Flexible Incentives Research Articles

Firm Performance: An Empirical Study of Vietnam’s Information Technology Companies

The purpose of this paper is to contribute to the limited previous research on intra-organizational knowledge transfer, by examining the impact of particular organizational factors (IT systems, organizational culture, organizational structure and incentive systems) on the process of knowledge transfer within IT companies in Vietnam and the relationship between the knowledge transfer process and its organizational performance. A survey of 36 companies out of 200 software companies in Hanoi and Ho Chi Minh city, targeted at 900 technical staff, middle managers and top managers, was conducted. The study findings, based on a sample response rate of 24 per cent, indicated that a culture of high solidarity, adaptability and collaboration was proved to have the strongest impact on the process of knowledge transfer and company performance. It was also found that a transparent and flexible incentive system motivated individuals to exchange and utilize knowledge in their daily work, that a high level of centralization and formalization hindered the flow of knowledge, and the effect of IT tools on the knowledge transfer process remained weak. Overall, the findings of the study indicated that organizational factors and intra-organizational knowledge transfer processes have positive correlations with organizational performance.

Flexibility in Europe's power sector — An additional requirement or an automatic complement?

By 2050, the European Union aims to reduce greenhouse gases by more than 80%. The EU member states have therefore declared to strongly increase the share of renewable energy sources (RES-E) in the next decades. Given a large deployment of wind and solar capacities, there are two major impacts on electricity systems: First, the electricity system must be flexible enough to cope with the volatile RES-E generation, i.e., ramp up supply or ramp down demand on short notice. Second, sufficient back-up capacities are needed during times with low feed-in from wind and solar capacities. This paper analyzes whether there is a need for additional incentive mechanisms for flexibility in electricity markets with a high share of renewables. For this purpose, we simulate the development of the European electricity markets up to the year 2050 using a linear investment and dispatch optimization model. Flexibility requirements are implemented in the model via ramping constraints and provision of balancing power. We found that an increase in fluctuating renewables has a tremendous impact on the volatility of the residual load and consequently on the flexibility requirements. However, any market design that incentivizes investments in least (total system) cost generation investment does not need additional incentives for flexibility. The main trigger for investing in flexible resources is the achievable full load hours and the need for backup capacity. In a competitive market, the cost-efficient technologies that are most likely to be installed, i.e., gas-fired power plants or flexible CCS plants, provide flexibility as a by-product. Under the condition of system adequacy, flexibility never poses a challenge in a cost-minimal capacity mix. Therefore, any market design incentivizing investments in efficient generation thus provides flexibility as an inevi complement.

A Reliability-Cost–Benefits (RCB) Model for the Addition of DG to Independent Micro-Grid Networks

Interest in alternative energy sources has been increased due to improved public awareness about the high energy cost and the adverse environmental impact of the conventional energy sources. This has caused a transition to a new market-based power network which, among other characteristics, allows more flexible incentives based demand-response-programs (DRP). Reliability aspects have been more challenging in remotely operated Independent-Microgrid-Networks (IMGN) mainly due to weather dependence. Such stochastic behavior has influenced the market prices of electricity and has created real time challenges for trade. The success of such uncertain energy systems depends to a large extent on new technical and financial tools. This requires to consider together the reliability and the financial cost–benefit analysis for every stakeholder of the deregulated electricity market. A novel decision making strategy for relating the system's reliability with cost-benefit incentives under IMGN paradigm has been proposed with an application of economic and signaling-game-theory (SGT).A relationship has been formulated with the consideration of maximizing the profit expectation of each player in the presence of the independent multi-generation resources with different penetration levels. This proposed model can be used as a tool for task scheduling problems and demand side management under the real time pricing schemes. The basic idea is to deal with the uncertainties involved to improve the reliability of renewable power systems. A simulation methodology for reliability evaluation and cost assessment in IMGN has also been developed. Results are discussed in comparison with the Time-of-Use (ToU) price rates.

