Power Law Distribution of the Frequency of Demises of U.S Firms

Both theoretical and applied economics have a great deal to say about many aspects of the firm, but the literature on the extinctions, or demises, of firms is very sparse. We use a publicly available data base covering some 6 million firms in the US and show that the underlying statistical distribution which characterises the frequency of firm demises - the disappearances of firms as autonomous entities - is closely approximated by a power law. The exponent of the power law is, intriguingly, close to that reported in the literature on the extinction of biological species.Comment: 8 pages, 2 figure

Bankruptcy risk model and empirical tests

We analyze the size dependence and temporal stability of firm bankruptcy risk in the US economy by applying Zipf scaling techniques. We focus on a single risk factor-the debt-to-asset ratio R-in order to study the stability of the Zipf distribution of R over time. We find that the Zipf exponent increases during market crashes, implying that firms go bankrupt with larger values of R. Based on the Zipf analysis, we employ Bayes's theorem and relate the conditional probability that a bankrupt firm has a ratio R with the conditional probability of bankruptcy for a firm with a given R value. For 2,737 bankrupt firms, we demonstrate size dependence in assets change during the bankruptcy proceedings. Prepetition firm assets and petition firm assets follow Zipf distributions but with different exponents, meaning that firms with smaller assets adjust their assets more than firms with larger assets during the bankruptcy process. We compare bankrupt firms with nonbankrupt firms by analyzing the assets and liabilities of two large subsets of the US economy: 2,545 Nasdaq members and 1,680 New York Stock Exchange (NYSE) members. We find that both assets and liabilities follow a Pareto distribution. The finding is not a trivial consequence of the Zipf scaling relationship of firm size quantified by employees-although the market capitalization of Nasdaq stocks follows a Pareto distribution, the same distribution does not describe NYSE stocks. We propose a coupled Simon model that simultaneously evolves both assets and debt with the possibility of bankruptcy, and we also consider the possibility of firm mergers.Comment: 8 pages, 8 figure

Flight service evaluation of an advanced composite empennage component on commercial transport aircraft. Phase 1: Engineering development

The empennage component selected for this program is the vertical fin box of the L-1011 aircraft. The box structure extends from the fuselage production joint to the tip rib and includes the front and rear spars. Various design options were evaluated to arrive at a configuration which would offer the highest potential for satisfying program objectives. The preferred configuration selected consists of a hat-stiffened cover with molded integrally stiffened spars, aluminum trussed composite ribs, and composite miniwich web ribs with integrally molded caps. Material screening tests were performed to select an advanced composite material system for the Advanced Composite Vertical Fin (ACFV) that would meet the program requirements from the standpoint of quality, reproducibility, and cost. Preliminary weight and cost analysis were made, targets established, and tracking plans developed. These include FAA certification, ancillary test program, quality control, and structural integrity control plans

Nonequilibrium phase transition in a model for social influence

We present extensive numerical simulations of the Axelrod's model for social influence, aimed at understanding the formation of cultural domains. This is a nonequilibrium model with short range interactions and a remarkably rich dynamical behavior. We study the phase diagram of the model and uncover a nonequilibrium phase transition separating an ordered (culturally polarized) phase from a disordered (culturally fragmented) one. The nature of the phase transition can be continuous or discontinuous depending on the model parameters. At the transition, the size of cultural regions is power-law distributed.Comment: 5 pages, 4 figure

Evidence for an evolutionarily conserved interaction between cell wall biosynthesis and flowering in maize and sorghum

BACKGROUND: Factors that affect flowering vary among different plant species, and in the grasses in particular the exact mechanism behind this transition is not fully understood. The brown midrib (bm) mutants of maize (Zea mays L.), which have altered cell wall composition, have different flowering dynamics compared to their wild-type counterparts. This is indicative of a link between cell wall biogenesis and flowering. In order to test whether this relationship also exists in other grasses, the flowering dynamics in sorghum (Sorghum bicolor (L.) Moench) were investigated. Sorghum is evolutionarily closely related to maize, and a set of brown midrib (bmr) mutants similar to the maize bm mutants is available, making sorghum a suitable choice for study in this context. RESULTS: We compared the flowering time (time to half-bloom) of several different bmr sorghum lines and their wild-type counterparts. This revealed that the relationship between cell wall composition and flowering was conserved in sorghum. Specifically, the mutant bmr7 flowered significantly earlier than the corresponding wild-type control, whereas the mutants bmr2, bmr4, bmr6, bmr12, and bmr19 flowered later than their wild-type controls. CONCLUSION: The change in flowering dynamics in several of the brown midrib sorghum lines provides evidence for an evolutionarily conserved mechanism that links cell wall biosynthesis to flowering dynamics. The availability of the sorghum bmr mutants expands the germplasm available to investigate this relationship in further detail

