Aspiration Gap Research Articles

Income aspirations and peasants' willingness to borrow in rural China

Using a comprehensive village-level survey data from two villages in Fuxian, China, collected in 2016 and 2021, we employ a Tobit model to analyze the consequences of income aspirations gap on peasants' willingness to borrow under different repayment terms. The willingness to borrow increases with the income aspirations gap of rural households and is moderated by social networks, though the moderating effect of time preference is observed only under 1-year repayment term. When borrowing purposes are introduced, the income aspirations gap significantly increases willingness to borrow only under 10-year repayment term when the purpose is future-oriented. Additionally, the relationship between the willingness to borrow and actual borrowing behavior is also examined, confirming that stimulating peasants' willingness to borrow from the perspective of income aspirations gap and facilitating the conversion of willingness into behavior is an effective way to address the insufficient financial needs in rural areas.

Reasons for M&A: A perspective from senior executives' rural experiences- Evidence from Chinese private listed companies

Mergers and Acquisitions (M&A) are critical strategies that significantly shape a company's direction. By drawing upon imprinting theory, this study analyzes the data of publicly traded companies spanning the years 2007 to 2018 in order to explore the formation of executives' imprints from their rural experiences and their positive impact on M&A decisions. Furthermore, based on corporate behavior theory, it was also verified that the cooperate aspiration gap is an important factor in promoting the dynamic changes of imprints formed by the rural experiences of executives, which in turn affects the relationship between the rural experiences of executives and corporate M&A decisions. The study reveals that the senior executives' rural experiences significantly boost the propensity of a company adopting M&A as a growth strategy. This tendency is particularly pronounced for younger executives and those less affected by a culture of familism. In addition, the study notes a progressive change in these imprints due to the corporate aspiration gap, which affects M&A strategies. Specifically, when a firm's performance fails to meet its objectives and societal expectations, it strengthens the link between an executive's rural background and the pursuit of M&A for expansion. Conversely, when a firm exceeds these aspirations, the correlation is weakened. By examining how individual imprints are formed, evolve, and impact decision-making, this study provides fresh perspectives on the factors driving corporate M&A decisions.

Negative Performance Aspiration Gap and Stock Price Crashes: Based on Behavioral Theory and Agency Theory Perspective*

AbstractThe paper explores how agency behavior of insiders within a company influences the risk of a stock price crash in the context of a continued expansion of the performance expectation gap. A panel data analysis of 10 727 observations of Chinese A‐share listed companies over the period 2003–2020 shows that as the negative performance aspiration gap widens, stock price crashes are more likely to occur. Furthermore, the separated role of top management and chairperson and an increase in the ownership proportion of major shareholders significantly amplifies the positive effect, whereas the increase in managerial shareholding and the equity balance diminish the main relationship.

Behavioural factors matter for the adoption of climate-smart agriculture

Increasing agricultural productivity while ensuring environmental sustainability are two important targets in achieving the sustainable development goals under climatic shocks. In this regard, different climate-smart agricultural (CSA) practices have been recommended and promoted to meet these goals and targets. However, the adoption of these practices remains low and variable. For the most part, low adoption has been attributed to external factors. Behavioural and psychological factors also matter but have received little empirical and policy attention. In this study, we examine the relationship between aspirations, aspiration gaps, and the adoption of CSA practices such as crop rotation, intercropping, fallowing, and organic soil amendments. Employing parametric and non-parametric estimation techniques on a pooled farm household survey from Cameroon and Kenya, we show that aspirations are associated with the use of crop rotation and organic soil amendments. We also investigate the theorized non-monotonic inverse U-shaped relationship between aspiration gaps and investments. We find evidence of this relationship for the adoption of these CSA practices, suggesting an aspiration failure for smallholder farmers. These results imply that aspirations that are ahead but not too far ahead of the current state serve as the best incentives for stimulating the adoption of CSA practices. Employing the multivariate probit model, we further highlight interdependencies in the use of these CSA practices. Specifically, we underscore significant complementarities, suggesting the bundled use of these practices. Overall, the analysis demonstrates that aspirations matter for farmer decision-making with many implications for agricultural, food, and environmental policies.

