Alec Levenson

Do Firms Get the Financing They Want? Measuring Credit Rationing Experienced by Small Business in the U.S

This paper measures the extent to which small businesses in the United States in the late 1980s were able to access the external credit finance they desired. We argue that a comprehensive definition of credit rationing must account for both (a) creditworthy firms that apply for and are denied financing, and (b) creditworthy firms that decide not to apply for desired external financing, given expectations about how long it may take to obtain financing and the evolution of investment opportunities.Data from a national survey of small businesses shows that only 2.14 percent of firms did not obtain the funding for which they applied in 1987–88. Another 2.17 percent may have faced some short-run constraints on investment: they were initially denied by lenders but received the credit for which they applied by the end of the sample period. Finally, an additional 4.22 percent of firms are estimated to have been discouraged from applying because of expected denial.Constrained firms are smaller, younger, and more likely to be owned by their founders than those firms that successfully applied for external finance. The total number of credit constrained firms seems quite small, particularly because we cannot distinguish empirically between creditworthy and noncreditworthy firms. Thus the extent of true credit rationing appears quite limited.

Measuring the Relationship Between Managerial Competencies and Performance

The use of competency systems to evaluate, reward, and promote managers has become commonplace in many organizations in recent years. Yet, despite their popularity, there is little evidence that competency systems increase managerial effectiveness. In this study, we estimate the relationship between managerial competencies and performance at both the individual and organizational unit levels. We find evidence that competencies are positively related to individual-level performance and that individual managerial performance may be increased by mentoring on a competency system. The evidence of a link between competencies and unit-level performance is weaker.

The Role of Informal Finance in Household Capital Accumulation: Evidence from Taiwan

Economies that experience rapid growth also experience major changes in their consumption patterns, particularly for consumer durables. This paper studies the diffusion of durables in Taiwan between 1977 and 1991. The authors focus on the link between household accumulation of durables and participation in informal financial institutions. While growth in per capita income in Taiwan has been great, many households still rely on traditional forms of finance. The authors test the idea that rotating savings and credit associations, which are found worldwide, exist to lower the cost of saving for durables. Their analysis finds evidence of that link. Copyright 1996 by Royal Economic Society.

The anatomy of an informal financial market: Rosca participation in Taiwan

Abstract Little is known about informal financial markets in developing countries. This paper analyzes participation in rotating savings and credit associations using a national household survey from Taiwan. We find that participation is highest among high-income households. There is some evidence that income stability may play a role as well. Life cycle differences suggest a role in funding durables purchases. Our evidence indicates that roscas may be an alternative savings device to the formal financial sector.

Extra-role behaviors among temporary workers: how firms create relational wealth in the United States of America

We examine temporary workers’ differential extra-role behaviors (ERBs) towards their client and employer; if this varied with the motivation of the worker for being temporary, whether these ERBs are affected by firms’ relationship management practices; and whether the ERBs aimed at the client and the employer impact subsequent outcomes. Results showed that temporary workers’ motivations are differentially related to agency and client directed ERBs. Agency ERBs were related to longer tenure with the agency, while client ERBs were associated with faster wage growth and more hours worked per week. Organizational relationship management practices elicit different client and agency directed ERBs.

Harnessing the power of HR analytics

Analytics enable HR to make strategic contributions, but not all analytics offer equal insights. Alec Levenson compares the usefulness of ROI, cost‐benefit, and impact analysis. He also explains why the time is right for HR to build an HR analytics centre of expertise and create a foundation of analytic skills across the function.

Do consumers respond to future income shocks? Evidence from social security reform in Taiwan

Abstract A prediction of the basic permanent income hypothesis/life cycle model is that an unexpected increase in future income produces an immediate increase in current consumption. This paper tests that prediction using data from Taiwan. The 1985 Labor Standards Law granted all employees in covered industries a windfall retirement/severance benefit. My results indicate that consumption did not increase immediately for those who were granted the windfall, relative to those who received no windfall. Moreover, consumption for those receiving a greater windfall did not increase relative to those who were granted less.

The Economic Approach to Personnel Research

We compare the economic approach to research on personnel and organizational design to approaches from behavioral disciplines. Instead of a survey of the field, our emphasis is on topics which are important in organizational research outside of economics, yet have been little emphasized by economics. We contend that many of these topics hold great promise for insights from the economic approach. In some cases we sketch ways in which economists can approach these topics. We also briefly discuss empirical methods in personnel economics.

The Role of Agricultural and Female Labor Mobility in Taiwan??s Industrialization: 1976-91

The period 1976-91 in Taiwan was one of rapid economic growth. Agricultural employment fell from 29% to 13% of the workforce, while the employment rate for prime-age females increased from 43% to 55%. These figures suggest widespread net movements of labor out of agriculture. In reality the net increase in nonagricultural jobs was filled by new labor-market entrants, not by net transfers of labor out of agriculture. Some women from agricultural households transferred into manufacturing. However, their role in fueling the industrial labor boom was dwarfed by the employment increases for women from nonagricultural households. Copyright 2000 by Blackwell Publishing Ltd

Optimizing Incentive Plan Design: A Case Study

We study effects of a firms attempt to optimize an existing incentive scheme to increase sales growth for direct store delivery workers. Before optimization workers reported Ratchet Effects that lowered productivity. The altered incentive plan offered higher compensation for increased sales relative to a sales growth target, and lower compensation for failing to meet the target. We gathered data on performance and attitudes at pilot and control sites before and after the change. Relative to control sites, sales growth increased in the pilot sites by two percent, a meaningful contribution to firm profits. We find no change in distortion of effort or manipulation of the performance measure. Workers did not substantially change number of hours worked, though allocation of time across tasks changed slightly. Despite increased productivity, workers continued to report Ratchet Effects after the change. We also find that an unplanned price increase midway through a fiscal year affected the extent of Ratchet Effects that year.