Customer asset management in action: using customers portfolio for allocating resources across business-to-business relationships for improved shareholder value

Suvi Nenonen Customer asset management in action: using customer portfolios for allocating resources across business-to-business relationships for improved shareholder value Customers are crucial assets to all firms as customers are the ultimate source of all cash flows. Regardless this financial importance of customer relationships, for decades there has been a lack of suitable frameworks explaining how customer relationships contribute to the firm financial performance and how this contribution can be actively managed. In order to facilitate a better understanding of the customer asset, contemporary marketing has investigated the use of financial theories and asset management practices in the customer relationship context. Building on this, marketing academics have promoted the customer lifetime value concept as a solution for valuating and managing customer relationships for optimal financial outcomes. However, the empirical investigation of customer asset management lags behind the conceptual development steps taken. Additionally, the practitioners have not embraced the use of customer lifetime value in guiding managerial decisions - especially in the business-to-business context. The thesis points out that there are fundamental differences between customer relationships and investment instruments as investment targets, effectively eliminating the possibility to use financial theories in a customer relationships context or to optimize the customer base as a single investment portfolio. As an alternative, the thesis proposes the use of customer portfolio approach for allocating resources across the customer base for improved shareholder value. In the customer portfolio approach, the customer base of a firm is divided into multiple portfolios based on customer relationships’ potential to contribute to the shareholder value creation. After this, customer management concepts are tailored to each customer portfolio, designed to improve the shareholder value in their own respect. Therefore, effective customer asset management with the customer portfolio approach necessitates that firms are able to manage multiple parallel customer management concepts, or business models, simultaneously. The thesis is one of the first empirical studies on customer asset management, bringing empirical evidence from multiple business-to-business case studies on how customer portfolio models can be formed, how customer portfolios can be managed, and how customer asset management has contributed to the firm financial performance.

The link between foreign aid, public investment and economic growth

Länsimaat ovat rahoittaneet kehitysyhteistyöhankkeita jo lähes kuuden vuosikymmenen ajan, mutta kehitysavun tehokkuudesta ei olla edelleenkään päästy yksimielisyyteen. Yksi avunantajamaiden tapa vaikuttaa kehitysavun tehokkuuteen, eli avun vaikutukseen vastaanottajamaan taloudellisen kasvun kiihdyttäjänä, on sitoa ne julkisen sektorin infrastruktuurihankkeisiin. Joissain tapauksissa tämä vaikuttaa avun vastaanottajan käytökseen ja asenteisiin kehitysapua kohtaan. Tutkielmassa käsitellään kehitysavun tehokkuutta tilanteessa, jossa se on sidottu julkisen sektorin investointeihin kehitysmaassa. Tutkimus pohjaa Kalaitzidakisin ja Kalyvitisin (2008) malliin, jossa osa kehitysmaan julkisen talouden investoinneista rahoitetaan kehitysavulla. Seuraavaksi tarkastellaan ylijäämää tavoittelevan käyttäytymisen (rent- seeking) vaikutusta kehitysavun tehokkuuteen pohjaten Economidesin, Kalyvitisin ja Philippopoulosin (2008) malliin. Tutkielmassa referoidaan lisäksi tutkimuskysymystä sivuavia empiirisiä tutkimuksia, esitellään aluksi tavallisimmat kehitysyhteistyön muodot, sekä esitellään talousteoreettisia näkökulmia kehitysyhteistyön tehokkuuden määrittelylle. Tutkielma perustuu puhtaasti teoreettisiin malleihin ja niissä sovelletut menetelmät ovat matemaattisia. Tutkielmassa käsitellään ensin tapaus, jossa kehitysyhteistyöllä rahoitetaan julkisen sektorin investointihankkeita. Jossain tapauksissa kehitysavun kasvu lasku siirtää vastaanottajamaan kulutusta julkisista investoinneista kulutukseen, jolloin kehitysyhteistyövaroin osittain rahoitettujen hankkeiden koko pienenee, ja suhteellinen tehokkuus laskee. Seuraavaksi tarkastellaan tilannetta, jossa kehitysyhteistyövaroista vain osa päätyy hankkeen rahoittamiseen, ja todetaan, että kehitysavun tehokkuus ja vaikutus maan kansantulon kasvuun vähenee talouden toimijoiden ylijäämää tavoittelevan käyttäytymisen (mukaan lukien korruptio) myötä entisestään. Tämän tutkimuksen perusteella voidaan todeta, että kehitysapu vaikuttaa kehittyvän maan talouden kasvuun tapauksessa, jossa julkisia infrastruktuurihankkeita rahoitetaan osittain maan omin verovaroin ja osittain kehitysyhteistyövaroin. Ylijäämää tavoitteleva käyttäytyminen vaikuttaa kehitysavun tehokkuuteen negatiivistesti vähentäen kehitysavun positiivisia kasvuvaikutuksia.

