Corporate governance, moral hazard and conflict of interest in Italian universal banking, 1914-1933

Universal banking is widely held to enjoy comparative advantages in corporate finance. Recent theories of financial intermediation argue that 'insider systems' are better suited to effectively deal with long-term growth and moral hazard problems. However, little attention (if any) is usually paid to corporate governance problems that are specific to universal banking. How can banks' ownership structure and agency problems influence their ability to address longterm growth and moral hazard problems? Under which institutional arrangements, incentives and constraints can universal banking effectively realize its potential? The paper looks at such issues through the experience of interwar Italy. The evolution of universal banking in the 1920s emerges as heavily exposed to potentially serious problems of moral hazard and conflicts of interest, due to inefficient corporate governance, lack of external controls and a moral-hazard-enhancing institutional set-up. These factors may distort bank managers' incentives, affect strategic trade-offs and lead to unsound banking. The findings are consistent with that part of corporate governance literature which points to the potential for moral hazard and conflicts of interest inherent to universal banking and emphasise the conditional and historically-specific nature of its alleged benefits

Memory and cognition in schizophrenia.

Episodic memory deficits are consistently documented as a core aspect of cognitive dysfunction in schizophrenia patients, present from the onset of the illness and strongly associated with functional disability. Over the past decade, research using approaches from experimental cognitive neuroscience revealed disproportionate episodic memory impairments in schizophrenia (Sz) under high cognitive demand relational encoding conditions and relatively unimpaired performance under item-specific encoding conditions. These specific deficits in component processes of episodic memory reflect impaired activation and connectivity within specific elements of frontal-medial temporal lobe circuits, with a central role for the dorsolateral prefrontal cortex (DLPFC), relatively intact function of ventrolateral prefrontal cortex and variable results in the hippocampus. We propose that memory deficits can be understood within the broader context of cognitive deficits in Sz, where impaired DLPFC-related cognitive control has a broad impact across multiple cognitive domains. The therapeutic implications of these findings are discussed

The detection and tracking of mine-water pollution from abandoned mines using electrical tomography

Increasing emphasis is being placed on the environmental and societal impact of mining, particularly in the EU, where the environmental impacts of abandoned mine sites (spoil heaps and tailings) are now subject to the legally binding Water Framework and Mine Waste Directives. Traditional sampling to monitor the impact of mining on surface waters and groundwater is laborious, expensive and often unrepresentative. In particular, sparse and infrequent borehole sampling may fail to capture the dynamic behaviour associated with important events such as flash flooding, mine-water break-out, and subsurface acid mine drainage. Current monitoring practice is therefore failing to provide the information needed to assess the socio-economic and environmental impact of mining on vulnerable eco-systems, or to give adequate early warning to allow preventative maintenance or containment. BGS has developed a tomographic imaging system known as ALERT ( Automated time-Lapse Electrical Resistivity Tomography) which allows the near real-time measurement of geoelectric properties "on demand", thereby giving early warning of potential threats to vulnerable water systems. Permanent in-situ geoelectric measurements are used to provide surrogate indicators of hydrochemical and hydrogeological properties. The ALERT survey concept uses electrode arrays, permanently buried in shallow trenches at the surface but these arrays could equally be deployed in mine entries or shafts or underground workings. This sensor network is then interrogated from the office by wireless telemetry (e.g: GSM, low-power radio, internet, and satellite) to provide volumetric images of the subsurface at regular intervals. Once installed, no manual intervention is required; data is transmitted automatically according to a pre-programmed schedule and for specific survey parameters, both of which may be varied remotely as conditions change (i.e: an adaptive sampling approach). The entire process from data capture to visualisation on the web-portal is seamless, with no manual intervention. Examples are given where ALERT has been installed and used to remotely monitor (i) seawater intrusion in a coastal aquifer (ii) domestic landfills and contaminated land and (iii) vulnerable earth embankments. The full potential of the ALERT concept for monitoring mine-waste has yet to be demonstrated. However we have used manual electrical tomography surveys to characterise mine-waste pollution at an abandoned metalliferous mine in the Central Wales orefield in the UK. Hydrogeochemical sampling confirms that electrical tomography can provide a reliable surrogate for the mapping and long-term monitoring of mine-water pollution

