Sensemaking in the Third Space - Essays on French-Finnish Bicultural Experiences in Organizations and Their Narratives (summary section only)

Research on cross-cultural and intercultural aspects in organizations has been traditionally conducted from an objectivist, functionalist perspective, with culture treated as an independent variable, and often the key explanatory factor. In order to do justice to the ontological relativity of the phenomena studied, more subjectivist research on intercultural interactions, and especially on their relationships with the dynamics of cultural identity construction, is needed. The present research seeks to address this gap by focusing on bicultural interactions in organizations, as they are experienced by the involved individuals. It is argued that such bicultural situations see the emergence of a space of hybridity, which is here called a ‘third space’, and which can be understood as providing ‘occasions for sensemaking’: it is this individual sensemaking that is of particular interest in the empirical narrative study. A first overall aim of the study is to reach an understanding of the dynamics of bicultural interactions in organizations; an understanding not only of the potential for learning and emancipatory sensemaking, but also of the possibility of conflict and alienatory ordering (this is mainly addressed in the theoretical essays 1 and 2). Further, a second overall aim of the study is to analyze the reflexive identity construction of four young French expatriates involved in such bicultural interactions in organizations in Finland, in order to examine the extent to which their expatriation experiences have allowed for an emancipatory opportunity in their cases (in essays 3 and 4). The primary theoretical contribution in this study lies in its new articulation of the dynamics of bicultural interactions in organizations. The ways in which the empirical material is analyzed bring about methodological contributions: since the expatriates’ accounts are bound to be some kind of construction, the analysis is made from angles that point to how the self-narratives construct reality. There are two such angles here: a ‘performative’ one and a ‘spatial’ one. The most important empirical contributions lie in the analysis of, on the one hand, the alternative uses that the young expatriates made of the notion of ‘national culture’ in their self-narratives, and, on the other hand, their ‘narrative practices of the third space’: their politics of escape or stabilization, their exploration of space or search for place, their emancipation from their origin or return to home as only horizon.

Three Essays on the Volatility of Finnish Stock Returns (summary section only)

First, in Essay 1, we test whether it is possible to forecast Finnish Options Index return volatility by examining the out-of-sample predictive ability of several common volatility models with alternative well-known methods; and find additional evidence for the predictability of volatility and for the superiority of the more complicated models over the simpler ones. Secondly, in Essay 2, the aggregated volatility of stocks listed on the Helsinki Stock Exchange is decomposed into a market, industry-and firm-level component, and it is found that firm-level (i.e., idiosyncratic) volatility has increased in time, is more substantial than the two former, predicts GDP growth, moves countercyclically and as well as the other components is persistent. Thirdly, in Essay 3, we are among the first in the literature to seek for firm-specific determinants of idiosyncratic volatility in a multivariate setting, and find for the cross-section of stocks listed on the Helsinki Stock Exchange that industrial focus, trading volume, and block ownership, are positively associated with idiosyncratic volatility estimates––obtained from both the CAPM and the Fama and French three-factor model with local and international benchmark portfolios––whereas a negative relation holds between firm age as well as size and idiosyncratic volatility.

Essays on the Bioeconomics of the Northern Baltic Fisheries

World marine fisheries suffer from economic and biological overfishing: too many vessels are harvesting too few fish stocks. Fisheries economics has explained the causes of overfishing and provided a theoretical background for management systems capable of solving the problem. Yet only a few examples of fisheries managed by the principles of the bioeconomic theory exist. With the aim of bridging the gap between the actual fish stock assessment models used to provide management advice and economic optimisation models, the thesis explores economically sound harvesting from national and international perspectives. Using data calibrated for the Baltic salmon and herring stocks, optimal harvesting policies are outlined using numerical methods. First, the thesis focuses on the socially optimal harvest of a single salmon stock by commercial and recreational fisheries. The results obtained using dynamic programming show that the optimal fishery configuration would be to close down three out of the five studied fisheries. The result is robust to stock size fluctuations. Compared to a base case situation, the optimal fleet structure would yield a slight decrease in the commercial catch, but a recreational catch that is nearly seven times higher. As a result, the expected economic net benefits from the fishery would increase nearly 60%, and the expected number of juvenile salmon (smolt) would increase by 30%. Second, the thesis explores the management of multiple salmon stocks in an international framework. Non-cooperative and cooperative game theory are used to demonstrate different "what if" scenarios. The results of the four player game suggest that, despite the commonly agreed fishing quota, the behaviour of the countries has been closer to non-cooperation than cooperation. Cooperation would more than double the net benefits from the fishery compared to a past fisheries policy. Side payments, however, are a prerequisite for a cooperative solution. Third, the thesis applies coalitional games in the partition function form to study whether the cooperative solution would be stable despite the potential presence of positive externalities. The results show that the cooperation of two out of four studied countries can be stable. Compared to a past fisheries policy, a stable coalition structure would provide substantial economic benefits. Nevertheless, the status of the salmon stocks would not improve significantly. Fourth, the thesis studies the prerequisites for and potential consequences of the implementation of an individual transferable quota (ITQ) system in the Finnish herring fishery. Simulation results suggest that ITQs would result in a decrease in the number of fishing vessels, but enables positive profits to overlap with a higher stock size. The empirical findings of the thesis affirm that the profitability of the studied fisheries could be improved. The evidence, however, indicates that incentives for free riding exist, and thus the most preferable outcome both in economic and biological terms is elusive.

