Investment Products Research Articles

China's declining business dynamism

AbstractWe document five novel facts about the dynamism of Chinese manufacturing firms between 2003 and 2018. We show that: (i) the revenue and capital shares of young firms have declined, (ii) life‐cycle growth of firm revenues and assets has declined, (iii) life‐cycle growth of process efficiency / product quality and investment in intangibles has declined (iv) younger firms have higher capital productivity than older firms, with the gap increasing over time, and (v) the dispersion of capital growth and the responsiveness of capital growth to capital productivity have both declined. Using a simple model, we estimate that the lower life‐cycle productivity growth of young firms reduces manufacturing productivity growth by 0.8 percentage points annually, and worsening allocative efficiency of capital between young and old firms reduced manufacturing total factor productivity by 1.25% between the early 2000s and late 2010s. We find that business dynamism is weaker in provinces where state‐owned enterprises account for a larger share of the capital stock.

Heterogeneous impact of economic and political uncertainty on green bond volatility: Evidence from the MRS-GARCH-MIDAS-Skewed T model

Green bonds attract increasing attention as a new eco-friendly investment product. We explore the heterogeneous impact of low-frequency economic and political uncertainty across high or low uncertainty states on green bond volatility in order to accurately analyze the green bond market risk. To this end, we propose a new Markov regime switching GARCH-MIDAS-Skewed T model, in which the regime switching behavior occurs on the low-frequency long-term volatility. An effective filtering estimation method is put forth by introducing the likelihood of the low-frequency sub-sample set. The evidence supports that there are significant time-varying and state-dependent impacts from uncertainty shocks on the volatility of green bonds, including monetary policy, inflation, and crude oil prices as well as global economic policy and political environment. In addition, we find the counter-cyclical behavior of green bond volatility, which increases in the period of economic recession or financial turbulence with expanding uncertainty. Improving the hedging ability of green bonds against uncertainty risks effectively contributes to low-carbon economic development.

Entrepreneurship, growth and productivity with bubbles

Entrepreneurship, growth and total factor productivity are larger when asset prices are high and decline during financial crises. We explain these facts using a growth model with financial bubbles in which individuals have heterogeneous wages and returns on productive investment. Heterogeneity separates individuals between savers and entrepreneurs. Savers buy financial assets, which are deposits or a financial bubble. Entrepreneurs incur in a start-up cost and borrow to invest in productive capital. The bubble provides liquidities to credit-constrained entrepreneurs. These liquidities increase investment, growth and entrepreneurship. Finally, the bubble may increase productivity when the return of each entrepreneur’s investment is positively correlated with her previous income.

Milk, money, and gender: Exploring the link between women's decision‐making in dairy production and welfare investments in boys versus girls

AbstractGreater women's bargaining power and decision‐making within a household have been shown to increase investments in human capital. This study links women's participation in decision‐making in dairy production with household investment in girls and boys in health, nutrition, and education. We survey households in the urbanizing region of Bangalore, India. We utilize a multinomial treatment effects model to analyze the individual and household factors that are associated with women's participation in sole or joint decision‐making. We then assess how the type of decision‐making influences a household's investments. The results first show that female decision‐making households are more disadvantaged on average than other types of decision‐making households. Second, we observe that female decision‐makers for dairy production are more likely to have more children and earn a higher income than their husbands. Third, the main findings show that households in which women engage in joint decision‐making have higher levels of investment across all categories for girls. Conversely, investments decrease in education and nutrition for both girls and boys when the wife is the sole decision‐maker. Lastly, investments are enhanced further for girls when households can sell milk at a higher price.

A study on supply chain information sharing strategy for emission reduction investment in electronic products based on game theory

By analyzing the competition between electronic product manufacturers and retailers in pricing, a dynamic game model is constructed. Using backward induction, the optimal choices and maximum profits under equilibrium conditions are determined. Finally, the constructed model is subjected to data simulation by setting numerical values for relevant parameters to analyze the effects of environmental emission reduction value on the supply chain and the information sharing value of each member. The following conclusions are drawn: when the emission reduction efficiency of manufacturers or the sensitivity of the market to environmental protection is high, the improvement effect of information sharing will outweigh its bilateral marginal effect. Retailers will voluntarily share all demand information and achieve a win-win situation in the supply chain.

