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Article
Publication date: 12 January 2023

Jia Jia Chang, Zhi Jun Hu and Changxiu Liu

In this study, a dynamic contracting model is developed between a venture capitalist (VC) and an entrepreneur (EN) to explore the influence of asymmetric beliefs regarding…

97

Abstract

Purpose

In this study, a dynamic contracting model is developed between a venture capitalist (VC) and an entrepreneur (EN) to explore the influence of asymmetric beliefs regarding output-relevant parameters, agency conflicts and complementarity on the VC's posterior beliefs through the EN's unobservable effort choices to influence the optimal dynamic contract.

Design/methodology/approach

The authors construct the contracting model by incorporating the VC's effort, which is ignored in most studies. Using backward induction and a discrete-time approximation approach, the authors solve the continuous-time contract design problem, which evolves into a nonlinear ordinary differential equation (ODE).

Findings

The optimal equity share that the VC provides to the EN decreases over time. In accordance with the empirical evidence, the EN's optimistic beliefs regarding the project's profitability positively affect its equity share. However, the interactions between the optimal equity share, project risk and both partners' degrees of risk aversion are not monotonic. Moreover, the authors find that the optimal equity share increases with the degree of complementarity, which indicates that the EN is willing to cooperate with the VC. This study’s results also show that the optimal equity shares at each time are interdependent if the VC is risk-averse and independent if the VC is risk-neutral.

Research limitations/implications

In conclusion, the authors highlight two potential directions for future research. First, the authors only considered a single VC, whereas in practice, a risk project may be carried out by multiple VCs, and it is interesting to discuss how the degree of complementarity affects the number of VCs that ENs contract. Second, the authors may introduce jumps and consider more general multivariate stochastic volatility models for output dynamics and analyze the characteristics of the optimal contracts. Third, further research can deal with other forms of discretionary output functions concerning complementarity, such as Cobb–Douglas and constant elasticity of substitution (See Varian, 1992).

Social implications

The results of this study have several implications. First, it offers a novel approach to designing dynamic contracts that are specific and easy to operate. To improve the complicated venture investment situation and abate conflict between contractual parties, this study plays a good reference role. Second, the synergy effect proposed in this study provides a theoretical explanation for the executive compensation puzzle in economics, in which managers are often “rewarded for luck” (Bertrand and Mullainathan, 2001; Wu et al., 2018). This result indicates a realistic perspective on financing and establishing cooperative relationships, which enhances the efficiency of venture investment. Third, from an empirical standpoint, one can apply this framework to study research and development (R&D) problems.

Originality/value

First, the authors introduce asymmetric beliefs and Bayesian learning to study the dynamic contract design problem and discuss their effects on equity share. Second, the authors incorporate the VC's effort into the contracting problem, and analyze the synergistic effect of effort complementarity on the optimal dynamic contract.

Details

Kybernetes, vol. 53 no. 4
Type: Research Article
ISSN: 0368-492X

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Article
Publication date: 1 May 2006

Eric C.K. Ho

The purpose of paper is to investigate the institutional features of the leasehold system of Hong Kong, which is predicated on the freedom of contract as an institutional…

1686

Abstract

Purpose

The purpose of paper is to investigate the institutional features of the leasehold system of Hong Kong, which is predicated on the freedom of contract as an institutional arrangement for land management and planning that promotes sustainable development.

Design/methodology/approach

The approach is analytical, using concepts of property rights informed by Coasian neo‐institutional economics and the ideas of Yu et al. on the Schumpeterian process in innovation.

Findings

It was demonstrated that the post‐contractual imposition of statutory planning control on the leasehold land management system in Hong Kong has adversely affected and adaptability of the leasehold system in achieving sustainability.

Research limitations/implications

This paper encourages a reinterpretation of statutory zoning in areas with a leasehold system and the reception of the land lease as a basis for innovations that help promote sustainable development.

Practical implications

This paper warns against legislative activism in planning controls as that can destroy or erode the basis for innovations that help promote sustainable development.

Originality/value

Using the idea of innovations of Yu et al. and Lai and Lorne, this paper further develops Lai theory of “planning by contract” as an alternative to “planning by edict”.

Details

Property Management, vol. 24 no. 3
Type: Research Article
ISSN: 0263-7472

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Article
Publication date: 12 November 2018

Darong Dai

The purpose of this paper is to use a variety-expanding growth model embedded in the North–South framework to study the implementation of globally desirable protection of…

192

Abstract

Purpose

The purpose of this paper is to use a variety-expanding growth model embedded in the North–South framework to study the implementation of globally desirable protection of intellectual property rights (IPRs) in the emerging South.

