The economic theory of international supply chains: a systems view

This paper offers an integrated analysis of out-sourcing, off-shoring and foreign direct investment within a systems view of international business. This view takes the supply chain rather than the firm as the basic unit of analysis. It argues that competition in the global economy selects supply chains that maximise the joint profit of all the firms in the chain. The systems view is compared with the firm-centred view commonly used in strategy literature. The paper shows that a firm’s strategy must be embedded within an efficient supply chain strategy, and that this strategy must be negotiated with, rather than imposed upon, other firms. The paper analyses the conditions under which various supply chain strategies - and by implication various firm-level strategies - are efficient. Only by adopting a systems view of supply chains is it possible to determine which firm-level strategies will succeed in a volatile global economy.

Optimal tax theory and the taxation of housing in the US and the UK

First, we survey recent research in the application of optimal tax theory to housing. This work suggests that the under-taxation of housing for owner occupation distorts investment so that owner occupiers are encouraged to over-invest in housing. Simulations of the US economy suggest that this is true there. But, the theoretical work excludes consideration of land and the simulations exclude consideration of taxes other than income taxes. These exclusions are important for the US and UK economies. In the US, the property tax is relatively high. We argue that excluding the property tax is wrong, so that, when the property tax is taken into account, owner occupied housing is not undertaxed in the US. In the UK, property taxes are relatively low but the cost of land has been increasing in real terms for forty years as a result of a policy of constraining land for development. The price of land for housing is now higher than elsewhere. Effectively, an implicit tax is paid by first time buyers which has reduced housing investment. When land is taken into account over-investment in housing is not encouraged in the UK either.

Commodity futures prices: more evidence on forecast power, risk premia and the theory of storage

In this paper, we examine the temporal stability of the evidence for two commodity futures pricing theories. We investigate whether the forecast power of commodity futures can be attributed to the extent to which they exhibit seasonality and we also consider whether there are time varying parameters or structural breaks in these pricing relationships. Compared to previous studies, we find stronger evidence of seasonality in the basis, which supports the theory of storage. The power of the basis to forecast subsequent price changes is also strengthened, while results on the presence of a risk premium are inconclusive. In addition, we show that the forecasting power of commodity futures cannot be attributed to the extent to which they exhibit seasonality. We find that in most cases where structural breaks occur, only changes in the intercepts and not the slopes are detected, illustrating that the forecast power of the basis is stable over different economic environments.

A unified theory of balance in the extratropics

Many physical systems exhibit dynamics with vastly different time scales. Often the different motions interact only weakly and the slow dynamics is naturally constrained to a subspace of phase space, in the vicinity of a slow manifold. In geophysical fluid dynamics this reduction in phase space is called balance. Classically, balance is understood by way of the Rossby number R or the Froude number F; either R ≪ 1 or F ≪ 1. We examined the shallow-water equations and Boussinesq equations on an f -plane and determined a dimensionless parameter _, small values of which imply a time-scale separation. In terms of R and F, ∈= RF/√(R^2+R^2 ) We then developed a unified theory of (extratropical) balance based on _ that includes all cases of small R and/or small F. The leading-order systems are ensured to be Hamiltonian and turn out to be governed by the quasi-geostrophic potential-vorticity equation. However, the height field is not necessarily in geostrophic balance, so the leading-order dynamics are more general than in quasi-geostrophy. Thus the quasi-geostrophic potential-vorticity equation (as distinct from the quasi-geostrophic dynamics) is valid more generally than its traditional derivation would suggest. In the case of the Boussinesq equations, we have found that balanced dynamics generally implies hydrostatic balance without any assumption on the aspect ratio; only when the Froude number is not small and it is the Rossby number that guarantees a timescale separation must we impose the requirement of a small aspect ratio to ensure hydrostatic balance.

Testing the expectations theory of the term structure in threshold models

We test the expectations theory of the term structure of U.S. interest rates in nonlinear systems. These models allow the response of the change in short rates to past values of the spread to depend upon the level of the spread. The nonlinear system is tested against a linear system, and the results of testing the expectations theory in both models are contrasted. We find that the results of tests of the implications of the expectations theory depend on the size and sign of the spread. The long maturity spread predicts future changes of the short rate only when it is high.