The impact of high arousal and displeasure on online review helpfulness: Exploring the moderating role of product involvement

Online reviews help consumers make purchasing decisions on e-commerce platforms by addressing uncertainties in online shopping. In the context of information overload, the value of review helpfulness has become increasingly evident. This study aims to explore the effects of discrete emotions on helpfulness by categorizing Ekman’s six basic emotions based on arousal and valence, and extracting their probabilities from Amazon reviews using BERT (Bidirectional Encoder Representations from Transformers). The results indicate high arousal or negative emotions adversely influence review usefulness. Furthermore, anger, disgust, and fear, characterized by high arousal and displeasure, significantly affect the perceived helpfulness of the reviews. Additionally, we identify product involvement as a significant moderator, suggesting that consumers’ investment in products influences their interpretation of reviews’ emotional content. This study contributes to understanding the relationship between discrete emotions, product involvement, and review helpfulness in e-commerce, offering insights for online retailers and platform developers to enhance consumer decision-making.

Synergizing stakeholder collaboration for value co-creation in China's prefabricated decoration diffusion: A tripartite evolutionary game perspective

The emerging prefabricated decoration (PD) sector in China offers a compelling avenue for revolutionizing the construction industry, aligning with the imperatives of sustainability and industrialization. However, the outlook for the diffusion of PD in China's construction industry is less than promising. The development of PD is closely related to its value creation and the intricate interplay of stakeholder strategies and their ramifications on PD's value co-creation necessitates thorough exploration. Based on evolutionary game theory, this study elucidates the dynamic interactions among local governments, developers, and decoration contractors in China's evolving PD landscape. A tripartite evolutionary game model was established, investigating the evolutionary stable equilibriums and the corresponding strategies. Then, an empirical analysis in Chongqing City validates the game models and primary conclusions. Scrutinizing subsidy thresholds, local subsidy biases, PD proportion in prefabrication, and binary innovation allocation, the research unveils nuanced insights pertinent to boosting PD's value co-creation. Findings advocate an assembly rate threshold of subsidy (65%–70 %) and a shift towards incentivizing decoration contractors to catalyze PD adoption. Additionally, excessive PD proportion and immature product investments may hinder industry development, prompting stakeholders to recalibrate strategies dynamically. These findings characterize the mechanisms of stakeholder value co-creation during the PD diffusion, enriching the implications of value co-creation theory in the emerging industry of the construction sector. They also furnish stakeholders committed to promoting the diffusion of PD in the domestic and international construction sectors with practical strategic guidance, particularly tailored for cities in the early stages of PD development.

Investment Willingness and Behavior Choice of the Middle-Class Families in China in the Future

Based on the survey data of the middle-class families from 20 cities in China, this paper discusses the investment willingness and behavior choice of the middle-class families in China in the future four years by means of mathematical statistics analysis. The study found that within 1 to 12 months in the future, the middle-class families will have a positive desire to invest inside the region (province). Within 12 to 24 months in the future, the middle-class families will have a strong desire to invest outside the region (province). On the other hand, in the future four years, the investment choices of the middle-class families will also change. Real estate investment, health investment, education & training will become the main investment mode of the middle-class families. The investment in high-risk financial products will be the choice of some middle-class families.

Are there generalizable patterns in line extension performance?

PurposeNew product introductions, particularly line extensions (LEs), are common in consumer goods categories. Despite their commonality, the success of LEs are not guaranteed. The purpose of this study is to provide brands that introduce LEs a benchmark about what success to expect.Design/methodology/approachThis study investigates the success of 36,994 LEs in each quarter for the first three years after introduction. Four indicators are calculated using consumer panel data to benchmark how long LEs survive (failure rate), how competitive they are in the category (market share) and how they are adopted by category buyers (penetration and repeat buyer rate).FindingsMost LEs survive after the first year, but many cease to exist or perform well in the long term. Around 50% of LEs fail a year after launch, but this failure rate halves once seasonal LEs are removed. Failure rates start to approach 80% after three years. Most LEs do not perform better than existing products. Around three in four LEs have a market share or penetration near or below the category norm. Although this percentage decreases the longer after launch, most LEs are still below the category norm.Practical implicationsThese new product success benchmarks provide guidelines to practitioners about what success the “typical” LE will achieve. This research can help guide new product investment decisions because it provides context on what is feasible to achieve.Originality/valueFour market success measures are used, a departure from past benchmarking research which uses practitioner evaluation on metrics seldom used in practice. The authors provide guidelines about when and how to measure LE and new product success more broadly.

