Endogenous business cycles with frictional labour markets

We present a neoclassical model of capital accumulation with frictional labour markets. Under standard parameter values the equilibrium of the model is indeterminate and consequently displays expectations-driven business cycles – so-called endogenous business cycles. We study the properties of such cycles, and find that the model predicts the high autocorrelation in output growth and the hump-shaped impulse response of output found in US data – important features that existing endogenous real business cycle models fail to explain. The indeterminacy of the equilibrium stems from job search externalities and does not rely on increasing returns to scale as in most models.

Scenario and modelling uncertainty in global mean temperature change derived from emission-driven global climate models

We compare future changes in global mean temperature in response to different future scenarios which, for the first time, arise from emission-driven rather than concentration-driven perturbed parameter ensemble of a global climate model (GCM). These new GCM simulations sample uncertainties in atmospheric feedbacks, land carbon cycle, ocean physics and aerosol sulphur cycle processes. We find broader ranges of projected temperature responses arising when considering emission rather than concentration-driven simulations (with 10–90th percentile ranges of 1.7 K for the aggressive mitigation scenario, up to 3.9 K for the high-end, business as usual scenario). A small minority of simulations resulting from combinations of strong atmospheric feedbacks and carbon cycle responses show temperature increases in excess of 9 K (RCP8.5) and even under aggressive mitigation (RCP2.6) temperatures in excess of 4 K. While the simulations point to much larger temperature ranges for emission-driven experiments, they do not change existing expectations (based on previous concentration-driven experiments) on the timescales over which different sources of uncertainty are important. The new simulations sample a range of future atmospheric concentrations for each emission scenario. Both in the case of SRES A1B and the Representative Concentration Pathways (RCPs), the concentration scenarios used to drive GCM ensembles, lies towards the lower end of our simulated distribution. This design decision (a legacy of previous assessments) is likely to lead concentration-driven experiments to under-sample strong feedback responses in future projections. Our ensemble of emission-driven simulations span the global temperature response of the CMIP5 emission-driven simulations, except at the low end. Combinations of low climate sensitivity and low carbon cycle feedbacks lead to a number of CMIP5 responses to lie below our ensemble range. The ensemble simulates a number of high-end responses which lie above the CMIP5 carbon cycle range. These high-end simulations can be linked to sampling a number of stronger carbon cycle feedbacks and to sampling climate sensitivities above 4.5 K. This latter aspect highlights the priority in identifying real-world climate-sensitivity constraints which, if achieved, would lead to reductions on the upper bound of projected global mean temperature change. The ensembles of simulations presented here provides a framework to explore relationships between present-day observables and future changes, while the large spread of future-projected changes highlights the ongoing need for such work.

Evaluating the interdependencies between managing business change, IT sourcing and IT governance

Organisations need the right business and IT capabilities in order to achieve future business success. It follows that the sourcing of these capabilities is an important decision. Yet, there is a lack of consensus on the approach to decid-ing where and how to source the core operational capabilities. Furthermore, de-veloping its dynamic capability enables an organisation to effectively manage change its operational capabilities. Recent research has proposed that analysing business capabilities is a key pre-requisite to defining its Information Technology (IT) solutions. This research builds on these findings by considering the interde-pendencies between the dynamic business change capability and the sourcing of IT capabilities. Further it examines the decision-making oversight of these areas as implemented through IT governance. There is a good understanding of the direct impact of IT sourcing decision on operational capabilities However, there is a lack of research on the indirect impact to the capability of managing business change. Through a review of prior research and initial pilot field research, a capability framework and three main propositions are proposed, each examining a two-way interdependency. This paper describes the development of the integrated capa-bility framework and the rationale for the propositions. These respectively cover managing business change, IT sourcing and IT governance. Firstly, the sourcing of IT affects both the operational capabilities and the capability to manage business change. Similarly a business change may result in new or revised operational ca-pabilities, which can influence the IT sourcing decision resulting in a two-way rela-tionship. Secondly, this IT sourcing is directed under IT governance, which pro-vides a decision-making framework for the organisation. At the same time, the IT sourcing can have an impact on the IT governance capability, for example by out-sourcing key capabilities; hence this is potentially again a two-way relationship. Finally, there is a postulated two-way relationship between IT governance and managing business change in that IT governance provides an oversight of manag-ing business change through portfolio management while IT governance is a key element of the business change capability. Given the nature and novelty of this framework, a philosophical paradigm of constructivism is preferred. To illustrate and explore the theoretical perspectives provided, this paper reports on the find-ings of a case study incorporating eight high-level interviews with senior execu-tives in a German bank with 2300 employees. The collected data also include or-ganisational charts, annual reports, project and activity portfolio and benchmark reports for the IT budget. Recommendations are made for practitioners. An understanding of the interdependencies can support professionals in improving business success through effectively managing business change. Additionally, they can be assisted to evaluate the impact of IT sourcing decisions on the organisa-tion’s operational and dynamic capabilities, using an appropriate IT governance framework.