Cultural transmission and optimization dynamics

We study the one-dimensional version of Axelrod's model of cultural transmission from the point of view of optimization dynamics. We show the existence of a Lyapunov potential for the dynamics. The global minimum of the potential, or optimum state, is the monocultural uniform state, which is reached for an initial diversity of the population below a critical value. Above this value, the dynamics settles in a multicultural or polarized state. These multicultural attractors are not local minima of the potential, so that any small perturbation initiates the search for the optimum state. Cultural drift is modelled by such perturbations acting at a finite rate. If the noise rate is small, the system reaches the optimum monocultural state. However, if the noise rate is above a critical value, that depends on the system size, noise sustains a polarized dynamical state.Comment: 11 pages, 10 figures include

How to run successful e-internships: a case for organizational learning

Purpose – The purpose of this paper is to outline unique learning experience that virtual/e-internships can offer small and medium-sized enterprises and start-up organizations.Design/methodology/approach – We interviewed 18 experts on e-internships (interns and managers of internships) across several countries to learn more about the learning experiences for both organizations and interns. The information from these interviews was also used to formulate a number of recommendations.Findings – The interviews provided insights into how e-internships can provide development opportunities for interns, managers and staff within these organizations. One important benefit pertains to the skill development of both interns and managers. The interns get unique working experiences that also benefit the organizations in terms of their creativity, input and feedback. In return, managers get a unique learning experience that helps them expand their project management skills, interpersonal skills and mentoring.Practical implications – We outline a number of recommendations that consider skill development, the benefit of diversity in numerous forms as well as mutual benefits for enterprises and start-ups.Originality/value – The discussion of the various benefits and conditions under which virtual internships will succeed in organizations provide practitioners an insight into the organizational opportunities available to them given the right investment into e-interns and internship schemes

Going global in small steps: e-internships in SMEs

Technological developments over the last thirty years increasingly shaped the means by which we recruit, select and appraise employees. Today, technology supports more flexible and geographically dispersed working modes: From teleworkers, to virtual workers, to e-interns (also known as virtual interns). The current article describes how developments in e-HRM and changes in employment forms contribute to the development and increasing popularity of e-internships (better known as virtual internships) amongst small and medium-sized enterprises. In this paper, we reflect on the rise of e-internships across different countries and relate this to e-HRM and technological advances. We explore the opportunities and challenges. These include developing effective global talent and knowledge management practices, managing diversity as well as intellectual and social capital. We furthermore link the employment of e-internship practices to strategic organizational goals and learning. In the final section, we also critically reflect on the high investment required for e-internships to succeed. The discussion on e-internships is set in the literature on e-HRM, virtual teams and knowledge management, which is furthermore supported by interviews conducted with e-interns or internship managers.Keywords: e-internships, virtual internships, computer-mediated communicatio

Innovation flow through social networks: Productivity distribution

A detailed empirical analysis of the productivity of non financial firms across several countries and years shows that productivity follows a non-Gaussian distribution with power law tails. We demonstrate that these empirical findings can be interpreted as consequence of a mechanism of exchanges in a social network where firms improve their productivity by direct innovation or/and by imitation of other firm's technological and organizational solutions. The type of network-connectivity determines how fast and how efficiently information can diffuse and how quickly innovation will permeate or behaviors will be imitated. From a model for innovation flow through a complex network we obtain that the expectation values of the productivity level are proportional to the connectivity of the network of links between firms. The comparison with the empirical distributions reveals that such a network must be of a scale-free type with a power-law degree distribution in the large connectivity range.Comment: 14 pages, 4 figures, submitted to Phys. Rev.

Power Law of Customers' Expenditures in Convenience Stores

In a convenience store chain, a tail of the cumulative density function of the expenditure of a person during a single shopping trip follows a power law with an exponent of -2.5. The exponent is independent of the location of the store, the shopper's age, the day of week, and the time of day.Comment: 9 pages, 5 figures. Accepted for publication in Journal of the Physical Society of Japan Vol.77No.