Design/methodology/approach

The authors use a variety-expanding growth model with innovation-led economic growth in both North and South. As usual, imitations targeted equally at Northern and Southern innovations only occur in the South, and the authors focus on the design of Southern IPR protection.

Findings

Welfare-maximizing degrees of Southern IPR protection are explicitly derived for both North and South. There tends to exist a North–South conflict on the right degree of protection. To resolve this conflict, the Southern government can grant appropriate subsides to support domestic innovators. The authors derive the right rate of innovation subsidies such that the conflict is resolved.

Originality/value

This paper represents the first attempt to deal with the North–South conflict on the degree of Southern IPR protection within the variety-expanding growth model. And the novel perspective is to relax the North–South tension on IPR protection via additionally implementing an appropriate innovation subsidy policy.

Details

Journal of Economic Studies, vol. 45 no. 6
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 14 August 2009

L.W.C. Lai, G.C. Lam, K.W. Chau, C.W.Y. Hung, S.K. Wong and R.Y.M. Li

The purpose of this paper is to develop a hypothesis for evaluating the potential contribution of planning conditions to protect the environment by reducing environmental…

943

Abstract

Purpose

The purpose of this paper is to develop a hypothesis for evaluating the potential contribution of planning conditions to protect the environment by reducing environmental complaints (ECs) in an institutional context of growing communicative planning and interpret the results of an empirical study using two received hypotheses in terms of sustainable development in the light of the actual participation of the public in influencing the formulation of planning conditions.

Design/methodology/approach

The hypothesis is tested using Environmental Protection Department EC and Planning Department zoning data. In addition, field observation of the conduct the Town Planning Board in their open sessions is made over a period of 27 months.

Findings

The hypothesis about the frequency of planning permissions and the incidence of ECs using the “received” model of Lai is refuted. The results for testing Lai's model on the relationship between Comprehensive Development Area zoning and ECs are indecisive. Though a negative correlation between zoning and complaints is established, the strength of such correlation is insignificant for each of the specified periods.

Research limitations/implications

The promise of communicative theorists about empowering the public in planning has yet to be fulfilled in terms of contribution to the shaping of planning conditions. Official suppression of addresses of locations of the occurrence of ECs does not allow the ideal hypothesis to be tested.

Practical implications

Subject to further and better qualitative research, the limitations of the new public participation law in planning for shaping planning conditions are revealed by an examination of observed facts about the time spent by the Town Planning Board in decision making and the nature of the planning conditions imposed in response to public comments.

Originality/value

The paper demonstrates an approach to evaluate the direct means of measuring the relationship between externalities and zoning with a view to interpret the contribution of planning conditions to sustainable development.

Details

Property Management, vol. 27 no. 4
Type: Research Article
ISSN: 0263-7472

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Article
Publication date: 7 October 2014

Daniel W.L. Lai, Gabrielle D. Daoust and Lun Li

The purpose of this paper is to review and discuss existing literature and available research findings related to understanding elder abuse and neglect in culturally diverse…

353

Abstract

Purpose

The purpose of this paper is to review and discuss existing literature and available research findings related to understanding elder abuse and neglect in culturally diverse communities, particularly the Chinese immigrant community in Canada. The conceptual understandings of elder abuse are examined, based upon the socio-cultural context and challenges faced by aging Chinese immigrants.

Design/methodology/approach

Previous literature and research publications related to elder abuse and neglect related to Chinese in Canada were reviewed and synthesized. Statistical information and research findings were summarized to illustrate the socio-cultural context that defines elder abuse and neglect experienced by aging Chinese immigrants in Canada.

Findings

From a culturally diverse perspective, influence of race, ethnicity, immigrant status, and cultural norms on the recognition, identification, prevention and intervention of elder abuse and neglect are important to consider. A key message for professionals working with the aging population, particularly older immigrants from ethno-cultural minority background, is that understanding the social cultural context in which elder abuse or neglect emerges is critical. For many of the aging Chinese immigrants in Canada, the socio-cultural circumstances that they have experienced, their social environment, and various barriers and challenges further prevent them from being aware of this emerging concern. Cultural norms and practices have played a critical role in their access to preventive and intervention services.

