Mercury: using the QuPreSS reference model to evaluate predictive services

Nowadays, lots of service providers offer predictive services that show in advance a condition or occurrence about the future. As a consequence, it becomes necessary for service customers to select the predictive service that best satisfies their needs. The QuPreSS reference model provides a standard solution for the selection of predictive services based on the quality of their predictions. QuPreSS has been designed to be applicable in any predictive domain (e.g., weather forecasting, economics, and medicine). This paper presents Mercury, a tool based on the QuPreSS reference model and customized to the weather forecast domain. Mercury measures weather predictive services' quality, and automates the context-dependent selection of the most accurate predictive service to satisfy a customer query. To do so, candidate predictive services are monitored so that their predictions can be eventually compared to real observations obtained from a trusted source. Mercury is a proof-of-concept of QuPreSS that aims to show that the selection of predictive services can be driven by the quality of their predictions. Throughout the paper, we show how Mercury was built from the QuPreSS reference model and how it can be installed and used.Peer ReviewedPostprint (author's final draft

The Use of Trademarks in Empirical Research: Towards an Integrated Framework

This paper represents an early attempt to develop an integrated framework linking empirical studies that make use of trademark statistics. Despite its youth, this field of scholarly activity has already accumulated a critical mass of papers that allow us to draw first general conclusions about the trademark lifecycle and its impact on organisational functioning. Based on a systematic review of 64 articles with some elements of empirical trademark analysis, five broad research areas have been identified, namely: the determinants of trademark deposits; the relationship between trademarks and innovation processes; the role of trademarks in differentiating product offerings; the strategic use of trademarks; and the impact of trademarks on firm performance. Within each category, a more detailed aggregation of articles has also been proposed. Overall, the analysis has shown that the performance-based perspective currently dominates the research landscape, with studies on trademark deposits and the trademark-innovation link to follow. At the same time, there is still little known about micro-foundations of a company's trademarking behaviour; the use of trademarks and other intellectual property rights in a complementary way and its effect on value transference; as well as the performance implications of differentiation strategy. This paper considers these and other findings to outline directions for future research

The Determinants of Credit Ratings in the United Kingdom Insurance Industry

Executive Summary The Determinants of Credit Ratings in the United Kingdom Insurance Industry Academic researchers have devoted a considerable amount of attention to the activities of credit rating agencies over the past 20 years, focusing in particular on the agencies’ potential role in overseeing corporate financial strength and promoting the efficient operation of financial markets. Examinations of credit rating practices has recently extended to the insurance industry, where the complex technical nature of market transactions leads to policyholders, investors and others facing particularly acute information asymmetries at the point-of-sale. Published credit ratings are therefore seen as helping to alleviate imperfections in insurance markets by providing a third party opinion on the adequacy of an insurer’s financial health and the likelihood of it meeting obligations to policyholders and others in the future. Although the United Kingdom (UK) insurance market is now one of the five largest in the world, relatively little is known about the practices of the major firms and policy-makers which influence its operations. In particular, whilst the determinants of rating agencies’ assessments of United States (US) insurers is well documented, published studies have yet to provide comprehensive evidence about insurance company ratings in the UK. This study attempts to fill this gap by examining the ratings awarded by two of the world’s leading agencies – A.M. Best and Standard and Poor (S&P) – and establishing the extent to which organizational variables can help predict: (i) insurance firms’ decision to be rated; and (ii) the assigned ratings themselves. Our sample of UK data comprises ratings made by A.M. Best and S&P over the period 1993-1997 for both life and property-liability insurers. The panel data we use is ordinal in nature and is therefore analysed using an ordered probit model. However, because neither A.M. Best or S&P rate the full population of UK insurance firms our data set is potentially subject to selfselection bias and we therefore extend the model to correct for such problems. In particular, the paper examines the effect of eight firm-specific variables (namely, capital adequacy, profitability, liquidity, growth, size, mutual/stockowner status, reinsurance level, and short/long-term nature of business) on the ratings awarded by the two agencies, as well as on insurance firms’ decisions to volunteer for the ratings in the first place. In general terms, our evidence concurs with earlier US findings, and suggests that although the decision to be rated by either of the agencies is largely influenced by a common set of factors, the determinants of the ratings themselves appear to differ. Specifically, our first main finding is that insurers’ decisions to be rated by either A.M. Best or S&P is positively related to surplus growth, profitability and leverage. Second, while we find that A.M. Best’s ratings are positively linked to profitability and liquidity, as well as being generally higher for mutual insurers, the findings for S&P differ substantially. Although liquidity again exerted a positive influence on assigned ratings, the only other statistically significant variable was financial leverage, which had a negative sign. We believe that the results of our research are of potential importance for companies operating in insurance markets as well as for policy-makers, brokers and others. For example, the evidence that mutual insurers are generally assigned higher ratings than stock insurers suggests that certain publicly-traded insurers, in particular new entrants, might not possess sound financial strength and may require closer regulatory scrutiny than other, more established, insurance firms. In addition, the finding that liquidity has a significantly positive effect on ratings assigned by two of the world’s leading credit agencies should provide a measure of confidence about the robustness of the ratings to industry regulators, policyholders and investors in the UK. This could imply that external ratings might eventually play a role in substituting for costly industry regulation. The study concludes that although the factors influencing the decision to be rated by A.M. Best or S&P are broadly the same, a degree of variability exists in the variables which influence the actual ratings themselves. Insurance company managers should be aware of this when contemplating whether to seek an independent rating and which agency to choose for the assessment. We therefore believe that this study fills an important gap in the literature about key players in the important UK insurance market and provides a basis for the conduct of future research

