Biennial Report

Continuation of the Biennial Report of the State Board of Control (Washington (State) Board of Control)

Preface

This edited book is intended for use by students, academics and practitioners who take interest in the outsourcing and offshoring of information technology and business services and processes. The book offers a review of the key topics in outsourcing and offshoring, populated with practical frameworks that serve as a tool kit for practitioners, academics and students. The range of topics covered in this book is wide and diverse, and represents both client and supplier perspectives on sourcing of global services. Various aspects related to the decision making process (e.g., asset transfer), learning mechanisms and organizational practices for managing outsourcing relationships are discussed in great depth. Contemporary sourcing models, including cloud services, are examined. Client dependency on the outsourcing provider, and social aspects, such as identity, are discussed in detail. Furthermore, resistance in outsourcing and failures are investigated to derive lessons as to how to avoid them and improve efficiency in outsourcing. Topics discussed in this book combine theoretical and practical insights regarding challenges that both clients and vendors face. Case studies from client and vendor organizations are used extensively throughout the book. Last but not least, the book examines current and future trends in outsourcing and offshoring, placing particular attention on the centrality of innovation in sourcing arrangements, and how innovation can be realized in outsourcing. The book is based on a vast empirical base brought together through years of extensive research by leading researchers in information systems, strategic management and operations.

A conceptual framework of knowledge integration in multisourcing arrangements

As organizations are increasingly outsourcing interdependent IT and business services to multiple vendors, the issue of knowledge integration between client and multiple vendors is becoming of high relevance today. This paper explores the antecedents and mechanisms which facilitate the success of knowledge integration across multiple stakeholders in multisourcing and the outcomes of successful knowledge integration in this context. The paper develops a conceptual framework of knowledge integration in the multisourcing arrangements, based on a detailed review of current literature on knowledge integration and applying it to the multi-vendor environment. This paper concludes by calling for further empirical study to examine the integrative framework of the key antecedents, mechanisms and consequences of knowledge integration in the multisourcing arrangements.

Innovation and internationalization of Latin American services

Innovation and internationalization in services are key drivers of structural transformation, productivity growth and overall economic performance in Latin America. The services sector accounts for two thirds of the region’s GDP and provides over 60% of its employment. These shares are higher than in other developing regions, but still lower than in countries with higher levels of per capita income. The spread of information and communication technologies in Latin America over the past three decades has vastly enhanced both the tradability of services and the sector’s propensity to innovate. Long considered unrelated processes, both internationalization and innovation are today widely recognized as key and complementary sources of firm-level competitiveness and human capital enhancement. The advent of many novel types of business and consumer services is furthermore a key factor in the rising insertion of Latin American firms in regional and global value chains and transnational production networks, which are now the predominant form of organization of international production and trade. This volume explores three different levels of interaction between internationalization and innovation in the services sector in Latin America. Part I analyses the role of services in manufacturing and other sectors’ global value chains from a theoretical perspective, drawing on the experiences of Brazil and Mexico. Part II reviews innovation and internationalization policies and their effects on the performance of the services sector. Part III presents a series of case studies on innovation and internationalization linkages in Brazil, Chile, Costa Rica and Mexico. The book concludes that, in order for Latin American countries and firms to upgrade into services value chains, public and private initiatives must generate a host of regional public goods —enhanced investment climates, supply of skills, greater access to finance, improved protection of intellectual property, better value appropriation, enhanced efforts at standardization and quality certification— to strengthen the links between innovation and internationalization.