Research limitations/implications

Although this paper is not based upon a particularly empirical research study, the research and literature synthesized are both empirically and conceptually based. As indicated in the review of previous research publications on the subjective matter of elder abuse and neglect in aging Chinese immigrants in Canada is limited. Research on various issues related to elder abuse and neglect in ethno-cultural minority communities is also relatively scant. Evaluation research on prevention and intervention programs is desperately needed so as to facilitate the further establishment of best practice prevention and intervention models that are culturally appropriate and effective. While research engagement with minority groups such as the aging Chinese immigrants who do not speak English or are not familiar with the research culture in the western civilization could be challenging, academic researchers and service providers in both the mainstream and ethno-cultural minority communities should further align themselves in practice-research partnership endeavors to ensure the safety and wellbeing of the aging vulnerable individuals could be better maintained.

Practical implications

In order to provide culturally competent services, service providers should be aware of cultural differences in attitudes towards elder mistreatment, including the ways in which specific types of abuse (e.g. financial abuse) are defined within ethno-cultural communities, and the cultural values and experiences that shape these understandings and determine attitudes or barriers towards reporting, intervention, and service use.

Originality/value

This paper is a first attempt in the research community to synthesize a few critical issues related to elder abuse and neglect in the aging Chinese immigrant community in Canada. The paper has connected previous empirical findings related to Chinese older adults as well as other culturally diverse aging populations to the conceptualization of elder abuse and neglect by considering the unique socio-cultural context faced by the ethnocultural older adults.

Details

The Journal of Adult Protection, vol. 16 no. 5
Type: Research Article
ISSN: 1466-8203

Keywords

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Book part
Publication date: 15 June 2012

Lawrence W.C. Lai and Frank T. Lorne

The types of innovation considered to be Schumpeterian can be very broad. What is an innovation? According to The Advanced Learner's Dictionary (Hornby, Gatenby, & Wakefield

Abstract

The types of innovation considered to be Schumpeterian can be very broad. What is an innovation? According to The Advanced Learner's Dictionary (Hornby, Gatenby, & Wakefield, 1973, p. 545), an innovation is “something new that is introduced.” This covers both inventions and their introduction. Thus, introducing methods to a new market can certainly be a form of Schumpeterian innovation. Schumpeter, however, distinguished innovations (innovators) from inventions (inventors) (Swedberg, 1991, p. 173). He considered innovations as the prime movers in the capitalist process. Johannessen, Olsen, and Lumpkin (2001) dwell on six measures of the “newness” of an innovation based on his interpretation of Schumpeter and others, but glossed over the distinction between innovations and inventions. What, then, was Schumpeter's original formulation?

Details

The Spatial Market Process
Type: Book
ISBN: 978-1-78190-006-2

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Book part
Publication date: 1 October 2007

Edwin L.-C. Lai

In this chapter I put forward a framework to help us understand the underlying sources of national policy failures regarding intellectual property rights (IPR) protection, the…

Abstract

In this chapter I put forward a framework to help us understand the underlying sources of national policy failures regarding intellectual property rights (IPR) protection, the need for international coordination, and how the coordination should be done. I also analyze whether global harmonization of IPR standards is necessary or sufficient for achieving globally welfare-maximizing policies. Then I move on to analyze the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which is a mighty effort to coordinate IPR policies across member countries of the World Trade Organization (WTO). I discuss what TRIPS was supposed to do and what it has actually achieved, with reference to my theoretical framework. I explain that it is desirable for IPR to be included in world trade talks and be negotiated along with other trade issues. I offer analyses on the extensions of the basic model by introducing political economy and trade barriers, as well as allowing countries to discriminate against foreign firms. Finally, I comment on further potential extensions such as introduction of foreign direct investment (FDI) or licensing, parallel imports, cumulative innovations, subject matter of protection and costs of implementation. The main thrust of the basic model is that, provided that there is free trade and non-discrimination of foreign firms, there exist positive cross-border externalities as a country strengthens its IPR protection, since it raises the profits of foreign firms and the welfare of foreign consumers without causing any deadweight loss on foreign soil. This implies that national governments tend to provide too little IPR protection compared with the global optimum. The model also implies that a country with higher innovative capability and larger domestic market would provide stronger IPR. Thus, it is natural for the South to protect IPR less than the North in the absence of international coordination. These basic results largely continue to hold under various extensions.