Does Europe Need Its Own Rating Agencies?

Monetary unions generally boost financial markets. But European private capital markets have progressed at an unsatisfactory pace even with the euro. What accounts for this? We focus on an increasingly key financial infrastructure: Rating Agencies (RAs). Taking an international perspective, we show that: (i) financial market development increases with the presence of national RAs; (ii) in four studied Asian countries, smaller-sized companies disproportionately hold a rating from national RAs, while disregarding the global RAs (Moody’s, S&P, Fitch). We argue that the absence of European RAs may currently limit the extent of rated companies and financial market evolution in Euroland.national vs. global credit rating agencies, financial market development

Antecedents of new venture performance : an empirical study of IPO (Initial Public Offering) ventures

To address a ubiquitous phenomenon in the venture area - why certain ventures persistently outperform others, but some of them do not - this research pursued to answer a specific research question: what are antecedents of venture performance? This research brought together two complementary theories, the resource-based view (RBV) and social network theory. By framing its conceptual model with two complementary theories and by using Initial Public Offering data, this research contributed to both academia and practitioners/policy makers with a prescriptive Initial Public Offering (IPO) performance model. The final sample for this study was 103 IPO firms, which underwent an IPO in 1997. To test eight hypotheses developed from the conceptual model, this research collected its data from reliable secondary sources, such as IPO prospectus, the Center for Research in Security Prices (CRSP) database, the U.S. patent and trademark office, the Wall Street Journal, and the PR Newswires. Several different hierarchical regressions indicated that internal resources ( technology, reputation, and top management team (TMT) capability ) were antecedents of IPO performance

Perceived competence and credit access of SMEs: can trust change the rules of the game?

Banks play an essential role in financing firms and especially small and medium en-terprises (SMEs). The process used by banks to decide whether and how much to lend is complex and banks rely on different lending techniques. Relationship lending, by leveraging a variety of private information gathered through contact with the firm, its owner, and the local community, has a peculiar role and can benefit SMEs by providing them with easier access to credit. No previous research focuses specifically on the perceived competence of the entrepreneur or the owner/manager of the firm as well as on competence as a substitute of trust. The present paper tries to fill this gap. The research is based on a panel of 535 entrepreneurial SMEs which operate in the widely studied and economically successful North East of Italy. The data were collected by administering a survey to bank managers of local community banks and of two national banks. The regressions show that competence is positively related to overall credit gained and negatively related to interest rate. In addition, in low trusted SMEs, credit gained is positively related to competence while the interest rate is negatively linked to competence. In highly trusted firms, these relationships are not significant. Our findings support the point that competence is an important factor irrespective of the quality of the firm and that it is a substitute for trust in low-trusted SMEs. The findings have two major implications: banks should develop tools that are capable to catch the competence of the entrepreneurs irrespective of the performance of the firm depicted in the firms' data; the entrepreneurs need to effectively communicate their competences to the relevant stakeholders such as the bank managers. Thus, perceived competence can play an important role during economic downturns when the performance of the firm is affected by hostile eco-nomic environment

Toward a process theory of entrepreneurship: revisiting opportunity identification and entrepreneurial actions

This dissertation studies the early development of new ventures and small business and the entrepreneurship process from initial ideas to viable ventures. I unpack the micro-foundations of entrepreneurial actions and new ventures’ investor communications through quality signals to finance their growth path. This dissertation includes two qualitative papers and one quantitative study. The qualitative papers employ an inductive multiple-case approach and include seven medical equipment manufacturers (new ventures) in a nascent market context (the mobile health industry) across six U.S. states and a secondary data analysis to understand the emergence of opportunities and the early development of new ventures. The quantitative research chapter includes 770 IPOs in the manufacturing industries in the U.S. and investigates the legitimation strategies of young ventures to gain resources from targeted resource-holders.Open Acces