Value creation and value capture fro open source software publisher : a new business model based on mutualisation

Key topics: Since the birth of the Open Source movement in the mid-80's, open source software has become more and more widespread. Amongst others, the Linux operating system, the Apache web server and the Firefox internet explorer have taken substantial market shares to their proprietary competitors. Open source software is governed by particular types of licenses. As proprietary licenses only allow the software's use in exchange for a fee, open source licenses grant users more rights like the free use, free copy, free modification and free distribution of the software, as well as free access to the source code. This new phenomenon has raised many managerial questions: organizational issues related to the system of governance that underlie such open source communities (Raymond, 1999a; Lerner and Tirole, 2002; Lee and Cole 2003; Mockus et al. 2000; Tuomi, 2000; Demil and Lecocq, 2006; O'Mahony and Ferraro, 2007;Fleming and Waguespack, 2007), collaborative innovation issues (Von Hippel, 2003; Von Krogh et al., 2003; Von Hippel and Von Krogh, 2003; Dahlander, 2005; Osterloh, 2007; David, 2008), issues related to the nature as well as the motivations of developers (Lerner and Tirole, 2002; Hertel, 2003; Dahlander and McKelvey, 2005; Jeppesen and Frederiksen, 2006), public policy and innovation issues (Jullien and Zimmermann, 2005; Lee, 2006), technological competitions issues related to standard battles between proprietary and open source software (Bonaccorsi and Rossi, 2003; Bonaccorsi et al. 2004, Economides and Katsamakas, 2005; Chen, 2007), intellectual property rights and licensing issues (Laat 2005; Lerner and Tirole, 2005; Gambardella, 2006; Determann et al., 2007). A major unresolved issue concerns open source business models and revenue capture, given that open source licenses imply no fee for users. On this topic, articles show that a commercial activity based on open source software is possible, as they describe different possible ways of doing business around open source (Raymond, 1999; Dahlander, 2004; Daffara, 2007; Bonaccorsi and Merito, 2007). These studies usually look at open source-based companies. Open source-based companies encompass a wide range of firms with different categories of activities: providers of packaged open source solutions, IT Services&Software Engineering firms and open source software publishers. However, business models implications are different for each of these categories: providers of packaged solutions and IT Services&Software Engineering firms' activities are based on software developed outside their boundaries, whereas commercial software publishers sponsor the development of the open source software. This paper focuses on open source software publishers' business models as this issue is even more crucial for this category of firms which take the risk of investing in the development of the software. Literature at last identifies and depicts only two generic types of business models for open source software publishers: the business models of ''bundling'' (Pal and Madanmohan, 2002; Dahlander 2004) and the dual licensing business models (Välimäki, 2003; Comino and Manenti, 2007). Nevertheless, these business models are not applicable in all circumstances. Methodology: The objectives of this paper are: (1) to explore in which contexts the two generic business models described in literature can be implemented successfully and (2) to depict an additional business model for open source software publishers which can be used in a different context. To do so, this paper draws upon an explorative case study of IdealX, a French open source security software publisher. This case study consists in a series of 3 interviews conducted between February 2005 and April 2006 with the co-founder and the business manager. It aims at depicting the process of IdealX's search for the appropriate business model between its creation in 2000 and 2006. This software publisher has tried both generic types of open source software publishers' business models before designing its own. Consequently, through IdealX's trials and errors, I investigate the conditions under which such generic business models can be effective. Moreover, this study describes the business model finally designed and adopted by IdealX: an additional open source software publisher's business model based on the principle of ''mutualisation'', which is applicable in a different context. Results and implications: Finally, this article contributes to ongoing empirical work within entrepreneurship and strategic management on open source software publishers' business models: it provides the characteristics of three generic business models (the business model of bundling, the dual licensing business model and the business model of mutualisation) as well as conditions under which they can be successfully implemented (regarding the type of product developed and the competencies of the firm). This paper also goes further into the traditional concept of business model used by scholars in the open source related literature. In this article, a business model is not only considered as a way of generating incomes (''revenue model'' (Amit and Zott, 2001)), but rather as the necessary conjunction of value creation and value capture, according to the recent literature about business models (Amit and Zott, 2001; Chresbrough and Rosenblum, 2002; Teece, 2007). Consequently, this paper analyses the business models from these two components' point of view.

Dislodgement of commercial property public debt markets : the case of U.S. and Australia

The paper investigates if there are any discernible trends in the U.S. and Australian commercial property public debt markets with the onset of the global financial crisis (GFC). Commercial mortgage-backed securities and unsecured bonds issued by real estate investment trusts for the period 2000 to Q3:2009 are reviewed. It is shown that events in the equity markets have an impact on the pricing of these two instruments. Furthermore, the impact of subdued activity in these financing instruments on the commercial property market is discussed.