Procuring Flexibility to Support Germany’s Renewables: Policy Options

To continue balancing supply and demand for power is a growing challenge on Germany’s path to producing 80% of its electricity from renewable resources by 2050. Large-scale investment into a range of technologies will be required to provide the flexibility necessary for balancing. This paper introduces a simple analytical framework to evaluate the German legislator’s numerous efforts to address this challenge. It then proceeds to make three proposals as to how flexibility can be sourced more cheaply. Priority should be given to measures that enable existing power markets to generate stronger rewards for flexibility. We thus call for financial incentives for variable electricity tariffs to elicit more consumer response and for investment subsidies instead of feed-in tariffs for more demand-oriented renewable power generation. If additional explicit incentives for flexibility are necessary, the paper makes some suggestions on implementing a unitary market for flexibility.

Nurses Perception of Incentives System in Assiut University Hospital

Background: Incentives play an important role in organizations as it influences a variety of work-related behavior, as well as the motivation of employees. Aim of the study: The present study was conducted in the main Assiut University Hospital to assess nurse’s perception about the incentives system. Subject sand Methods: This study included 271 nurses who randomly selected from all units at the main Assiut University Hospital. The study included both quantitative and qualitative methods for data collection. Results: High percent of the participants reported that the most important incentives are fair remuneration, bounces, appropriate working hours, and different services (health/ education). The promotion, appreciation of work efforts, a good relations with colleagues and superior encouragement were the most important morale incentives. This is confirmed by the results of Focus group discussions as about half of the participants especially female nurses considered the morale incentives are more important than the financial one especially the good dealing and the respect from the physicians. Conclusion and Recommendations: In conclusion, this study indicates that nurses know what they want from incentives. Attention to priorities and flexible incentives system may help to create the cohesive work environment that nurses seek. Determine the objectives are the most important factors to increase the effectiveness of the incentive system.

Flexibility for Germany's Energy Transition

To continue balancing supply and demand for power is a growing challenge on Germany’s path to producing 80% of its electricity from renewable resources by 2050. Large-scale investment into a range of technologies will be required to provide the flexibility necessary for balancing. This paper introduces a simple analytical framework to evaluate the German legislator’s numerous efforts to address this challenge. It then proceeds to make three proposals as to how flexibility can be sourced more cheaply. Priority should be given to measures that enable existing power markets to generate stronger rewards for flexibility. We thus call for financial incentives for variable electricity tariffs to elicit more consumer response and for investment subsidies instead of feed-in tariffs for more demand-oriented renewable power generation. If additional explicit incentives for flexibility are necessary, the paper makes some suggestions on implementing a unitary market for flexibility.

Incentive Schemes, Employee Motivation and Productivity In Organizations In Nigeria: Analytical Linkages

The paper aims at determining the link between incentive schemes and employee motivation and productivity in organizations and to provide useful information to management on how best to design and administer incentive schemes. To achieve this objective, the paper draws largely from past research findings and cases from the United Nations development Programme (UNDP). Cases cited include those from Tanzania, Rwanda and Brazil. The findings were that incentive schemes have high significant relationship with employee motivation and productivity in both the organized private sector and public sector organizations in Nigeria. The paper recommends that management must identify the type of incentive that best motivate the employee, design and administer flexible incentive programmes, seek and obtain feedback on incentives and set effective employee performance goals in the organization.

Rogers' Chocolates Ltd. and the Corporation of the City of Victoria: A Case Comment on Involuntary Designation and the Conservation of Heritage Buildings

AbstractThe process adopted by the local government to protect the interior of an old building in Victoria, British Columbia, culminated in a significant compensation award in favor of the building's owner and highlights the shortcomings of a coercive regulatory approach to heritage conservation. This study focuses on the relationship between cooperative resolution of conflicts between the rights of the public to protect heritage buildings and the rights of private property owners to the use of their property without interference, on the one hand, and the long-term utility and conservation of historic buildings and the sustainability of local government heritage programs, on the other. Analysis includes discussion on (a) key issues arising out of an involuntary heritage designation, (b) flexible alternative conservation mechanisms and incentives available to local governments, (c) approaches to conservation of heritage buildings in other jurisdictions, and (d) opportunities for improvement in the local government heritage conservation program.

How Can Donors Create Incentives for Results and Flexibility for Fragile States? A Proposal for IDA

International Development Association (IDA) donors and others operating a country performance-based allocation system face two difficult problems: to strengthen incentives to produce and document development results and to increase flexibility for fragile states. Fragile states have the greatest need for projects, but their projects tend to rate poorly in performance-based allocations systems, which provide little incentive to produce successful projects in fragile states or other countries. This paper offers a proposal to address these issues. First, rebalance incentives to increase attention to results and to the frameworks for monitoring and evaluating them. Second, supplement performance-based allocations to fragile states through a performance fund to enable well-performing projects to be scaled up. Doing so would change the conversation about allocations to fragile states from how much? to where can we show value? and lead to a stronger and more general link between development results and development financing.