Improving real-time estimates of output and inflation gaps with multiple-vintage models

Real-time estimates of output gaps and inflation gaps differ from the values that are obtained using data available long after the event. Part of the problem is that the data on which the real-time estimates are based is subsequently revised. We show that vector-autoregressive models of data vintages provide forecasts of post-revision values of future observations and of already-released observations capable of improving estimates of output and inflation gaps in real time. Our findings indicate that annual revisions to output and inflation data are in part predictable based on their past vintages.

Business cycle asymmetries: characterisation and testing based on Markov-switching autoregressions

Tests for business cycle asymmetries are developed for Markov-switching autoregressive models. The tests of deepness, steepness, and sharpness are Wald statistics, which have standard asymptotics. For the standard two-regime model of expansions and contractions, deepness is shown to imply sharpness (and vice versa), whereas the process is always nonsteep. Two and three-state models of U.S. GNP growth are used to illustrate the approach, along with models of U.S. investment and consumption growth. The robustness of the tests to model misspecification, and the effects of regime-dependent heteroscedasticity, are investigated.

Behaviour models clarify definitions of affordance and capability

There is ongoing work on conceptual modelling of such busi- ness notions as Affordance and Capability. We have found that such business notions as Affordance and Capability are constructively defned using elements and properties of exe- cutable behaviour models. In this paper, we clarify the def- initions of Affordance and Capability using Coloured Petri Nets and Protocol models.The illustrating case is the process of drug injection. We show that different behaviour modelling techniques provide different precision for definition of Affordance and Capability and clarify the conceptual models of these notions. We generalise that the behaviour models can be used to improve the precision of conceptualization.

Calculating the application criticality and business risk from technology obsolescence

The problem of technology obsolescence in information intensive businesses (software and hardware no longer being supported and replaced by improved and different solutions) and a cost constrained market can severely increase costs and operational, and ultimately reputation risk. Although many businesses recognise technological obsolescence, the pervasive nature of technology often means they have little information to identify the risk and location of pending obsolescence and little money to apply to the solution. This paper presents a low cost structured method to identify obsolete software and the risk of their obsolescence where the structure of a business and its supporting IT resources can be captured, modelled, analysed and the risk to the business of technology obsolescence identified to enable remedial action using qualified obsolescence information. The technique is based on a structured modelling approach using enterprise architecture models and a heatmap algorithm to highlight high risk obsolescent elements. The method has been tested and applied in practice in three consulting studies carried out by Capgemini involving four UK police forces. However the generic technique could be applied to any industry based on plans to improve it using ontology framework methods. This paper contains details of enterprise architecture meta-models and related modelling.