The impact of national savings on economic development: a focused study on the ten poorest countries in Sub-Saharan Africa

The purpose of this study is to examine the impact of national savings on economic development, as measured by the Human Development Index (HDI), Inequality-adjusted HDI (iHDI), and Multidimensional Poverty Index (MPI), in ten of the poorest countries in Sub-Saharan Africa. The study employs a sequential Generalized Method of Moments (GMM) analysis to address potential endogeneity issues and account for the dynamic nature of the relationships, covering the period from 2009 to 2019. The findings reveal a complex relationship between national savings and the selected development indicators. While national savings exhibit positive impacts on HDI and iHDI, the results are not consistently statistically significant across all the sequential models. However, the analysis suggests that national savings have a positive influence on reducing multidimensional poverty, as measured by MPI, particularly when effectively channeled into productive investments. The study also highlights the significant positive impact of government expenditure and foreign direct investment (FDI) on human development, underscoring the importance of strategic public investments and foreign capital. The results suggest that while national savings are crucial, their effective utilization is essential for enhancing human development indices. Strategic investments in public goods and foreign capital are also important. The mixed effects of inflation and official development assistance (ODA) emphasize the need for stable economic policies and effective utilization of foreign aid. The modest positive impact of institutional quality suggests that improvements in governance and institutional frameworks can contribute to human development. The findings underscore the need for policies promoting financial inclusion, efficient public expenditure, foreign direct investment, and stable macroeconomic conditions to leverage national savings for economic development. The study’s findings provide valuable insights for policymakers in Sub-Saharan Africa, highlighting the need for comprehensive strategies that leverage national savings, public expenditure, and foreign investment to drive sustainable economic development and poverty reduction.

Pricing and Inventory Decisions for the Apparel Industry Under a Carbon Neutrality Target with Green Investments and Recycling Efforts

The apparel industry is the second largest source of pollution globally, following only the petrochemical industry in terms of environmental pollution caused by production, sales, and consumption processes. Low-carbon, environmentally friendly, and energy-efficient production and consumption methods are crucial pathways for the apparel industry to achieve carbon neutrality targets. Therefore, considering green investments in apparel products and the recycling of discarded apparel, this paper investigated the inventory and pricing optimization decisions of apparel enterprises within the context of a carbon neutrality target. The results indicated that green investment or recycling can effectively increase the total profits of the apparel brand. Due to the cumulative effect of comprehensive environmental strategies, apparel brands achieve greater profits when simultaneously adopting both green investments and recycling efforts compared to implementing either one alone. Green investments focus on reducing the environmental impact during production by minimizing resource consumption and emissions from the source, while recycling emphasizes product reutilization, effectively extending the utilization cycle of resources. By implementing these two strategies, brands not only reduce the negative environmental impacts during production but also maximize resource reuse throughout the product lifecycle.

Gold Production and the Global Energy Transition—A Perspective

Gold is neither a critical mineral nor a metal that is central to the global energy transition in terms of demand from new energy production technologies. Yet, gold is unique among mined commodities for its role in financial markets and for its global production footprint including in numerous developing economies. Since the production of gold incurs CO2 emissions and other environmental risks including water pollution and land degradation, gold producers seek to adopt clean production solutions through electrification and renewable energy adoption. Further, gold’s unique role as a store of value creates new potential green business models in gold, such as the digitalisation of in-ground gold inventories, which can further reduce negative environmental externalities from gold mining. A net-zero emissions, future global gold industry, is possible. Major gold producers are targeting net-zero Scope 1 and 2 emissions by 2050, coupled with a lower overall environmental footprint to meet heightened societal expectations for cleaner production. An analysis of emissions data from Australian gold mines shows systematic differences between mining operations. Further clean energy investment in gold production is required to reduce emission levels towards the target of net zero.