The Sustainable Energy Utility (SEU) Model for Energy Service Delivery

Climate change, energy price spikes, and concerns about energy security have reignited interest in state and local efforts to promote end-use energy efficiency, customer-sited renewable energy, and energy conservation. Government agencies and utilities have historically designed and administered such demand-side measures, but innovative third-party administrative models present new options to finance, market, and deliver sustainable energy services to energy end-users. This study outlines the concept of a new third-party administrative model, a sustainable energy utility (SEU), with the potential to achieve deep energy efficiency savings and a high penetration of customer-sited renewable energy. An SEU is characterized by central coordination, comprehensive programs, flexible incentives, financial self-sufficiency, competitive procurement, and a focus on delivering energy services rather than commodity energy.

Financial Flexibility and Managerial Incentives

In a setting with moral hazard and optimal compensation contracts, dividends must be coordinated with leverage to maintain efficient investment incentives. Dividends are more flexible than debt, allowing firms to reduce the cost of financial constraints. Dividends, however, also provide managerial flexibility. With low payouts, managers enjoy excessive flexibility over investment choices, and pursue projects that increase their information advantage. This increases the rents they receive under the dynamically consistent compensation scheme. With more disciplined dividends, these furtive investments create a debt overhang problem, such that shareholder wealth is maximized with a compensation scheme that neglects low outcomes (at bondholder expense) and reduces the manager's rents. Investment and compensation choices, therefore, reflect both the flexibility of the financial policy and the flexibility in the manager's dividend choice. When dividends cannot effectively restrict managerial opportunism, short-term debt payments can substitute, but at the cost of default or exacerbating the shareholder-bondholder conflict. The optimal financial policy balances the benefits of financial flexibility and the cost of managerial flexibility. Our theory is closely related to the theory of DeAngelo and DeAngelo (2007), where leverage and dividends combine to provide optimal financial flexibility, while controlling for the agency costs of cash accumulation. Dividends, rather than debt payments, constrain managerial discretion as this preserves the ability to borrow and enhances the ability to issue equity (by enhancing the firm's reputation for returning cash to equity holders). In our analysis, the agency costs of cash accumulation are derived in an explicit and unique manner that operates through managerial information advantages. Disbursements reduce these costs, but may also exacerbate the shareholder-bondholder conflict, which is similar to Myers'(1977) debt overhang problem, but again unique in that it operates through managerial compensation. The optimal financial policy trades off the unique aspects of the agency and debt overhang problems, in contrast to DeAngelo and DeAngelo, where it trades off agency costs illustrated by Jensen (1986) with the security valuation costs illustrated by Myers and Majluf (1984)). Our theory also recognizes that since dividends are designed to control managerial discretion, it may be difficult to induce controlling managers to make disbursements. Short-term debt imposes a stronger commitment, but at the risk of additional costs, so that our financial policy also incorporates Jensen's concern with the relative softness of dividends, which is absent in DeAngelo and DeAngelo.

Legal Reforms and Foreign Investment in the Inter-Korean Project: The Kaesong Industrial Complex