Assessing the business risk of technology obsolescence through enterprise modelling

The problem of technology obsolescence in information intensive businesses (software and hardware no longer being supported and replaced by improved and different solutions) and a cost constrained market can severely increase costs and operational, and ultimately reputation risk. Although many businesses recognise technological obsolescence, the pervasive nature of technology often means they have little information to identify the risk and location of pending obsolescence and little money to apply to the solution. This paper presents a low cost structured method to identify obsolete software and the risk of their obsolescence where the structure of a business and its supporting IT resources can be captured, modelled, analysed and the risk to the business of technology obsolescence identified to enable remedial action using qualified obsolescence information. The technique is based on a structured modelling approach using enterprise architecture models and a heatmap algorithm to highlight high risk obsolescent elements. The method has been tested and applied in practice in two consulting studies carried out by Capgemini involving three UK police forces. However the generic technique could be applied to any industry based on plans to improve it using ontology framework methods. This paper contains details of enterprise architecture meta-models and related modelling.

State capitalism and social responsibility in China's banking industry

China’s financial system has experienced a series of major reforms in recent years. Efforts have been made towards introducing the shareholding system in state-owned commercial banks, restructuring of securities firms, re-organising equity of joint venture insurance companies, further improving the corporate governance structure, managing financial risks and ultimately establishing a system to protect investors (Xinhua, 2010). Financial product innovation, with the further opening up of financial markets and the development of the insurance and bond market, has increased liquidity as well as reduced financial risks. The U.S. subprime crisis indicated the benefit of financial innovations for the economy, but without proper control, they may lead to unexpected consequences. Kirkpatrick (2009) argues that failures and weaknesses in corporate governance arrangements and insufficient accounting standards and regulatory requirements attributed to the financial crisis. Similar to the financial crises of the last decade, the global financial crisis which sparked in 2008, surfaced a variety of significant corporate governance failures: the dysfunction of market mechanisms, the lack of transparency and accountability, misaligned compensation arrangements and the late response of government, all which encouraged management short-termism, poor risk management, as well as some fraudulent schemes. The unique characteristics of the Chinese banking system are an interesting point for studying post-crisis corporate governance reform. Considering that China modelled its governance system on the Anglo-American system, this paper examines the impact of the financial crisis on corporate governance reform in developed economies, and particularly, China’s reform of its financial sector. The paper further analyses the Chinese government’s role in bank supervision and risk management. In this regard, the paper contributes to the corporate governance literature within the Chinese context by providing insights into the contributing factors to the corporate governance failure that led to the global financial crisis. It also provides policy recommendations for China’s policy makers to seriously consider. The results suggest a need for the re-examination of corporate governance adequacy and the institutionalisation of business ethics. The paper’s next section provides a review of China’s financial system with reference to the financial crisis, followed by a critical evaluation of a capitalistic system and a review of Anglo-American and Continental European models. It then analyses the need for a new corporate governance model in China by considering the bank failures in developed economies and the potential risks and inefficiencies in a current State controlled system. The paper closes by reflecting the need for Chinese policy makers to continually develop, adapt and rewrite corporate governance practices capable of meeting the new challenge, and to pay attention to business ethics, an issue which goes beyond regulation.

Placing defects at the heart of high quality new homes: a learning perspective

The UK new-build housing sector is facing dual pressures to expand supply, whilst delivering against tougher planning and Building Regulation requirements; predominantly in the areas of sustainability. The sector is currently responding by significantly scaling up production and incorporating new technical solutions into new homes. This trajectory of up-scaling and technical innovation has been of research interest; but this research has primarily focus on the ‘upstream’ implications for house builders’ business models and standardised design templates. There has been little attention, though, to the potential ‘downstream’ implications of the ramping up of supply and the introduction of new technologies for build quality and defects. This paper contributes to our understanding of the ‘downstream’ implications through a synthesis of the current UK defect literature with respect to new-build housing. It is found that the prevailing emphasis in the literature is limited to the responsibility, pathology and statistical analysis of defects (and failures). The literature does not extend to how house builders individually and collectively, in practice, collect and learn from defects information. The paper concludes by describing an ongoing collaborative research programme with the National House Building Council (NHBC) to: (a) understand house builders’ localised defects analysis procedures, and their current knowledge feedback loops to inform risk management strategies; and, (b) building on this understanding, design and test action research interventions to develop new data capture, learning processes and systems to reduce targeted defects.