Workaround motivation model (WAMM): an adaptation of the Theory of Interpersonal Behaviour

The study of workarounds (WA) has increased in importance due to their impact on patient safety and efficiency. However, there are no adequate theories to explain the motivation to create and use a workaround in a healthcare sitting. Although theories of technology acceptance help to understand the reasons to accept or reject technology, they fail to explain drivers for alternatives. Also workarounds involve creators and performers that have different motivations. Models such as Theory of Planned Behaviour (TPB) or Theory of Reasoned Action (TRA) can help to explain the role of workaround users, but lack explanation of workaround creators’ dynamics. Our aim is to develop a theoretical foundation to explain workaround motivation behaviour models with norms that relate to sanctions to provide an integrated Workaround Motivation Model; WAMM. The development of WAMM model is explained in this paper based on workaround cases as part of further research to establish the model.

Information strategies and the theory of the Firm

Information costs play a key role in determining the relative efficiency of alternative organisational structures. The choice of locations at which information is stored in a firm is an important determinant of its information costs. A specific example of information use is modelled in order to explore what factors determine whether information should be stored centrally or locally and if it should be replicated at different sites. This provides insights into why firms are structured hierarchically, with some decisions and tasks being performed centrally and others at different levels of decentralisation. The effects of new information technologies are also discussed. These can radically alter the patterns and levels of information costs within a firm and so can cause substantial changes in organisational structure.

The economic theory of the firm as a foundation for international business theory

The economic theory of the firm is central to the theory of the multinational enterprise. Recent literature on multinationals, however, makes only limited reference to the economic theory of the firm. Multinationals play an important role in coordinating the international division of labour through internal markets. The paper reviews the economic principles that underlie this view. Optimal internalisation equates marginal benefits and costs. The benefits of internalisation stem mainly from the difficulties of licensing proprietary knowledge, reflecting the view that MNEs possess an ‘ownership’ or ‘firm-specific’ advantage. The costs of internalisation, it is argued, reflect managerial capability, and in particular the capability to manage a large firm. The paper argues that management capability is a complement to ownership advantage. Ownership advantage determines the potential of the firm, and management capability governs the fulfilment of this potential through overcoming barriers to growth. The analysis is applied to a variety of issues, including out-sourcing, geographical dispersion of production, and regional specialisation in marketing.

The dependence of radiative forcing and feedback on evolving patterns of surface temperature change in climate models

Experiments with CO2 instantaneously quadrupled and then held constant are used to show that the relationship between the global-mean net heat input to the climate system and the global-mean surface-air-temperature change is nonlinear in Coupled Model Intercomparison Project phase 5 (CMIP5) Atmosphere-Ocean General Circulation Models (AOGCMs). The nonlinearity is shown to arise from a change in strength of climate feedbacks driven by an evolving pattern of surface warming. In 23 out of the 27 AOGCMs examined the climate feedback parameter becomes significantly (95% confidence) less negative – i.e. the effective climate sensitivity increases – as time passes. Cloud feedback parameters show the largest changes. In the AOGCM-mean approximately 60% of the change in feedback parameter comes from the topics (30N-30S). An important region involved is the tropical Pacific where the surface warming intensifies in the east after a few decades. The dependence of climate feedbacks on an evolving pattern of surface warming is confirmed using the HadGEM2 and HadCM3 atmosphere GCMs (AGCMs). With monthly evolving sea-surface-temperatures and sea-ice prescribed from its AOGCM counterpart each AGCM reproduces the time-varying feedbacks, but when a fixed pattern of warming is prescribed the radiative response is linear with global temperature change or nearly so. We also demonstrate that the regression and fixed-SST methods for evaluating effective radiative forcing are in principle different, because rapid SST adjustment when CO2 is changed can produce a pattern of surface temperature change with zero global mean but non-zero change in net radiation at the top of the atmosphere (~ -0.5 Wm-2 in HadCM3).

The dependence of cusp ion signatures on the reconnection rate

The interpretation of structure in cusp ion dispersions is important for helping to understand the temporal and spatial structure of magnetopause reconnection. “Stepped” and “sawtooth” signatures have been shown to be caused by temporal variations in the reconnection rate under the same physical conditions for different satellite trajectories. The present paper shows that even for a single satellite path, a change in the amplitude of any reconnection pulses can alter the observed signature and even turn sawtooth into stepped forms and vice versa. On 20 August 1998, the Defense Meteorological Satellite Program (DMSP) craft F-14 crossed the cusp just to the south of Longyearbyen, returning on the following orbit. The two passes by the DMSP F-14 satellites have very similar trajectories and the open-closed field line boundary (OCB) crossings, as estimated from the SSJ/4 precipitating particle data and Polar UVI images, imply a similarly-shaped polar cap, yet the cusp ion dispersion signatures differ substantially. The cusp crossing at 08:54 UT displays a stepped ion dispersion previously considered to be typical of a meridional pass, whereas the crossing at 10:38 UT is a sawtooth form ion dispersion, previously considered typical of a satellite travelling longitudinally with respect to the OCB. It is shown that this change in dispersed ion signature is likely to be due to a change in the amplitude of the pulses in the reconnection rate, causing the stepped signature. Modelling of the low-energy ion cutoff under different conditions has reproduced the forms of signature observed.