IntroductionThe KIC is emerging as a matter of interest both domestically and internationally-displaying characteristics of being North Korea's national development project to resolve its economic troubles after the Rajin-Sunbong and Sinuiju special economic zone projects fell through. North Korea can use the KIC as a testing ground for possible economic reform that could eventually lead to the complete liberalization of North Korea's economy, and also as a strategic means of easing military tensions between the two Koreas.It is essential for North Korea to open up its doors for its long-term survival. Leaders in Pyongyang deem that a limited opening of the North Korean economy through the establishment of special economic zones is the best plan of action for regime preservation and economic rehabilitation. However, the KIC's potential for success has to be assessed in a more prudent manner. First, North Korea is unable to procure enough funds to autonomously establish the infrastructure necessary to maintain foreign capital in the special economic zone. Second, the country's limited domestic market provides very few incentives to attract foreign investors. Third, the related industries are underdeveloped, making production costs relatively high for potential investors. Fourth, there is a lack of skilled workers who understand the market economy and who are equipped with the latest technology. Finally, there is not enough confidence that North Korea will be able to make the wholesale changes needed or to establish the legal and institutional infrastructure that conforms to international standards. This paper focuses on the issues of attracting foreign investment to the KIC and building a legal and systematic infrastructure that will help maintain this investment. These key indicators can predict the stability and sustainability of the KIC's development henceforth.The North Korean authorities' attitude toward the KIC is very favorable, regardless of how slowly they have met various demands made by South Korea. Most transitional states have been able to experiment with flexible institutional incentives in SEZs, where possible political and economic side effects could be contained within the zones. For example, China's experimentation with liberal market reform was too politically dangerous on a national level, but was possible in SEZs. Based on experience, China began to reform its laws and institutions, creating more diverse SEZs nationwide, such as the Shanghai-Podong Development District, the Weihai Torch High-Tech Industries Development Zone, and free trade zones (Ministry of Justice, 2005).North Korea has also shown deep interest in learning market economics and capitalism from China's model of SEZs. Frequent visits to China's most successful SEZs by North Korean leader Kim Jong Il and the North Korean elite are a good indication that North Korea is benchmarking China. The KIC is a melting pot of capitalism and socialism.The Current State of DevelopmentLaunched full-scale in 2004, the KIC consists of 6,535 acres of land in Kaesong, Panmun-gun, and Jangdan-gun, and 9,803 acres of land in nearby areas. Currently in the first stage, 817 acres of land are being developed for small- to medium-sized labor-intensive businesses. Despite a variety of unfavorable conditions, such as the North Korean nuclear test in 2006 and the subsequent rise of negative public opinion within South Korea, the KIC has been developing steadily as an economic enterprise for the co-prosperity of the two Koreas, grounded on the principle of keeping politics and economics separate. The KIC is expected to gain all the more momentum from two major events. On October 4, 2007, South Korean leader Roh Moo-hyun and North Korean leader Kim Jong Il signed the eight-point Joint Declaration for Advancing Inter-Korean Relations and Peace and Prosperity, after a three-day summit from October 2 to October 4, 2007. The Second Session of the Sixth Round of the Six-Party Talks was held in Beijing, amongst China, Japan, North Korea, Russia, South Korea, and the United States, from September 27 to September 30, 2007. …

Cultivation and the loss of rice landraces in the Terai region of Nepal

Landraces (LRs) are important as a source of novel alleles for crop improvement, and their conservation is therefore necessary for food security. These genetic resources have suffered continuous erosion, especially in more accessible areas. We assess the loss of Nepali rice LRs and identify the factors influencing the probability of cultivating the most dominant LR via a logistic regression model. The majority of farmers cultivate LRs and modern varieties simultaneously. However, there has been a decrease in varietal diversity and a loss of some LRs over recent years, mainly because of their low yield, their sensitivity to diseases and pests, and their late maturity. The opportunity cost of maintaining the Satha landrace is higher on irrigated farms and for those farmers specializing in niche products. On the other hand, Satha is more likely to be cultivated by large-scale farmers and by those having a religious and/or a cultural attachment to this LR. Market-based incentives are less costly than publicly funded conservation programmes, and the superior taste of some LRs may allow them to be developed as niche products. However, to achieve this, public investment is needed to generate the necessary support infrastructure. In the more accessible Terai region, there is a particular need to introduce a flexible incentive mechanism to maintain LRs and to offset the negative effect of development intervention.

Nominal Wage Flexibility, Wage Indexation and Monetary Union

Membership in a monetary union implies stronger incentives for nominal wage flexibility in the form of wage indexation and shorter contract length than non-membership. This counteracts the stabilisation policy cost of giving up monetary independence. But more wage flexibility is only an imperfect substitute for an individual monetary policy. It is possible that an increase in wage flexibility is welfare-decreasing because of the accompanying rise in price variability. The interaction between wage setting and central bank behaviour may result in either multiple equilibria or a unique full-indexation equilibrium.

Nominal Wage Flexibility, Wage Indexation and Monetary Union

Membership in a monetary union implies stronger incentives for nominal wage flexibility in the form of wage indexation and shorter contract length than nonmembership. For example, entry into a monetary union may cause a move from a non-indexation to an indexation equilibrium. But more wage flexibility is only an imperfect substitute for an own monetary policy. It is possible that an increase in wage flexibility is welfare-decreasing because of the accompanying rise in price variability. The interaction between wage setting and central bank behaviour may result in either multiple equilibria or a unique full-indexation equilibrium.