An epistemic community as influencer and implementer in local government accounting in Australia

This paper adopts an epistemic community framework to explicate the dual role of epistemic communities as influencers of accounting policy within regulatory space and as implementers who effect change within the domain of accounting. The context is the adoption and implementation of fair value accounting within local government in New South Wales (NSW). The roles and functions of Australian local government are extensive, and include the development and maintenance of infrastructure, provision of recreational facilities, certain health and community services, buildings, cultural facilities, and in some cases, water and sewerage (Australian Local Government Association, 2009). The NSW state Department of Local Government (DLG) is responsible for legislation and policy development to ensure that local councils are able to deliver ‘quality services to their communities in a sustainable manner’ (DLG, 2008c). These local councils receive revenue from various sources including property rates, government grants and user-pays service provision. In July 2006 the DLG issued Circular 06-453 to councils (DLG, 2006c), mandating the staged adoption of fair value measurement of infrastructure assets. This directive followed the policy of NSW State Treasury (NSW Treasury, 2007),4 and an independent inquiry into the financial sustainability of local councils (LGSA, 2006). It was an attempt to resolve the inconsistency in public sector asset valuation in NSW Local Governments, and to provide greater usefulness and comparability of financial statements.5 The focus of this study is the mobilization of accounting change by the DLG within this wider political context. When a regulatory problem arises, those with political power seek advice from professionals with relevant skill and expertise (Potter, 2005). This paper explores the way in which professionals diffuse accounting ‘problems’ and the associated accounting solutions ‘across time and space’ (Potter, 2005, p. 277). The DLG’s fair value accounting policy emanated from a ‘regulatory space’ (Hancher and Moran, 1989)6 as a result of negotiations between many parties, including accounting and finance professionals. Operating within the local government sector, these professionals were identified by the DLG as being capable of providing helpful input. They were also responsible for the implementation of the new olicy within local councils. Accordingly they have been dentified as an pistemic community with the ability to ranslate regulatory power by changing he domain of ccounting (Potter, 2005, p. 278).7 The paper is organised as follows. The background to the LG’s decision to require the introduction of fair value accounting for infrastructure assets is explored. Following this, the method of the study is described, and the epistemic community framework outlined. In the next sections, evidence of the influencing and implementing roles of epistemic groups is provided. Finally, conclusions are drawn about the significance of these groups both within regulatory space in developing accounting regulation, and in embedding change within the domain of accounting.

The Profiling of Property, Plant & Equipment (PPE) Contributions in Australia and Malaysia Public Listed Construction Companies

The purpose of this paper is to study the profiling of property, plant and equipment (PPE) contributions in Australia and Malaysia construction companies. A company’s worth is usually based on the listed share price on the stock exchange. In arriving at the net profit, the contribution of PPE in the company’s assets is somehow being neglected. This paper will investigate the followings; firstly the level of PPE contribution in the construction firms by comparing the PPE contributions to the company’s asset as a whole which includes fixed (non-current) assets and current assets. This will determine the true strength of the companies, rather than relying on the share prices alone. Secondly, the paper will determine the trend of company’s asset ownership to show the company’s performance of the PPE ownership during the period of study. The data is based on the selected construction companies listed on the Australian Stock Exchange (ASX) and Malaysian Stock Exchange, known as Bursa Malaysia. The profiling will help to determine the strength of the construction firms based on the PPE holding, and the level of PPE ownerships in the two countries construction firms during the period of study.

Energy efficiency and sustainability in residential property

The issue of a more sustainable environment has been the aim of many governments and institutions for decades. Current research and literature has shown the continuing impact of global development and population increases on the planet as a whole. Issues such as carbon emissions, global warming, resource sustainability, industrial pollution, waste management and the decline in scarce resources, including food, are now realities and are being addressed at various levels. All levels of government, business and the public now equally share responsibility for the continued sustainable environment in general. Although these issues of global warming, climate change and the overuse of scarce resources are well documented, and constantly covered in all media forms, public attitudes to these issues vary significantly. Despite being aware of these issues many individuals consider that the problem is one for governments to tackle and that their individual efforts are not important or necessary. In many cases individuals are concerned with sustainability, but are either not in the position to take action due to economic circumstances or are not prepared to offset sustainability gains with personal interests...