“Not what I Can, but what I Should”

Educational inequalities associated with differences in social class backgrounds remain stable in many Western societies, where students from lower social classes generally have lower academic prospects. Previous research suggested that psychological barriers could explain part of this social class attainment gap. This study aimed to investigate the role of identity compatibility in explaining the relationship between high school students’ socioeconomic background and their educational aspirations. Identity compatibility is defined as perceived compatibility between students’ socioeconomic background and a stereotype of a university student. A total of 362 high school students from Croatia completed an online survey that measured their subjective socioeconomic status, identity compatibility, educational aspirations, and their school achievement. The results showed positive associations between the students’ subjective socioeconomic status and identity compatibility, which was, in turn, positively associated with their educational aspirations. The parallel multiple mediation model confirmed the significant indirect effect of subjective socioeconomic status on educational aspirations via identity compatibility, while the path via school achievement was not significant. These findings suggest that part of the social class educational aspiration gap could be explained by the perceived lack of compatibility between one’s social class identity and future university student identity, potentially leading to lower university enrolment rates among lower social class students. Practical considerations of study results are discussed in terms of the potential of socio-psychological interventions in reducing the social class educational aspiration gap.

Aspirations and investments in livestock: Evidence of aspiration failure in Kenya

AbstractAspirations influence future‐oriented behavior and ensuing outcomes but they may also fail to do so when the aspired‐to‐status is far away from the current one. Theoretical predictions suggest an inverted U‐shaped relationship between this aspiration gap and the effort to achieve what is aspired to. Aspirations that are ahead but not too far ahead of the current status serve as the best incentives for investments. We examine the income aspiration gap of smallholder households and relate it to livestock in a pastoral setting in Northern Kenya. Our focus on livestock is guided by the burgeoning recognition of livestock as an investment and saving conduit for many households in pastoral communities in developing nations. Employing different empirical strategies including parametric and semi‐parametric techniques, we find livestock to be increasing with aspirations up to a threshold, from which it then declines to lead to an aspiration failure. Delving into livestock heterogeneity, we uncover evidence that cattle and poultry respond more to the aspiration gap than small ruminants such as sheep and goats. Different U‐shaped tests confirm this relationship, bolstering the evidence of an aspiration failure. These findings are robust to the inclusion of relevant controls, truncations at zero, and different variable transformations. We also show that the findings are unlikely to be driven by unobserved heterogeneity. Additionally, we find that internal locus of control, that is the degree to which individuals believe they control outcomes in their lives is associated with livestock investments.

Aspirations, risk preferences, and investments in agricultural technologies

We investigate the relationship between aspirations, risk preferences, and investment in agricultural technologies using data collected among cacao farmers in Ecuador. We first find that an inverted U-shaped relationship between the income aspirations gap and investments exists when considering relatively long-term investments (e.g., farm renovations) but not when considering relatively short-term investments (e.g., fertilizer use). Next, using lab-in-the-field experiments and survey instruments designed to elicit risk preferences, we show that the observed inverted U-shaped relationship is robust to the inclusion of risk preference parameters in our regression specification—a potentially important omitted variable in previous studies. Our empirical results are consistent with existing theory suggesting that aspirations that are ahead, but not too far ahead, of current levels provide the best incentives for investments in the future, and suggest the presence of psychological constraints to investments in agricultural technology.