Essays on socially optimal phosphorus policies in crop production

Phosphorus is a nutrient needed in crop production. While boosting crop yields it may also accelerate eutrophication in the surface waters receiving the phosphorus runoff. The privately optimal level of phosphorus use is determined by the input and output prices, and the crop response to phosphorus. Socially optimal use also takes into account the impact of phosphorus runoff on water quality. Increased eutrophication decreases the economic value of surface waters by Deteriorating fish stocks, curtailing the potential for recreational activities and by increasing the probabilities of mass algae blooms. In this dissertation, the optimal use of phosphorus is modelled as a dynamic optimization problem. The potentially plant available phosphorus accumulated in soil is treated as a dynamic state variable, the control variable being the annual phosphorus fertilization. For crop response to phosphorus, the state variable is more important than the annual fertilization. The level of this state variable is also a key determinant of the runoff of dissolved, reactive phosphorus. Also the loss of particulate phosphorus due to erosion is considered in the thesis, as well as its mitigation by constructing vegetative buffers. The dynamic model is applied for crop production on clay soils. At the steady state, the analysis focuses on the effects of prices, damage parameterization, discount rate and soil phosphorus carryover capacity on optimal steady state phosphorus use. The economic instruments needed to sustain the social optimum are also analyzed. According to the results the economic incentives should be conditioned on soil phosphorus values directly, rather than on annual phosphorus applications. The results also emphasize the substantial effects the differences in varying discount rates of the farmer and the social planner have on optimal instruments. The thesis analyzes the optimal soil phosphorus paths from its alternative initial levels. It also examines how erosion susceptibility of a parcel affects these optimal paths. The results underline the significance of the prevailing soil phosphorus status on optimal fertilization levels. With very high initial soil phosphorus levels, both the privately and socially optimal phosphorus application levels are close to zero as the state variable is driven towards its steady state. The soil phosphorus processes are slow. Therefore, depleting high phosphorus soils may take decades. The thesis also presents a methodologically interesting phenomenon in problems of maximizing the flow of discounted payoffs. When both the benefits and damages are related to the same state variable, the steady state solution may have an interesting property, under very general conditions: The tail of the payoffs of the privately optimal path as well as the steady state may provide a higher social welfare than the respective tail of the socially optimal path. The result is formalized and an applied to the created framework of optimal phosphorus use.

Essays on Banking Crises

This thesis aims at finding the role of deposit insurance scheme and central bank (CB) in keeping the banking system safe. The thesis also studies the factors associated with long-lasting banking crises. The first essay analyzes the effect of using explicit deposit insurance scheme (EDIS), instead of using implicit deposit insurance scheme (IDIS), on banking crises. The panel data for the period of 1980-2003 includes all countries for which the data on EDIS or IDIS exist. 70% of the countries in the sample are less developed countries (LDCs). About 55% of the countries adopting EDIS also come from LDCs. The major finding is that the using of EDIS increases the crisis probability at a strong significance level. This probability is greater if the EDIS is inefficiently designed allowing higher scope of moral hazard problem. Specifically, the probability is greater if the EDIS provides higher coverage to deposits and if it is less powerful from the legal point of view. This study also finds that the less developed a country is to handle EDIS, the higher the chance of banking crisis. Once the underdevelopment of an economy handling the EDIS is controlled, the EDIS separately is no longer a significant factor of banking crises. The second essay aims at determining whether a country s powerful CB can lessen the instability of the banking sector by minimizing the likelihood of a banking crisis. The data used include indicators of the CB s autonomy for a set of countries over the period of 1980-89. The study finds that in aggregate a more powerful CB lessens the probability of banking crisis. When the CB s authority is disentangled with respect to its responsibilities, the study finds that the longer tenure of CB s chief executive officer and the greater power of CB in assigning interest rate on government loans are necessary for reducing the probability of banking crisis. The study also finds that the probability of crisis reduces more if an autonomous CB can perform its duties in a country with stronger law and order tradition. The costs of long-lasting banking crises are high because both the depositors and the investors lose confidence in the banking system. For a rapid recovery of a crisis, the government very often undertakes one or more crisis resolution policy (CRP) measures. The third essay examines the CRP and other explanatory variables correlated with the durations of banking crises. The major finding is that the CRP measure allowing the regulation forbearance to keep the insolvent banks operative and the public debt relief program are respectively strongly and weakly significant to increase the durations of crises. Some other explanatory variables, which were found by previous studies to be related with the probability of crises to occur, are also correlated with the durations of crises.