Operating models for a multi-polar world: balancing global integration and local responsiveness

Purpose – Multinationals have always needed an operating model that works – an effective plan for executing their most important activities at the right levels of their organization, whether globally, regionally or locally. The choices involved in these decisions have never been obvious, since international firms have consistently faced trade‐offs between tailoring approaches for diverse local markets and leveraging their global scale. This paper seeks a more in‐depth understanding of how successful firms manage the global‐local trade‐off in a multipolar world. Design methodology/approach – This paper utilizes a case study approach based on in‐depth senior executive interviews at several telecommunications companies including Tata Communications. The interviews probed the operating models of the companies we studied, focusing on their approaches to organization structure, management processes, management technologies (including information technology (IT)) and people/talent. Findings – Successful companies balance global‐local trade‐offs by taking a flexible and tailored approach toward their operating‐model decisions. The paper finds that successful companies, including Tata Communications, which is profiled in‐depth, are breaking up the global‐local conundrum into a set of more manageable strategic problems – what the authors call “pressure points” – which they identify by assessing their most important activities and capabilities and determining the global and local challenges associated with them. They then design a different operating model solution for each pressure point, and repeat this process as new strategic developments emerge. By doing so they not only enhance their agility, but they also continually calibrate that crucial balance between global efficiency and local responsiveness. Originality/value – This paper takes a unique approach to operating model design, finding that an operating model is better viewed as several distinct solutions to specific “pressure points” rather than a single and inflexible model that addresses all challenges equally. Now more than ever, developing the right operating model is at the top of multinational executives' priorities, and an area of increasing concern; the international business arena has changed drastically, requiring thoughtfulness and flexibility instead of standard formulas for operating internationally. Old adages like “think global and act local” no longer provide the universal guidance they once seemed to.

Ethics education in management accounting studies: evidence from business schools in Ghana

Management accounting in recent times, and perhaps rightly so, has begun to gain recognition as a profession separate and complimentary to financial accounting. Evidence exists to suggest that management accountants are exposed to a unique set of ethical challenges within industry and that a significant high number of management accountants have engaged in unethical practices in performing their jobs. For the accounting profession as a whole, the growing number of corporate failures has created a credibility crisis that requires a deliberate intervention to mitigate. If this is not addressed sooner, the accounting profession stands the risk of losing relevance. Scholarship on ethical issues in accounting practice have either focused mostly on financial accounting or have sought to combine ethical issues for financial and management accounting. Various arguments have been made in recent times of the need to treat ethical issues in behavioural studies as context-specific and therefore separate ethical considerations in management accounting from financial accounting. This study adopts an approach, following various literature, that effective ethics education can help practitioners deal appropriately with ethical issues at the work place, and explores students’ and faculty members’perceptions on current practices in ethics education. As expected, faculty and students differ significantly on a wide range of issues on ethics education in management accounting. Based on the insights provided from this study, appropriate recommendations have been made to improve ethics education in management accounting.

Dual semiosis analysis model managing customer-focused service innovation

Customers will not continue to pay for a service if it is perceived to be of poor quality, and/or of no value. With a paradigm shift towards business dependence on service orientated IS solutions [1], it is critical that alignment exists between service definition, delivery, and customer expectation, businesses are to ensure customer satisfaction. Services, and micro-service development, offer businesses a flexible structure for solution innovation, however, constant changes in technology, business and societal expectations means an iterative analysis solution is required to i) determine whether provider services adequately meet customer segment needs and expectations, and ii) to help guide business service innovation and development. In this paper, by incorporating multiple models, we propose a series of steps to help identify and prioritise service gaps. Moreover, the authors propose the Dual Semiosis Analysis Model, i.e. a tool that highlights where within the symbiotic customer / provider semiosis process, requirements misinterpretation, and/or service provision deficiencies occur. This paper offers the reader a powerful customer-centric tool, designed to help business managers highlight both what services are critical to customer quality perception, and where future innovation