicon Valley and the Northeast Corridor. Second, as the technologies mature and the number of related jobs grows, hiring spreads geographically. But this process is very slow, taking around 50 years to disperse fully. Third, while initial hiring in new technologies is highly skill biased, over time the mean skill level in new positions declines, drawing in an increasing number of lower-skilled workers. Finally, the geographic spread of hiring is slowest for higher-skilled positions, with the locations where new technologies were pioneered remaining the focus for the technology’s high-skill jobs for decades
A Theory of Fair CEO Pay
No full textThis paper studies executive pay with fairness concerns: if the CEO’s wage falls below a perceived fair share of output, he suffers disutility that is increasing in the discrepancy. Fairness concerns do not always lead to fair wages; instead, the firm threatens the CEO with unfair wages for low output to induce effort. The contract sometimes involves performance-vesting equity: the CEO is paid a constant share of output if it is sufficiently high, and zero otherwise. Even without moral hazard, the contract features pay-for-performance, to address fairness concerns and ensure participation. This rationalizes pay-for-performance even if effort incentives are unnecessary
When mimicry leads to divergence: Interdependence asymmetries and selective imitation among competitors
No full textResearch Summary
We investigate why firms imitating the same competitor's strategy in the same environment often replicate different components of that strategy. We argue that such divergence can arise because firms vary in the internal interdependencies that underlie their strategies. When a firm significantly differs from a competitor in how one component of its strategy interacts with other components, the consequences of replicating the competitor's choices about that component are harder to anticipate, making imitation less likely. We discuss how imitators' internal coordination mechanisms may help mitigate barriers to imitation arising from interdependence asymmetries and test our resulting hypotheses in the context of esports, where small teams of professional video-game players compete in high-stakes tournaments.
Managerial Summary
We investigate why firms observing the same competitor often imitate different aspects of that competitor’s strategy. We argue that this variation stems from each firm’s unique internal connections between activities. When a competitor’s practice is closely linked to other parts of their strategy, imitation becomes riskier if similar links do not exist in the focal firm—making imitation less likely. Using data from esports teams, where both strategic choices and coordination are observable, we show that these differences can act as barriers to imitation. However, strong communication or shared experience among decision-makers helps overcome such barriers. Our results may caution managers against indiscriminately copying “best practices”: the highly competitive teams we studied considered not only what competitors did, but also whether those practices fit their own processes and structures
Bertrand competition and captive customers
Full text linkWe study a Bertrand oligopoly with asymmetric costs in which each seller has some “captive” buyers. In the limit as captive buyers vanish, the lowest-cost firm sells to all buyers at a price equal to the second-lowest marginal cost. However, the closest competing price arises from non-degenerate mixed strategies, firms play exclusively undominated strategies, and with positive probability all but one firm sets the monopoly price
You should be able to boil your strategy down to a single clear visualization
No full textWhy do investors respond favorably to some CEO presentations but not to others? In an analysis of 654 presentations on acquisitions, two professors found one factor that stood out: whether a compelling visualization of the strategic rationale for the deal was included. Unfortunately, they discovered, the majority of strategic visualizations aren’t designed to have impact. In this article the professors explain why visualizations are so important to the communication of strategy and describe how to create one that will win buy-in from employees and investors alike. By combining insights from research on how the brain processes information with their study of deal presentations and experiments testing people’s responses to various visual approaches, they have identified five critical design principles: Group ideas into three or four main concepts, create layers with increasing detail, use color and shading only to distinguish the layers, indicate a clear sequence of relationships among the elements, and present information horizontally