Trust and control interrelations: New perspectives on the trust control nexus

This article is the post-print version of the published article that may be accessed at the link below. Copyright @ 2007 Sage Publications.This article introduces the special issue on New Perspectives on the Trust-Control Nexus in Organizational Relations. Trust and control are interlinked processes commonly seen as key to reach effectiveness in inter- and intraorganizational relations. The relation between trust and control is, however, a complex one, and research into this relation has given rise to various and contradictory interpretations of how trust and control relate. A well-known discussion is directed at whether trust and control are better conceived as substitutes, or as complementary mechanisms of governance. The articles in this special issue bring the discussion on the relationship between both concepts a step further by identifying common factors, distinctive mechanisms, and key implications relevant for theory building and empirical research. By studying trust and control through different perspectives and at different levels of analysis, the articles provide new theoretical insights and empirical evidence on the foundations of the trust-control interrelations

Resource-Based View and SMEs Performance Exporting through Foreign Intermediaries: The Mediating Effect of Management Controls

Following the resource-based view, this research empirically explores the role of formal and informal management control in mobilizing export resources to develop export capabilities, influencing the export performance of small and medium-sized enterprises (SMEs) in an interorganizational relationship context. Empirical data were collected using a survey administrated online to finance managers in Spanish SMEs which use foreign intermediaries to access export markets. In this setting, evidence mainly suggests, first, that management control systems (MCSs) play a relevant mediating role between the effect of, on the one hand, resources on capabilities, and, on the other hand, resources and capabilities on performance. Second, that MCSs and capabilities play a interrelated double mediating effect between the impact of resources on performance; more specifically, a significant double indirect effect is found (1) between financial resources, behavior control, customer relationship building capability and performance, and (2) between physical resources, behavior control, customer relationship building capability and performanc

A contextual behavioral approach to the study of (persecutory) delusions

Throughout the past century the topic of delusions has mainly been studied by researchers operating at the mental level of analysis. According to this perspective, delusional beliefs, as well as their emergence and persistence, stem from an interplay between (dysfunctional) mental representations and processes. Our paper aims to provide a starting point for researchers and clinicians interested in examining the topic of delusions from a functional-analytic perspective. We begin with a brief review of the research literature with a particular focus on persecutory delusions. Thereafter we introduce Contextual Behavioral Science (CBS), Relational Frame Theory (RFT) and a behavioral phenomenon known as arbitrarily applicable relational responding (AARR). Drawing upon AARR, and recent empirical developments within CBS, we argue that (persecutory) delusions may be conceptualized, studied and influenced using a functional-analytic approach. We consider future directions for research in this area as well as clinical interventions aimed at influencing delusions and their expression

Management control of supplier relationships in manufacturing: a case study in the automotive industry.

This paper studies management control design of supplier relationships in manufacturing, a supply chain phase currently under-explored. Compared to supplier relations during procurement and R&D, which research found to be governed by a combination of formal and informal controls, supplier relations in manufacturing are more formal, so that they could be governed by more formal and less informal controls. To refine the management control system and influencing contingencies, we propose a theoretical framework specifically adapted for the manufacturing stage. This framework is investigated by an in depth case study of the supplier management control of a Volvo Cars production facility. We identify three types of suppliers visualizing the associations in the framework and illustrating the framework’s explicative power in (automotive) manufacturing. Furthermore, the case contradicts that supplier relations in the manufacturing phase are governed by little informal control, because the automaker highly values the role of trust building and social pressure. Most notably, a structured supplier team functions as a clan and establishes informal control among participating suppliers, which strengthens the automaker’s control on dyadic supplier relations.management control; supplier relationships; manufacturing; contingency theory; case research;

State Capacity and Non-state Service Provision in Fragile and Conflict-affected States