Does CEO openness matter when explaining firm internationalization decisions: evidence from China

PurposeThe impact of executive characteristics on firm internationalization has already been extensively explored. However, relatively few studies have examined the critical role of chief executive officer (CEO) personality attributes, and especially CEO openness, in firm internationalization. This research aims to deepen the understanding of firm internationalization, by exploring whether and when CEO openness influences firm internationalization.Design/methodology/approachA sample of private high-tech listed firms in China is used, with data from 2004 to 2020.FindingsBased on upper echelons theory, this study theorizes and finds that CEO openness will positively influence firm internationalization. Further, based on the behavioral theory of the firm, this study finds that the performance aspiration gap weakens the positive effect of CEO openness on firm internationalization, but also finds that the potential slack strengthens this effect.Originality/valueFirst, the study reinterprets firm internationalization strategies from the perspective of CEO openness, a personality attribute; CEO openness is an important but so far rarely discussed topic in the field of international business. Second, for the first time, problemistic search and slack search into a research framework are introduced to explore the relationship between CEO characteristics and firm internationalization. This approach can further define the boundary conditions under which CEOs can project their values, preferences and personalities into the process of formulating and implementing a firm's internationalization strategy.

Mind the aspiration gap: how primary school pupils perceive their future adult selves and the perspectives and expectations of parents and teachers

ABSTRACT This article reports on research investigating the aspirations of pupils in primary schools located in low-socioeconomic areas in one English county. The research adopted a qualitative approach to explore aspirations, self-efficacy, opinions regarding the merits of investment in education, and notions of perceived future selves. The research also considered the expectations of parents and teachers providing insight into how they support children's aspirations and expose them to opportunities and ideas. The study utilised various trigger activities as a precursor to focus groups. The findings show a distinct gap between pupils’ conception of their current selves and their future selves whereby there is uncertainty and insecurity about the appropriate steps needed to make informed choices and realise aspirations. Parents and extended family are the predominant idea source for aspirations and their assistance is recognised, above all, as important by pupils. Aspirations are also fashioned by pupils’ gender-specific ideas about certain jobs and cultural exposure to the media. Pupils discern the importance of working hard and performing well at school. Most parents just want their child to be happy in the future and, as such, would support their child’s career choices believing these could be achieved although believing qualifications are important, and the job market restricted. Teachers want their pupils to have options but identify barriers to achieving aspirations as worklessness in families, the locality of the school, low self-efficacy and unrealistic aspirations.

R&D Intensity: What to Expect When Family and Non-Family Firms Underperformed?

The main purpose of our study is to test the R&D investment decision-making process of family and non-family enterprises, especially focus on their R&D investment differences under extreme below performance aspiration (EBPA). And we further discuss the regulatory mechanism of unabsorbed slack on performance feedback process. The results show that: first, in the range of EBPA, the R&D investment intensity of non-family enterprises will decrease with the increase of negative performance aspiration, while that of family enterprises will accelerate with the increase of negative performance aspiration. (2) Unabsorbed slack could enhance the positive relationship between performance aspiration gap and R&D investment intensity of family business, while for non-family business, it would weaken the negative relationship between aspiration gap and R&D investment intensity.

What constrains firms from divesting their legacy business?

AbstractThis study focuses on a unique business phenomenon, legacy divestitures, which refers to the sale or spinoff of a firm's original business. I argue that firms may be prevented from engaging in legacy divestiture by organizational inertia, which become increasingly stronger as the legacy business gets older. I also examine factors that help firms overcome the constraints of inertial forces on firms' legacy divestitures. Hypotheses are tested using a sample of 108 diversified American companies, 27 of which divested legacy businesses between 1980 and 2017. Firms are less likely to divest their legacy businesses as the legacy units get older. The negative relationship is weakened by two factors, performance–aspiration gaps and R&D intensity.

Aspirations, inequality, and behavioral change: evidence from Colombia

ABSTRACT In this article, I analyze why inequality can discourage investment. I derive my hypothesis from the theory of aspirations as a reference point. A more significant aspiration gap – the distance between the current state and the aspired state – leads to frustration and fewer incentives to invest. In study I, I use data from a longitudinal panel, exploiting environmental shocks to identify a plausibly exogenous source of variation for inequality. I combine it with an indirect measurement of aspirations using data on wealth, computed for the plausible reference group, defined as cells within the population, sharing similar observable characteristics. Finally, I use the variation in the total debt as the outcome variable. In study II, I use data from a specialized survey where shocks and aspirations are directly measured. I look at total debt as the outcome. Although the two tests are only partially conclusive, the evidence aligns with the central hypothesis.

