A DEA-based incentives system for centrally managed multi-unit organisations

In multi-unit organisations such as a bank and its branches or a national body delivering publicly funded health or education services through local operating units, the need arises to incentivize the units to operate efficiently. In such instances, it is generally accepted that units found to be inefficient can be encouraged to make efficiency savings. However, units which are found to be efficient need to be incentivized in a different manner. It has been suggested that efficient units could be incentivized by some reward compatible with the level to which their attainment exceeds that of the best of the rest, normally referred to as “super-efficiency”. A recent approach to this issue (Varmaz et. al. 2013) has used Data Envelopment Analysis (DEA) models to measure the super-efficiency of the whole system of operating units with and without the involvement of each unit in turn in order to provide incentives. We identify shortcomings in this approach and use it as a starting point to develop a new DEA-based system for incentivizing operating units to operate efficiently for the benefit of the aggregate system of units. Data from a small German retail bank is used to illustrate our method

Governance arrangements for state owned enterprises

The aim of this paper is to shed new light on key challenges in governance arrangements for state owned enterprises in infrastructure sectors. The paper provides guidelines on how to classify the fuzzy and sometimes conflicting development goals of infrastructure and the governance arrangements needed to reach such goals. Three policy recommendations emerge. First, some of the structures implied by internationally adopted principles of corporate governance for state owned enterprises favoring a centralized ownership function versus a decentralized or dual structure have not yet been sufficiently"tested"in practice and may not suit all developing countries. Second, general corporate governance guidelines (and policy recommendations) need to be carefully adapted to infrastructure sectors, particularly in the natural monopoly segments. Because the market structure and regulatory arrangements in which state owned enterprises operate matters, governments may want to distinguish the state owned enterprises operating in potentially competitive sectors from the ones under a natural monopoly structure. Competition provides not only formidable benefits, but also unique opportunities for benchmarking, increasing transparency and accountability. Third, governments may want to avoid partial fixes, by tackling both the internal and external governance factors. Focusing only on one of the governance dimensions is unlikely to improve SOE performance in a sustainable way.National Governance,Banks&Banking Reform,Public Sector Economics&Finance,Debt Markets,Public Sector Expenditure Analysis&Management

Recent Advances in the Empirics of Organizational Economics

We present a survey of recent contributions in the empirical organizational economics, focusing on management practices and decentralization. Productivity dispersion between firms and countries has motivated the improved measurement of firm organization across industries and countries. There appears to be substantial variation in management practices and decentralization between countries, but especially within countries. Much of the poorer average management quality in countries like Brazil and India seems due to a "long tail" of poorly managed firms, which barely exist in the US. Many basic economic theories are supported by this new data. Some stylized facts include: (1) competition seems to foster improved management and decentralization; (2) larger firms, skillintensive plants and foreign multinationals appear better managed and are more decentralized; (3) family owned and managed firms appear to have worse management; (4) firms facing an environment of lighter labor market regulations, and more human capital intensive organizations specialize relatively more in "people management". There is evidence for complementarities between ICT, decentralization and management, but the relationship is complex and identification of the productivity effects of organizational practices remain a challenge for future research.productivity, organization, management, decentralization

地方分権と地域格差:OECD諸国の経験と中国の探査

Tohoku University犬塚元課

The boundaries of the state

The paper is organized as follows: in part 2, I give a short account of Humboldt's boundaries of the state that relates to many present-day challenges to classical liberalism: his blunt rejection of any solicitude of the state for the positive welfare of the citizen which also covers education, religion and any kind of moral paternalism. In part 3, I refer to the new economic literature on the optimal size and number of nations in order to discuss whether small states are more likely to be (nearly) minimal states. This literature tends to disregard Humboldt's arguments in favour of exposing the individual to varieties of situations that he can choose and from which he can learn to self-develop. Therefore, in part 4, I argue that the evolutionary merits of this exposure can be illustrated by regarding institutional competition as a Hayekian discovery procedure. In part 5, I look at the partial removal of borders within the European Union and, using some intuitions from club theory, I argue that, in terms of the size of European government, integration has become in most areas too deep whereas in terms of the size of membership in the Union the EU has grown too big in some areas and too small in others. I conclude with a plea for more decentralization and competition amongst jurisdictions as a way to lead, as if by an invisible hand, to at least somewhat more limited states. My qualified claim is thus: more, and more open, boundaries between states lead to more limited governments. --

Sentiment, Expectations and Real Estate Prices —Evidence from China

From the perspective of behavioral finance, this thesis utilizes the real estate data since China's market-oriented reform to investigate the influence of sentimental variables and expectations on real estate prices. As the first topic of the research, Chapter 2 of this thesis takes China’s state level Consumer Expectation Index as proxy variable of consumers’ aggregated sentiment, and adopts the method of time series to empirically research on the relationship between the sentiment and China’s real estate prices. The research result indicates that there is long-term cointegrating relationship between the consumers’ aggregated sentiment and real estate prices, and the influence of the sentiment on real estate prices is stronger than the fundamental indicators in the traditional analytical framework such as M2, GDP, etc. For the purpose of further distinguishing the influence of psychological factors on real estate prices, and investigating data at a more detailed level, Chapter 3 of the thesis adopts panel data model to research the influence of sentiment of the market opinion leaders (entrepreneurs) on house prices of different provinces. The estimation result of the overall panel data indicates that the sentiment of entrepreneurs significantly affects house prices. Then, the country is divided into three areas: eastern, central and western areas, of which the estimation results indicate that the degree of the sentimental influence on house prices is positively correlated with the degree of market maturity. The maturer the market is, the more likely it is to be affected by the psychological factors. The conclusion of endogenous test shows that the sentiment of entrepreneurs is independent of other economic fundamentals and directly affects the prices of housing property. Chapter 4 of the thesis examines the influence of the promotion expectations of Chinese local officials (governors) on house prices from the perspective of public administration. China adopts a unique promotion system of local officials similar to yardstick competition, which has had a broad and profound influence on China's real estate market. This chapter first illustrates the theoretical mechanism that triggers China’s land finance. And on this basis, it carries an empirical study on the influence of promotion expectations of local officials on land prices and then the house prices. The test results indicate that the promotion expectations of China’s local officials have long-term and profound influence on house prices, which help us to better understand the unique mechanism of China's sustained rapid development. The public administrative policies outlined in Chapter 4 have important reference to other developing countries