How can governments effectively engage with non-state providers (NSPs) of basic services where capacity is weak? This paper examines whether and how fragile and conflict affected states can co-ordinate, finance, and set and apply standards for the provision of basic services by NSPs. It explores ways of incrementally engaging the state, beginning with activities that are least likely to do harm to non-state provision. Through the ‘indirect’ roles of setting the policy environment and engaging in policy dialogue, regulating and facilitating, contracting, and entering into mutual and informal agreements with NSPs, the state can in principle assume responsibility for the provision of basic services without necessarily being involved in direct provision. But government capacity to perform these roles is constrained by the state’s weak legitimacy, coverage and competence, lack of basic information about the non-state sector, and lack of basic organisational capacity to form and maintain relationships with NSPs. The experience of the exercise of the indirect roles in fragile settings suggests: * Governments may be more willing to engage with NSPs where there is recognition that government cannot alone deliver all services, where public and private services are not in competition, and where there is evidence that successful collaboration is possible (demonstrated through small-scale pilots). * The extent to which engagements are ‘pro-service’may be influenced by government motives for engagement and the extent to which the providers that are most important to poor people are engaged. * Formal policy dialogue between government and NSPs may be imperfect, unrepresentative and at times unhelpful in fragile settings. Informal dialogue - at the operational level - could more likely be where synergies can be found. * Regulation is more likely to be ‘pro-service’ where it offers incentives for compliance, and where it focuses on standards in terms of outputs and outcomes rather than inputs and entry controls. * Wide scale, performance-based contracting has been successful in delivering services in some cases, but the sustainability of this approach is often questioned. Some successful contractual agreements have a strong informal, relational element and grow out of earlier informal connections. * Informal and mutual agreements can avoid the capacity problems and tensions implicit in formal contracting but may present problems of non-transparency and exclusion of competition. Paradoxically, the need for large-scale approaches and quick co-ordination of services in fragile and conflict-affected settings may require ‘prematurely high’ levels of state-NSP engagement, before the development of the underlying institutional structures that would support them. When considering strategies to support the capacity of government to engagement with NSPs, donors should: * Recognise non-state service provision and adopt the ‘do no harm’ principle: It would be wrong to set the ambition of 'managing ‘ non-state provision in its entirety, and it can be very harmful for low-capacity states to seek to regulate all NSP or to draw it into clumsy contracts. * Beware of generalisation: Non-state provision takes many forms in response to different histories and to political and economic change. The possibilities and case for state engagement have to be assessed not assumed. The particular identities of NGOs and enterprises should be considered. * Recognise that state building can occur through any of the types of engagement with NSPs: Types of engagement should therefore be selected on the basis of their likely effectiveness in improving service delivery. * Begin with less risky/small scale forms of engagement where possible: State interventions that imply a direct controlling role for the state and which impose obligations on NSPs (i.e. contracting and regulation) require greater capacity (on both sides) and present greater risk of harm if performed badly than the roles of policy dialogue and entering into mutual agreements. * Adopt mixed approaches: The choice between forms of engagement does not have to be absolute. Rather than adopting a uniform plan of engagement in a particular country, it may be better to try different approaches in different regions or sectors

The impact of inter-organizational management control systems on performance: a longitudinal case study of a supplier relation in automotive.

This study investigates whether appropriate management control design of supplier relations is associated with better performance. Although management control systems (MCSs) are found to be contingent on situational characteristics, it remains unclear whether this contingency fit contributes to performance. In order to illustrate the existence and refine the dynamics of the fit-performance association, we perform a longitudinal case study of an exemplary automotive manufacturer-supplier relation that was subject to considerable change and severe performance difficulties in the course of time. As proposed, case findings show that if the supplier is incapable of dealing with changed contingencies, a MCS contingency misfit is associated with poor operational performance. However, this misfit is only temporal, as the manufacturer adapts the MCS to fit the changed supplier relation and regain operational performance. In addition, the longitudinal study suggests that trust and basic formal control (control continuously exercised under all circumstances) are complements, while trust substitutes for extra formal control (control set up on top of basic formal control). Finally, the data indicate a timing difference in the substitutive relation: the building up of extra formal control proceeds gradually, while the lowering happens almost immediately.management control; trust; performance; supplier relationships; manufacturing; contingency theory; case research; automotive;

Governance: Who Controls Matters

In this paper, we provide an outlook for further research on the topic of governance. We review four different approaches on the theory of the firm and discuss implications for governance, namely; nexus of contracts / agency theory, property rights / incomplete contracts, adaptation, and nexus of specific investments.governance, property rights, adaptation, nexus of contracts