Top Management Team Stability and Corporate Social Responsibility: The Moderating Effects of Performance Aspiration Gap and Organisational Slack

Although studies on the impact of senior executives on corporate social responsibility (CSR) are relatively sufficient, they take a static perspective when investigating the different attitudes of senior executives towards fulfilling social responsibility. Few studies consider the impact of the dynamic changes in a top management team (TMT) on sustainable corporate development, especially social responsibility. We perform regression analysis on 2010–2019 data from Chinese listed firms to examine the relationship between TMT stability and CSR performance and consider the moderating roles of the performance aspiration gap and slack resources. We find that TMT stability has a positive impact on CSR performance and that the performance aspiration gap and slack resources negatively moderate the relationship between TMT stability and CSR performance. This study expands the current literature on the relationship between TMT characteristics and social responsibility, sheds light on what situations can cause agency problems, and provides practical guidance for the sustainable development of a firm and adequate performance of CSR.

Effects of health education on adolescents' non-cognitive skills, life satisfaction and aspirations, and health-related quality of life: A cluster-randomized controlled trial in Vietnam.

The effectiveness of health education on adolescents has been questioned, along with a growing body of empirical studies documenting the absence of behavioral changes after the intervention. However, evidence on its impact on other crucial health domains, besides health practices, is lacking. We evaluated the causal effects of a school-based health education program on adolescents' multidimensional psychological health factors. A cluster-randomized controlled trial. We conducted a cluster-randomized controlled trial involving 140 lower secondary schools in Vietnam. After stratifying by district, schools were randomized 1:1 to either treatment or control groups. Students enrolled in the treatment schools received monthly stand-alone health education in five topics by school teachers at the class level, but control group students did not receive any intervention. The primary outcomes of the study were students' non-cognitive skills, life satisfaction, aspirations gap, and the Health-Related Quality of Life at five-month follow-up. We estimated the intention-to-treat effects with the panel fixed effects model using student panel data. Of the 6,477 students enrolled at baseline, 2,958 (92%) treated and 2,967 (91%) control students completed the follow-up survey five months after baseline data collection from October to December 2018. Compared with controls, health education led to improved treatment school students' self-efficacy (p-value = 0.013), presumed life satisfaction five years from the present (p-value = 0.001), aspirations gap for a socially and mentally healthy future (p-value = 0.036), and the Health-Related Quality of Life (p-value = 0.036). A school-based health education program enhanced students' non-cognitive skills, life satisfaction and aspirations gap, and the Health-Related Quality of Life significantly. This study proposes essential psychological factors that should be taken into account when evaluating the effectiveness of a health education program in resource-limited settings.

Aspirations, Human Capital Investment, and the Intergenerational Transmission of Poverty in Indonesia

This study investigates the effect of parental aspirations gap on children’s educational attainment between 2007 and 2014, using two waves of Indonesian Family Life Survey data. The aspirations gap is measured by the difference between one’s future reference point and his or her current life evaluation reported by each household head and spouse. The results show that boys whose fathers report a moderate level of the aspirations gap achieve substantially longer schooling years than the mean level of their same age cohort. Furthermore, the relationship is found to be inversely U-shaped, implying that an excessive aspirations gap discourages investment in children’s human capital. An increasing aspirations gap of parents is also found to impede the educational attainment of children in poor families, which are more vulnerable to shocks that are found to increase the gap. Overall, the results of this paper shed light on the role of parental aspirations gap in the link between socioeconomic status of family and educational outcomes of children in Indonesia, where the gap of the poor is found to increase faster than the rich.