Recommendations to Improve Recovery of Endangered Species in the United States

The institutional framework of entitlements set forth by the Endangered Species Act (ESA) has played an unintended but significant role in hampering species recovery efforts. Whereas the ESA explicitly designates the rights and duties of individuals and government agencies with regard to the protection of listed species, it leaves the implementation of recovery efforts largely to the discretion of the landowner. Such a designation of rights creates numerous perverse incentives that hinder the implementation of recovery efforts. Flexible incentive programs could be used to address this gap in endangered species conservation by rewarding the implementation of recovery efforts of private landowners. Research into the human dimensions of species recovery would allow the formulation of policies and incentives designed to reduce the barriers to species recovery and take advantage of the positive attitudes much of the public has of the intrinsic value of species.

Kicking the Habit: Moving from Pegged Rates to Greater Exchange Rate Flexibility

Why do governments find it so difficult to move from pegged exchange rates to greater exchange rate flexibility? I first establish that there is a problem to be solved: that there are powerful incentives for greater flexibility deriving from changes in the international economic and financial environment but that policymakers find it difficult to engineer a smooth transition. I offer practical suggestions and a framework under which the probability of a smooth transition can be maximised. Drawing examples from recent economic history, I then attempt to understand the experience of selected countries which have undertaken this transition.

Uptake of cervical screening in general practice: effect of practice organisation, structure, and deprivation.

OBJECTIVES - To investigate associations between uptake for cervical screening in general practice and the organisation of screening, features of practice structure, and deprivation. SETTING - Greater Glasgow Health Board area in the west of Scotland, which covers a socioeconomically varied population. METHODS - General practice questionnaire survey and interview based study. The main outcome measure was the uptake rate for each participating practice over the five and a half years ending 31 December 1993. This was used to determine whether practices achieved 80% uptake to trigger maximum payment for cervical screening services. RESULTS - Forty seven percent (n = 92) of all practices in the Greater Glasgow Health Board area agreed to take part in the research, with complete data collected for 87 practices. Participation varied according to number of partners in the practice and the average deprivation score of the practice. Uptake rates ranged from 48-2% to 92-9% (median 77.5%, interquartile range 69.8% to 83.4%). Thirty seven practices (43%) achieved the 80% target. None of the recommended features of good organisation of cervical screening showed any statistically significant association with uptake rates. In stepwise multiple regression four variables were shown to have independent associations with uptake. These were the number of partners in the practice, the average deprivation of the practice, the presence of a female general practitioner, and using a practice's own lists for sending out letters of invitation. In stepwise logistic regression just two of these variables contributed to the prediction of achieving 80% uptake namely, average deprivation and number of partners. There were no significant interactions between deprivation and the organisation of screening in relation to uptake. CONCLUSIONS - Organising cervical screening in general practice according to accepted standards is less important in predicting uptake than more intractable features of the practice such as the size of the partnership, its average deprivation level, the presence of a female general practitioner, and using their own (presumed more accurate) register of addresses to call women. A flexible incentive scheme may more fairly reward the efforts of those general practitioners who achieve high uptake rates but who do not trigger remuneration at the 80% level.

On costs, benefits, and regulatory success: Reply to Crandall

Robert Crandall writes as if the regulatory state is a simple failure. In fact, however, from the economic point of view there have been many successes, in the form of regulations whose benefits exceed their costs. Moreover, economic criteria are inadequate for evaluating regulatory performance, since even well‐aggregated private willingness to pay provides a poor basis for assessing government regulation. It is now necessary to move beyond sterile debates about whether regulation is desirable; nonregulation is not an option, since laissez faire is itself a regulatory system. Democratic, economic, and constitutional criteria hold out the promise of much better regulatory tools, in the form of flexible incentives rather than rigid commands.

Recent Legislative and Court Activities Relating to the SSI and SSDI Programs for the Mentally Ill

We anticipate that future policy and clinical practice will emphasize greater efficiency, cost containment, flexible incentive programs, greater understanding of the disability process, and strategies to optimally rehabulitate the severely disabled mentally ill.