Stock Option Compensation in Finland: An Analysis of Economic Determinants, Contracting Frequency, and Design

This paper addresses several questions in the compensation literature by examining stock option compensation practices of Finnish firms. First, the results indicate that principal-agent theory succeeds quite well in predicting the use of stock options. Proxies for monitoring costs, growth opportunities, ownership structure, and risk are found to determine the use of incentives consistent with theory. Furthermore, the paper examines whether determinants of stock options targeted to top management differ from determinants of broad-based stock option plans. Some evidence is found that factors driving these two types of incentives differ. Second, the results reveal that systematic risk significantly increases the likelihood that firms adopt stock option plans, whereas total firm risk and unsystematic risk do not seem to affect this decision. Third, the results show that growth opportunities are related to time-dimensional contracting frequency, consistent with the argument that incentive levels deviate more rapidly from optimum in firms with high growth opportunities. Finally, the results suggest that vesting schedules are decreasing in financial leverage, and that contract maturity is decreasing in firm focus. In addition, both vesting schedules and contract maturity tend to be longer in firms involving state ownership.

Appropriate Institutions and Economic Growth - one size fits no-one

Modern-day economics is increasingly biased towards believing that institutions matter for growth, an argument that has been further enforced by the recent economic crisis. There is also a wide consensus on what these growth-promoting institutions should look like, and countries are periodically ranked depending on how their institutional structure compares with the best-practice institutions, mostly in place in the developing world. In this paper, it is argued that ”non-desirable” or “second-best” institutions can be beneficial for fostering investment and thus providing a starting point for sustained growth, and that what matters is the appropriateness of institutions to the economy’s distance to the frontier or current phase of development. Anecdotal evidence from Japan and South-Korea is used as a motivation for studying the subject and a model is presented to describe this phenomenon. In the model, the rigidity or non-rigidity of the institutions is described by entrepreneurial selection. It is assumed that entrepreneurs are the ones taking part in the imitation and innovation of technologies, and that decisions on whether or not their projects are refinanced comes from capitalists. The capitalists in turn have no entrepreneurial skills and act merely as financers of projects. The model has two periods, and two kinds of entrepreneurs: those with high skills and those with low skills. The society’s choice of whether an imitation or innovation – based strategy is chosen is modeled as the trade-off between refinancing a low-skill entrepreneur or investing in the selection of the entrepreneurs resulting in a larger fraction of high-skill entrepreneurs with the ability to innovate but less total investment. Finally, a real-world example from India is presented as an initial attempt to test the theory. The data from the example is not included in this paper. It is noted that the model may be lacking explanatory power due to difficulties in testing the predictions, but that this should not be seen as a reason to disregard the theory – the solution might lie in developing better tools, not better just better theories. The conclusion presented is that institutions do matter. There is no one-size-fits-all-solution when it comes to institutional arrangements in different countries, and developing countries should be given space to develop their own institutional structures that cater to their specific needs.

Examining effectiveness of an immigrant labor market integration intervention. The role of acculturation, discrimination, self-efficacy, outcome expectances, action and coping planning.

The designing of effective intervention tools to improve immigrants’ labor market integration remains an important topic in contemporary Western societies. This study examines whether and how a new intervention tool, Working Life Certificate (WLC), helps unemployed immigrants to find employment and strengthen their belief of their vocational skills. The study is based on quantitative longitudinal survey data from 174 unemployed immigrants of various origins who participated in the pilot phase of WLC examinations in 2009. Surveys were administered in three waves: before the test, right after it, and three months later. Although it is often argued that the unemployment among immigrants is due either to their lack of skills and cultural differences or to discrimination in recruitment, scholars within social psychology of behavior change argue that the best way of helping people to achieve their goals (e.g. finding employment) is to build up their sense of self-efficacy, alter their outcome expectances in a more positive direction or to help them to construct more detailed action and coping plans. This study aims to shed light on the role of these concepts in immigrants’ labor market integration. The results support the theories of behavior change moderately. Having positive expectances regarding the outcomes of various job search behaviors was found to predict employment in the future. Together with action and coping planning it also predicted increase in job search behavior. The intervention, WLC, was able to affect participants’ self-efficacy, but contrary to expectations, self-efficacy was found not to be related to either job search behavior or future labor market status. Also, perceived discrimination did not explain problems in finding employment, but hints of subtle or structural discrimination were found. Adoption of Finnish work culture together with strong family culture was found to predict future employment. Hence, in this thesis I argue that awarding people diplomas should be preferred in immigrant integration training as it strengthens people’s sense of self-efficacy. Instead of teaching new information, more attention should be directed at changing people’s outcome expectances in a more positive direction and helping them to construct detailed plans on how to achieve their goals.