Production or transmission investments? A comparative analysis

AbstractThe European electricity market is moving towards an integration process, and to facilitate that integration and the flow of electricity in that market, the European Transmission System Operator proposes different investments in transmission and production capacities. I develop a model of imperfect competition to study those investments, and I identify the economic forces that determine the equilibrium price and the flow of electricity: The size and the competitive effects. I prove formally when those forces operate simultaneously or independently, and how they determine consumers’ surplus and suppliers’ profits. I prove that an investment in transmission capacity outperforms an investment in production capacity by maximizing consumers’ welfare, but the performance in terms of suppliers’ profits is ambiguous.

US Critical Mineral Policies and Alliance Strategies in an Age of Geopolitical Rivalry

We examine the geoeconomic strategies of the US regarding critical minerals through the lens of geopolitical rivalry with China. Chinese companies, mostly state-owned enterprises, play a prominent role in the extraction and processing of minerals critical to the energy transition. Drawing on the balance of power theory, we argue that the US, the incumbent hegemon, can employ both domestic policies and alliance-building strategies to counterbalance China’s dominance in critical mineral sectors. Empirically, we first assess the nature of US domestic policies with respect to promoting domestic critical mineral production and restricting foreign investment in the extractive sectors through investment screening measures, and then assess the degree to which the US has relied on Five Eyes alliance partners to achieve common strategic goals. We find evidence that the US uses a multifaceted geoeconomic approach involving domestic policies and alliance strategies to counterbalance China’s dominant position in critical mineral supply chains.

Do local government investment preferences influence renewable energy technology innovation? Evidence from China

Local government investment can influence renewable energy technology innovation (RETI). Based on the panel data of 30 provinces in China from 2007 to 2019, this paper uses fixed effect models, partial linear generalized function coefficient models, and other methods to test the impact of local government investment preferences (LGIP) on RETI. The results are: (1) Productive investment preferences significantly inhibit RETI. (2) The impact of productive investment preferences on RETI is heterogeneous across economic development stages and regions. (3) With economic growth, the negative impact of productive investment preferences on RETI gradually decreases. The findings suggest that local governments should adjust investment patterns and appropriately reduce productive investment to improve RETI.

How Numerical Cognition Explains Ambiguity Aversion

Abstract Consumers generally prefer precise probabilities or outcomes over imprecise ranges with the same expected value, a bias known as “ambiguity aversion.” We argue that two elementary principles of numerical cognition explain great heterogeneity in this bias, affecting consumer choices in many domains where options are characterized by varying levels of uncertainty (e.g., lotteries, discounts, investment products, vaccines, etc.). The first principle, the “compression effect,” stipulates that consumers’ mental number lines are increasingly compressed at greater number magnitudes. This alone suffices to predict ambiguity aversion as it causes a midpoint (e.g., $40) to be perceived as closer to the upper bound of a range (e.g., $60) compared to its lower bound (e.g., $20). Furthermore, as the compression effect distorts the mental number line especially at lower numbers, it follows that ambiguity aversion should decrease around greater numbers. The second principle, the “left-digit effect” causes a range’s relative attractiveness to decrease (increase) disproportionately with every left-digit transition in its lower (upper) bound, thus increasing (decreasing) ambiguity aversion. Due to the overall compression effect, the impact of the left-digit effect increases at greater numbers. We present 34 experiments (N = 10,634) to support the theory’s predictions and wide applicability.