The dependence of high-latitude dayside ionospheric flows on the North-South component of the IMF: A high time resolution correlation analysis using EISCAT “Polar” and AMPTE UKS and IRM data

In 1984 and 1985 a series of experiments was undertaken in which dayside ionospheric flows were measured by the EISCAT “Polar” experiment, while observations of the solar wind and interplanetary magnetic field (IMF) were made by the AMPTE UKS and IRM spacecraft upstream from the Earth's bow shock. As a result, 40 h of simultaneous data were acquired, which are analysed in this paper to investigate the relationship between the ionospheric flow and the North-South (Bz) component of the IMF. The ionospheric flow data have 2.5 min resolution, and cover the dayside local time sector from ∼ 09:30 to ∼ 18:30 M.L.T. and the latitude range from 70.8° to 74.3°. Using cross-correlation analysis it is shown that clear relationships do exist between the ionospheric flow and IMF Bz, but that the form of the relations depends strongly on latitude and local time. These dependencies are readily interpreted in terms of a twinvortex flow pattern in which the magnitude and latitudinal extent of the flows become successively larger as Bz becomes successively more negative. Detailed maps of the flow are derived for a range of Bz values (between ± 4 nT) which clearly demonstrate the presence of these effects in the data. The data also suggest that the morning reversal in the East-West component of flow moves to earlier local times as Bz, declines in value and becomes negative. The correlation analysis also provides information on the ionospheric response time to changes in IMF Bz, it being found that the response is very rapid indeed. The most rapid response occurs in the noon to mid-afternoon sector, where the westward flows of the dusk cell respond with a delay of 3.9 ± 2.2 min to changes in the North-South field at the subsolar magnetopause. The flows appear to evolve in form over the subsequent ~ 5 min interval, however, as indicated by the longer response times found for the northward component of flow in this sector (6.7 ±2.2 min), and in data from earlier and later local times. No evidence is found for a latitudinal gradient in response time; changes in flow take place coherently in time across the entire radar field-of-view.

GM food purchase intentions: linking the theory of planned behaviour with consumer trust and stated choice

After the “European” experience of BSE and further food safety crises consumer trust is playing an increasingly important role in political and marketing decision making. This also relates to the area of consumer acceptance of GM food. This paper integrates consumer trust with the theory of planned behavior and a stated choice model to gain a more complete picture of consumer decision making. Preliminary results indicate that when GM products offer practical benefits to consumers acceptance may increase considerably. Furthermore, both trust and perceived benefits contribute significantly to explaining the level of acceptance.

The missing pillar: the creativity theory of knowledge spillover entrepreneurship

Knowledge spillover theory of entrepreneurship and the prevailing theory of economic growth treat opportunities as endogenous and generally focus on opportunity recognition by entrepreneurs. New knowledge created endogenously results in knowledge spillovers enabling inventors and entrepreneurs to commercialize it. This article discusses that knowledge spillover entrepreneurship depends not only on ordinary human capital, but more importantly also on creativity embodied in creative individuals and diverse urban environments that attract creative classes. This might result in self-selection of creative individuals into entrepreneurship or enable entrepreneurs to recognize creativity and commercialize it. This creativity theory of knowledge spillover entrepreneurship is tested utilizing data on European cities.

The dependence of wintertime Mediterranean precipitation on the atmospheric circulation response to climate change

Climate models indicate a future wintertime precipitation reduction in the Mediterranean region but there is large uncertainty in the amplitude of the projected change. We analyse CMIP5 climate model output to quantify the role of atmospheric circulation in the Mediterranean precipitation change. It is found that a simple circulation index, i.e. the 850 hPa zonal wind (U850) in North Africa, well describes the year to year fluctuations in the area-averaged Mediterranean precipitation, with positive (i.e. westerly) U850 anomalies in North Africa being associated with positive precipitation anomalies. Under climate change, U850 in North Africa and the Mediterranean precipitation are both projected to decrease consistently with the relationship found in the inter-annual variability. This enables us to estimate that about 85% of the CMIP5 mean precipitation response and 80% of the variance in the inter-model spread are related to changes in the atmospheric circulation. In contrast, there is no significant correlation between the mean precipitation response and the global-mean surface warming across the models. It follows that the uncertainty in cold-season Mediterranean precipitation projection will not be narrowed unless the uncertainty in the atmospheric circulation response is reduced.