Nonlinear mixture autoregressive model: economic applications

The aim of this dissertation is to model economic variables by a mixture autoregressive (MAR) model. The MAR model is a generalization of linear autoregressive (AR) model. The MAR -model consists of K linear autoregressive components. At any given point of time one of these autoregressive components is randomly selected to generate a new observation for the time series. The mixture probability can be constant over time or a direct function of a some observable variable. Many economic time series contain properties which cannot be described by linear and stationary time series models. A nonlinear autoregressive model such as MAR model can a plausible alternative in the case of these time series. In this dissertation the MAR model is used to model stock market bubbles and a relationship between inflation and the interest rate. In the case of the inflation rate we arrived at the MAR model where inflation process is less mean reverting in the case of high inflation than in the case of normal inflation. The interest rate move one-for-one with expected inflation. We use the data from the Livingston survey as a proxy for inflation expectations. We have found that survey inflation expectations are not perfectly rational. According to our results information stickiness play an important role in the expectation formation. We also found that survey participants have a tendency to underestimate inflation. A MAR model has also used to model stock market bubbles and crashes. This model has two regimes: the bubble regime and the error correction regime. In the error correction regime price depends on a fundamental factor, the price-dividend ratio, and in the bubble regime, price is independent of fundamentals. In this model a stock market crash is usually caused by a regime switch from a bubble regime to an error-correction regime. According to our empirical results bubbles are related to a low inflation. Our model also imply that bubbles have influences investment return distribution in both short and long run.

Hyveiden harjoittaminen : edellytykset ja esteet

In the first half of the 20th century, most moral philosophers took the concept of virtue to be secondary to moral principles or emotions, though in various and mutually conflicting ways. In the early 1960s interest in the virtues was restored by the analytic philosophers Elizabeth Anscombe and Georg Henrik von Wright, the younger colleagues and friends of the late Wittgenstein. Later, Alasdair MacIntyre became a leading virtue ethicist. In 1981, MacIntyre introduced in After Virtue the concept of practices, which he based on the Aristotelian distinction between praxis and poiesis. This dissertation examines MacIntyre s characterization of the interconnectedness between practices and virtues, especially in relation to skills, education, and certain emotions. The primary position of the virtues is defended against the tendency in modern moral philosophy to overemphasize the role either of principles and rules or of emotions. The view according to which rational action and acting according to the virtues is best conceptualized as following rules or principles is criticized by arguments that are grounded by some Wittgensteinian observations, and that can be characterized as transcendental. Even if the virtues cannot be defined by, and are not based entirely on, emotions, the role of certain emotions on the learning and education of skills and virtues are studied more carefully than by MacIntyre. In the cases of resentment, indignation, and shame, the analysis of Peter Strawson is utilized, and in the case of regret, the analysis of Bernard Williams. Williams analysis of regret and moral conflict concludes in a kind of antirealism, which this study criticizes. Where education of practices and skills and the related reactive emotions are examined as conditions of learning and practicing the virtues, institutions and ideologies are examined as obstacles and threats to the virtues. This theme is studied through Karl Marx s conception of alienation and Karl Polanyi s historical and sociological research concerning the great transformation . The study includes six Finnish-published articles carrying the titles Our negative attitudes towards other persons , Authority and upbringing , Moral conflicts, regret and ethical realism , Practices and institutions , Doing justice as condition to communal action: a transcendental argument for justice as virtue , and Alienation from practices in capitalist society: Alasdair MacIntyre s Marxist Aristotelianism . The introductory essay sums up the themes of the articles and presents some central issues of virtue ethics by relating the classical Socratic questions to Aristotelian practical philosophy, as well as to current controversies in metaethics and moral psychology.

Economic evaluation of forest policy programs.

XVIII IUFRO World Congress, Ljubljana 1986.