Public preferences for biodiversity conservation and climate-change mitigation: A choice experiment using ecosystem services indicators

Potential conflicts exist between biodiversity conservation and climate-change mitigation as trade-offs in multiple-use land management. This study aims to evaluate public preferences for biodiversity conservation and climate-change mitigation policy considering respondents’ uncertainty on their choice. We conducted a choice experiment using land-use scenarios in the rural Kushiro watershed in northern Japan. The results showed that the public strongly wish to avoid the extinction of endangered species in preference to climate-change mitigation in the form of carbon sequestration by increasing the area of managed forest. Knowledge of the site and the respondents’ awareness of the personal benefits associated with supporting and regulating services had a positive effect on their preference for conservation plans. Thus, decision-makers should be careful about how they provide ecological information for informed choices concerning ecosystem services tradeoffs. Suggesting targets with explicit indicators will affect public preferences, as well as the willingness of the public to pay for such measures. Furthermore, the elicited-choice probabilities approach is useful for revealing the distribution of relative preferences for incomplete scenarios, thus verifying the effectiveness of indicators introduced in the experiment.

Is economic valuation of ecosystem services useful to decision-makers? Lessons learned from Australian coastal and marine management

Economic valuation of ecosystem services is widely advocated as a useful decision-support tool for ecosystem management. However, the extent to which economic valuation of ecosystem services is actually used or considered useful in decision-making is poorly documented. This literature blindspot is explored with an application to coastal and marine ecosystems management in Australia. Based on a nation-wide survey of eighty-eight decision-makers representing a diversity of management organizations, the perceived usefulness and level of use of ecosystem services economic valuation in support of coastal and marine management are examined. A large majority of decision-makers are found to be familiar with economic valuation and consider it useful - even necessary - in decision-making, although this varies across decision-makers groups. However, most decision-makers never or rarely use it. The perceived level of importance and trust in estimated dollar values differ across ecosystem services, and are especially high for values that relate to commercial activities. A number of factors are also found to influence respondent’s use of economic valuation. Such findings concur with conclusions from other existing works, and are instructive to reflect on the issue of the usefulness of ESV in environmental management decision-making. They also confirm that the survey-based approach developed in this application represents a sound strategy to examine this issue at various scales and management levels.

Modelling and Forecasting Property Rents and Returns (summary section only)

Recently, focus of real estate investment has expanded from the building-specific level to the aggregate portfolio level. The portfolio perspective requires investment analysis for real estate which is comparable with that of other asset classes, such as stocks and bonds. Thus, despite its distinctive features, such as heterogeneity, high unit value, illiquidity and the use of valuations to measure performance, real estate should not be considered in isolation. This means that techniques which are widely used for other assets classes can also be applied to real estate. An important part of investment strategies which support decisions on multi-asset portfolios is identifying the fundamentals of movements in property rents and returns, and predicting them on the basis of these fundamentals. The main objective of this thesis is to find the key drivers and the best methods for modelling and forecasting property rents and returns in markets which have experienced structural changes. The Finnish property market, which is a small European market with structural changes and limited property data, is used as a case study. The findings in the thesis show that is it possible to use modern econometric tools for modelling and forecasting property markets. The thesis consists of an introduction part and four essays. Essays 1 and 3 model Helsinki office rents and returns, and assess the suitability of alternative techniques for forecasting these series. Simple time series techniques are able to account for structural changes in the way markets operate, and thus provide the best forecasting tool. Theory-based econometric models, in particular error correction models, which are constrained by long-run information, are better for explaining past movements in rents and returns than for predicting their future movements. Essay 2 proceeds by examining the key drivers of rent movements for several property types in a number of Finnish property markets. The essay shows that commercial rents in local markets can be modelled using national macroeconomic variables and a panel approach. Finally, Essay 4 investigates whether forecasting models can be improved by accounting for asymmetric responses of office returns to the business cycle. The essay finds that the forecast performance of time series models can be improved by introducing asymmetries, and the improvement is sufficient to justify the extra computational time and effort associated with the application of these techniques.