Tax Incentives, R&D Manipulation, and Corporate Innovation Performance: Evidence from Listed Companies in China

This study investigated the R&D manipulation of Chinese listed companies under preferential tax policies based on the bunching approach. On this basis, differences in organizational performance aspirations were used to distinguish firm heterogeneity. This was to clarify how tax incentives affected firm innovation performance. The empirical results show that preferential tax policies can effectively reduce the actual tax burden of high-tech enterprises. Some companies have enjoyed corporate income tax breaks by manipulating R&D spending. The counterfactual estimate of R&D intensity shows that the elasticity of taxable income of R&D investment of listed companies in China is between 0.55 and 0.8. The elasticity of taxable income of manufacturing enterprises is between 0.6 and 0.75. Furthermore, within the R&D operating range, firm-level variations will affect innovation performance. The incentive effect of R&D activities of enterprises with a negative organizational performance aspiration gap is higher than that of enterprises with a positive organizational performance aspiration gap. The conclusion provides the basis for the country to improve preferential tax policies for high-tech enterprises.

Higher education financing and the educational aspirations of teenagers and their parents

We study the impact of higher education financing on the academic aspirations of teenagers and their parents. We exploit a reform which introduced a large increase in the tuition fees universities can charge, more generous support for the poorest students and a more redistributive student loan system, and varied across the UK’s constituent countries. Using rare survey data on post compulsory secondary and university education aspirations, we find that teenagers’ aspirations are not responsive to large changes in higher education financing. In contrast, parents adjust their aspirations, resulting in a reduction of the socio-economic aspiration gap for their children.

Does Ignorance of Economic Returns and Costs Explain the Educational Aspiration Gap? Representative Evidence from Adults and Adolescents

The gap in university enrolment by parental education is large and persistent in many countries. In our representative survey of German adults, 74% of university graduates, but only 36% of those without a university degree, favour university education for their children. The latter are more likely to underestimate returns and overestimate costs of university. Similarly, 75% of adolescents with university‐educated parents, but only 51% without university‐educated parents aspire to a university degree. Experimental provision of general return and cost information does not close the aspiration gap as treatment effects are at least as strong for individuals with a university background as for those without. Differences in economic preference parameters also cannot account for the educational aspiration gap.

Moving in the Right Direction: Consumption-Based Projection Shows an Earlier and Lower Peak in Global Anthropogenic GHG Emissions

Projections of future emissions based on current trends are vital to assess the performance of mitigation efforts and to devise mitigation strategies. Several studies have investigated the aspiration gap between projected emissions and global warming targets, but it is as yet uncertain how changes in consumption patterns may impact trajectories. Here we employ a Markov Chain Monte Carlo (MCMC) Bayesian analysis of historical and projected consumption-based emissions during 1995-2050 via a modified Kaya identity. We assume regional convergence over time after finding strong supporting historical evidence. We find global emissions of 27-62 GtCO2eq yr-1 by 2050, slightly higher than SSP1-2.6 and encompassing SSP4-6.0, resulting in 1.9-2.4°C of warming above pre-industrial levels mid-way through the century. The median projection shows a 2024 peak of 55 GtCO2eq yr-1 and an annual average decrease of 0.58 GtCO2eq thereafter. Future emission decreases result from the interplay between a rapid reduction driven by decreasing emission intensities, especially in housing, and the change of final demand structure (-53 GtCO2eq yr-1) against increases from economic and population growth (+44 GtCO2eq yr-1). Compared to other work, we find an earlier peak which is lower in magnitude. This is due to the inclusion of recent data, the consideration of regional convergence, and the incorporation of structural changes in final demand as explanatory variables. This highlights the importance in continually updating projections and considering models that reflect convergence and demand structure changes, in order to better inform climate policy.

Cost-benefit information closes aspiration gaps – if parents think their child is ready for college

ABSTRACT Can information close socioeconomic gaps in parents’ postsecondary aspirations for their children? We administer a survey experiment to a nationally representative sample of U.S. parents, who are also asked whether their child is academically prepared for college. We inquire whether parents prefer their child to pursue a four-year degree, two-year degree, or no further education. Some parents are also randomly told the costs of college for an individual in their state and income bracket; local labor-market returns to a degree; or both costs and returns. Information closes socioeconomic aspiration gaps only if parents believe their child is ready for college.