Essays on corporate governance, stakeholders, and restructuring

This dissertation consists of an introductory section and three theoretical essays analyzing the interaction of corporate governance and restructuring. The essays adopt an incomplete contracts approach and analyze the role of different institutional designs to facilitate the alignment of the objectives of shareholders and management (or employees) over the magnitude of corporate restructuring. The first essay analyzes how a firm's choice of production technology affects the employees' human capital investment. In the essay, the owners of the firm can choose between a specific and a general technology that both require a costly human capital investment by the employees. The specific technology is initially superior in using the human capital of employees but, in contrast to the general technology, it is not compatible with future innovations. As a result, anticipated changes in the specific technology diminish the ex ante incentives of the employees to invest in human capital unless the shareholders grant the employees specific governance mechanisms (a right of veto, severance pay) so as to protect their investments. The results of the first essay indicate that the level of protection that the shareholders are willing to offer falls short of the socially desirable one. Furthermore, when restructuring opportunities become more abundant, it becomes more attractive both socially and from the viewpoint of the shareholders to initially adopt the general technology. The second essay analyzes how the allocation of authority within the firm interacts with the owners' choice of business strategy when the ability of the owners to monitor the project proposals of the management is biased in favor of the status quo strategy. The essay shows that a bias in the monitoring ability will affect not only the allocation of authority within the firm but also the choice of business strategy. Especially, when delegation has positive managerial incentive effects, delegation turns out to be more attractive under the new business strategy because the improved managerial incentives are a way for the owners to compensate their own reduced information gathering ability. This effect, however, simultaneously makes the owners hesitant to switch the strategy since it would involve a more frequent loss of control over the project choice. Consequently, the owners' lack of knowledge of the new business strategy may lead to a suboptimal choice of strategy. The third essay analyzes the implications of CEO succession process for the ideal board structure. In this essay, the presence of the departing CEO on the board facilitates the ability of the board to find a matching successor and to counsel him. However, the ex-CEO's presence may simultaneously also weaken the ability of the board to restructure since the predecessor may use the opportunity to distort the successor's project choice. The results of the essay suggest that the extent of restructuring gains, the firm's ability to hire good outside directors and the importance of board's advisory role affect at which point and for how long the shareholders may want to nominate the predecessor to the board.

Essays on Illegal Activities, Institutions and Economic Growth

In public economics, two extremist views on the functions of a government compete: one emphasizes government working for the public interest to provide value for the citizens, while another regards government mainly as a workhorse for private interests. Moreover, as the sole legitimate authority, the government has the right to define the rules and laws as well as to enforce them. With respect to regulation, two extremes arise: from too little regulation to too much of it. If the government does not function or ceases to exist, the state falls into anarchy or chaos (Somalia). If it regulates too much, it will completely suffocate private activities, which might be considered extralegal (the former Soviet Union). In this thesis I scrutinize the government s interventionist policies and evaluate the question of how to best promote economic well-being. The first two essays assume that the government s policies promote illegal activity. The first paper evaluates the interaction between the government and the mafia, and pays attention to the law enforcement of underground production. We show that the revenue-maximizing government will always monitor the shadow economy, as monitoring contributes to the government s revenue. In general, both legal and illegal firms are hurt by the entry of the mafia. It is, however, plausible that legal firms might benefit by the entry of the mafia if it competes with the government. The second paper tackles the issue of the measurement of the size of the shadow economy. To formulate policies it is essential to know what drives illegal economic activity; is it the tax burden, excess regulation, corruption or a weak legal environment? In this paper we propose an additional explanation for tax evasion and shadow production, namely cultural factors as manifested by religion as determinants of tax morality. According to our findings, Catholic and Protestant countries do not differ in their tax morale. The third paper contributes to the literature discussing the role of the government in promoting economic and productivity growth. Our main result is that, given the complex relationship between economic growth and economic freedom, marketization has not necessarily been beneficial in terms of growth. The last paper builds on traditional growth literature and revisits the debate on convergence clubs arising from demographic transition. We provide new evidence against the idea that countries within a club would converge over time. Instead, we propose that since the demographic transition is a dynamic process, one can expect countries to enter the last regime of stable, modern growth in stages.