Нейросетевой кластерный анализ устойчивого развития экономики регионов Российской Федерации в аспекте принципов ESG

The sustainable development of the innovative economy in the regions of the Russian Federation is researched. From this position, the changes in the commissioning of capacities for the protection of water resources and atmospheric air from pollution, as well as the renewal of forests in Russia for the period 2017–2022 are presented. Taking into account the importance of responsible investment, investments in fixed assets aimed at environmental protection and rational use of natural resources of the Russian Federation in 2022 are given. The relevance of the research is due to the progress in the achievements of science and technology, as well as the existing strong competition. This requires the promotion of creative concepts in the management of sustainable socio-economic development of Russia. Such concepts may be based on consideration of ESG criteria: Environment — environment, Social — social development, Governance — corporate governance. In order to reduce the heterogeneity of the socio-ecological development of Russia, the multifactorial task of strategic management on the formation of a methodology based on ESG principles is analyzed. The authors propose a promising and productive method for solving multifactorial problems — neural network cluster analysis using information technology. It allowed us to distribute the regions of the Russian Federation into six cluster formations characterized by different levels of development in the perspective of ESG features according to a set of 11 indicators. The structure of clusters detailing the entry of Russian regions into them is given. The average values of the studied indicators of sustainable innovative development of the regional economy in each of the clusters and in the whole country are shown. It follows from the results of the work that the management’s focus on the synthesis of ESG principles and the productivity of responsible investment will become important components in the formation of strategies for the innovative development of the Russian economy. This will be one of the key factors in strengthening the economic security of the Russian Federation.

Environmental judicial reform and corporate investment behavior — Based on a quasi-natural experiment of environmental courts

Ensuring the effectiveness of environmental legislation and regulations necessitates enhancing the professional caliber of the environmental judiciary. Utilizing a multi-period difference-in-differences model, we explore the impact of environmental judicial reforms, exemplified by the establishment of environmental courts, on corporate investment behavior. We find that firms in regions with established environmental courts significantly increase their environmental investments and productive investments, while financial investments remain unaffected. Mechanism testing reveals that the environmental court affects corporate investment by strengthening local government environmental enforcement and promoting public environmental participation. Furthermore, the marginal effect of environmental courts is more pronounced in regions with fewer environmental regulations and lower economic development levels, as well as in state-owned enterprises. Compared to collegiate benches, environmental resources judicial tribunals exert a greater influence on corporate investment behavior. This study adds to the micro-economic analysis of environmental judiciary by providing empirical evidence on how formal institutional frameworks impact corporate investment behavior.

The slowness of language, the speed of capital: conflicting temporalities of the “green transition” in the Swedish north

Abstract Following substantial investments in battery production and fossil-free steel, a few select places in northern Sweden are currently undergoing rapid economic and cultural changes. The aim of this article is to explore the role language education plays for three different groups of (im)mobile subjects – refugees, labor migrants, and cosmopolitan elites – in the ongoing social transformations. By using the time-consuming and ideologically charged social practice of teaching and learning languages as a lens, it is argued that although framed as a sustainability project, the pace of the transformation is set by the accelerating logic of capitalism, posing a challenge to the democratic planning of inclusive local communities, as well as to societal subsystems characterized by much slower temporal regimes. Hence, although Sweden is committed to a “just transition” as part of the Paris Agreement, some are obviously benefiting much more than others from this transition. This paper further highlights the potentially high costs for the local communities that “win” the bids for the new green industries. Apart from considerable economic costs in the present, another result might also be increased social stratification and weakening social cohesion in the long term.

Green production investment policy and financing format selection for a capital-constrained manufacturer

This paper discusses the financing strategy and green production investment decisions within a green supply chain consisting of a capital-constrained manufacturer and a retailer. The paper first develops a game model between the manufacturer and the retailer based on the manufacturer’s investment strategies and financing choices, including bank financing and retailer credit financing. Then, a comparative analysis is conducted on the optimal financing decisions of the manufacturer between the two choices. The results show that with sufficient initial capital, the manufacturer opts for green production. In scenarios with insufficient initial capital, the optimal financing-investment strategies are contingent upon financing rates, initial capital, and investing effects. When the manufacturer selects common products, the requirements for financing interest rates in bank financing are more relaxed. The requirements for financing interest rates of retailer credit financing are more relaxed when green products are selected. In addition, the manufacturer tends to select retailer credit financing when the difference in financing rates is small or when the initial capital is limited. Moreover, the choice of financing format for green products should also factor in the investment effect. Finally, the paper explores the manufacturer’s hybrid financing strategy and operational strategy when producing two types of products.