Property development: Appraisal and finance

The book provides an overview to the context of property development so that academics, students and professionals can examine the stages of development in the process - from initial consideration, to site finding, general appraisal, valuation, funding, construction and marketing, with a focus on two key areas of the process: appraisal and finance. The Second Edition reflects the developing research interests of the authors by putting property development and appraisal in a wider economic environment and the appraisal process was treated in a more holistic manner. Secondly, more case studies were included and the chapters framed with clear objectives key terms and summaries. Thirdly, this edition examined in more detail the property development and appraisal process in relation to sustainability and other key issues such as climate change, the changing financial environment, planning design and global influences. Research on appraisal techniques is incorporated in chapters 3-5. Research on property finance based on the original Property Lending Surveys carried out by the author and incorporated in other texts (Property Finance, 1994, 2003) is included in chapters 6-8. Research on property companies and their capital structures in included in chapter 8. Analysis of the relationship between sustainability and design is included in chapter 9. This is a key text in the area of property development, sales of the First Edition and Second Edition have been in the thousands globally to academics, students and practitioners.

Inheritance, access to resources and poverty in Serer families in Senegal

This research explores the relationship between inheritance, access to resources and the intergenerational transmission of poverty among the Serer ethnic group in rural and urban environments in Senegal. In many Sub-Saharan African countries, customary law excludes women from owning and inheriting assets, such as land and property. Yet, assets controlled by women often result in increased investments in the next generation's health, nutrition and schooling and reduce the intergenerational transmission of poverty. Qualitative research with 60 participants in Senegal reveals the important role that land, housing and financial assets may play in building resilience to household shocks and interrupting the intergenerational transmission of poverty. However, the protection afforded by these assets was often dependent on other factors, including human, social and environmental capital. The death of a spouse or parent had major emotional and material impacts on many Serer families. The inheritance and control of assets and resources was strongly differentiated among family members along lines of gender, age and generation. Younger widows and their children were particularly vulnerable to chronic poverty. Although inheritance disputes were rare, the research suggests they are more likely between co-wives in polygamous unions and their children, particularly in urban areas. In addition to experiencing economic and health-related shocks, many interviewees were exposed to a range of climate-related risks and environmental pressures which increased their vulnerability. Family members coped with these shocks and risks by diversifying livelihoods, migrating to urban areas and other regions for work, participating in women's co-operatives and associations and developing supportive social networks with extended family and community members. Policies and practices that may help to alleviate poverty, safeguard women's and young people's inheritance and build resilience to financial, health-related and environmental shocks and risks include: - Social protection measures targeted towards poor widows and orphaned children, such as social and cash transfers to pay for basic needs including food, healthcare and children's schooling. - Micro-finance initiatives and credit and savings schemes, alongside training and capacity-building targeted to women and young people to develop income-generation activities and skills. - Free legal advice, support and advocacy for women and young people to pursue inheritance claims through the legal system. - Raising awareness about women's and children's legal rights and working with government and community and religious leaders to tackle discriminatory inheritance practices and contradictions caused by legal pluralism. - Increasing women's control of land and access to inputs, enhancing their business, organisational, and leadership skills and promoting civic participation in local, regional and national decision-making processes. - Improving access to basic services in rural areas, particularly healthcare, building the quality of education and promoting girls' access to education - Enhancing agricultural production and providing more employment opportunities, apprenticeships and vocational training for young people, particularly in rural areas.

Population ageing and the implications for finanical markets

How will financial institutions respond to the transactions and asset management needs of both the ageing population and their carers? The ageing of the population has generated increased interest from both government and business, including banking and financial services, in the sorts of services that will be required by older people, and how their money and property will be managed. This article examines the trends and implications for banking practice of this increasing population of customers and their carers.