Liquid decision making

In today’s business world, decisions have to be made on different levels, including strategic, tactical, and operational levels. Decisions on the strategic level are characterized by their complexity, longevity and impact. Such decisions can benefit from the participation of a large, diverse group of people as they contribute different background knowledge, perspectives, and evaluation criteria. Typically, such decisions need to be considered over a prolonged period of time as opinions may need to be formed or may change due to the availability of new information. The goal of people in group decision making situations is typically to achieve good decisions. A mechanism is thus desirable that is capable of addressing the aforementioned challenges and of producing a good decision. For this work, a decision is thought to be good if it is predominantly based on the sincere opinions of the participants. In this thesis, we investigate the market metaphor as a promising approach for group decision making. Markets are attributed with the capability of gathering and aggregating assessments from people in a single indicator, the price. They allow for a continued participation over a prolonged time, reversibility of one’s market position by repeated trading, and the usage of individual evaluation criteria. For investigating the application of the market metaphor to decision making, we develop LDM, a market-based approach for group decision making. There, we represent a pending decision as a market and the decision options as stocks. Participants then buy shares of their favored stocks and sell shares of the stocks they dislike. High demand leads to price increase whereas low prices are the result of low demand. The most favored decision options can be identified from the ranking of the stocks according to their prices. To support the achievement of a good decision, we model the market behavior of participants, devise design principles, identify suitable application scenarios, and determine appropriate functionalities for a market software. We furthermore devise the concept of market perturbations for uncovering the trading intentions of participants. We furthermore implement a web-based software prototype of LDM. It provides functionalities for decision making, market trading, user handling, information exchange, and market perturbations. Participants there trade their favored stocks using virtual play money. We test the LDM approach and its software prototype in an EU-funded project, in a lab study, in the selection of research proposals, and in a university seminar for scenario building.Entscheidungen müssen in Unternehmen auf unterschiedlichen Ebenen getroffen werden. Besonders strategische Entscheidungen sind oft komplex, langwierig und haben weitreichende Auswirkungen. Die Beteiligung einer großen, heterogenen Personengruppe kann solche Entscheidungen begünstigen, da sie unterschiedliches Hintergrundwissen sowie verschiedene Perspektiven und Bewertungskriterien beisteuern. Oft werden solche Entscheidungen über einen längeren Zeitraum getroffen, da die Beteiligten sich ihre Meinungen erst bilden müssen, oder diese sich durch neue Informationen ändern. Um dabei gute Entscheidungen zu treffen, sollte ein Ansatz dazu unter den geschilderten Umständen ein gutes Ergebnis liefern können. Als gutes Ergebnis wird in dieser Arbeit eine Entscheidung angesehen, die hauptsächlich auf der ehrlichen Meinung der Teilnehmer beruht. In dieser Arbeit untersuchen wir die Marktmetapher als vielversprechenden Ansatz für die Entscheidungsfindung. Märkten wird die Fähigkeit zugeschrieben, Informationen von verschiedenen Personen in einem einzigen Indikator, dem Preis, aggregieren zu können. Sie ermöglichen dabei eine kontinuierliche Teilnahme über einen längeren Zeitraum, eine Änderung der Meinung durch wiederholtes Handeln sowie die Anwendung von individuellen Bewertungskriterien. Für unsere Untersuchung entwickeln wir LDM, einen marktbasierten Ansatz für die Entscheidungsfindung in Gruppen. Eine anstehende Entscheidung wird darin als Markt repräsentiert und die Entscheidungsoptionen als Aktien. Die Teilnehmer kaufen Anteile ihrer favorisierten Aktien und verkaufen die Anderen mittels virtuellem Spielgeld. Eine hohe Nachfrage führt zu hohen Preisen, niedrige Nachfrage zu niedrigen Preisen. Aus der Rangfolge der Aktien nach ihren Preisen kann dann die bevorzugteste Entscheidungsoption identifiziert werden. Um eine gute Entscheidung mittels \acl{LDM} zu erreichen, erstellen wir ein Verhaltensmodell der Teilnehmer, Entwurfsprinzipien, geeignete Einsatzszenarien und geeignete Funktionalitäten für eine Software. Außerdem entwickeln wir das Konzept der Marktstörungen um Handelsintentionen der Teilnehmer in Erfahrung zu bringen. Diese Aspekte setzen wir in einer webbasierten Software um, die Funktionalitäten zur Entscheidungsfindung, zum Handeln, zur Nutzerverwaltung, zum Informationsaustausch und für Marktstörungen enthält. LDM sowie die Sofware testen wir erfolgreich in einem EU-Projekt, in einer Laborstudie, bei der Auswahl von Forschungsvorhaben und in einem Universitätsseminar zu Szenarioentwicklung