Details

Intellectual Property, Growth and Trade
Type: Book
ISBN: 978-1-84950-539-0

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Article
Publication date: 11 September 2009

P. Ben Chou and Katia Passerini

The purpose of this paper is to integrate the empirical and game theoretical approaches to address the strategic interactions among countries in choosing their optimal levels of

2946

Abstract

Purpose

The purpose of this paper is to integrate the empirical and game theoretical approaches to address the strategic interactions among countries in choosing their optimal levels of intellectual property rights (IPRs), and to identify how these countries can reach an efficient and equitable equilibrium.

Design/methodology/approach

Because countries' decisions on which IPR standards and protections to implement are interrelated, the authors apply game theory to characterize the scenarios before and after the 1994 Agreement on Trade‐related Intellectual Property Rights (TRIPS) involving developed and developing countries.

Findings

The model shows that the pre‐TRIPS equilibrium is comprised of high‐income (H‐I) developed countries which choose a strong IPR protection while the middle‐income (M‐I) and low‐income (L‐I) developing countries choose a weak IPR standard. For countries to move from such an equilibrium to the uniformly strong IPR regime under TRIPS, it is necessary for the H‐I countries to compensate L‐I and M‐I countries that do not have the sufficient conditions to attract knowledge/technology transfer. This compensation covers IPR protection implementation costs and increased royalties for patents.

Research limitations/implications

The model proposed in this study is not complex. In reality, the payoff functions can have more variables and parameters, which, however, may also complicate the model and lower its generalizability.

Originality/value

The study explains that it is difficult for countries to reach an efficient and equitable equilibrium without the subsidies and side‐payments from the developed countries to the developing countries. It builds an important bridge between the game theoretical approach and the empirical studies of TRIPS, which can be further enriched and tested. It acknowledges that it is more likely for stronger IPR standards (as in TRIPS) to be implemented than an open source approach.

Details

Journal of Knowledge Management, vol. 13 no. 5
Type: Research Article
ISSN: 1367-3270

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Article
Publication date: 1 March 2006

Lawrence Wai‐chung Lai

The purpose of this paper is to theorise on the nature of property management broadly understood as resource management and demonstrate the actual and potential contribution of…

4735

Abstract

Purpose

The purpose of this paper is to theorise on the nature of property management broadly understood as resource management and demonstrate the actual and potential contribution of innovative property management to sustainable development.

Design/methodology/approach

The approach is analytical and backed by real life examples, using concepts of property rights informed by Coasian neo‐institutional economics and Yu's ideas on the Schumpeterian process in innovation.

Findings

There is a fast spread of gated communities in the Pearl River Delta and some private shopping centres provide public facilities and entertainment as a public relation method.

Research limitations/implications

The transformation of negative externalities into positive ones is the crux to achieve win‐win solutions to property management for sustainable development.

Practical implications

A good property manager does not simply perform the role of a passive housekeeper or management fee collector. S/he is, above all, an innovator who applies updated technology and concepts with great sensitivity to the externalities generated by or affecting the resource s/he manages.

Originality/value

This is the first paper that defines for property management a research agenda anchored in Coasian economics and demonstrate the actual and potential contribution of property management.

Details

Property Management, vol. 24 no. 2
Type: Research Article
ISSN: 0263-7472

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Article
Publication date: 1 May 2006

Lawrence Wai Chung Lai, Kwong Wing Chau, Daniel Chi Wing Ho and Frank T. Lorne

The purpose of this paper is to discuss a Coasian interpretation of a model of sustainable development for Hong Kong that incorporates three segments, namely economy, society, and…

5221

Abstract

Purpose

The purpose of this paper is to discuss a Coasian interpretation of a model of sustainable development for Hong Kong that incorporates three segments, namely economy, society, and environment.

Design/methodology/approach

The approach is analytical, using concepts of property rights informed by Coasian neo‐institutional economics and Yu's ideas on the Schumpeterian process in innovation.

Findings

First, the sustainable development criteria must be non‐dictatorial, decentralized, and compatible with market economics. The emphasis is contractarian rather than legislative or administrative. Second, the essence of segment cooperation is to create a win‐win situation rather than an “integrated” rent seeking game, which will likely result in more values being created. Third, the requirement that it be progressive over time implies that programs and policies that are duplicative need to be avoided, and innovations are to be encouraged. Fourth, the requirement of satisfying only two aspects of the three segments of cooperation implies a less stringent standard of making stepwise improvements, and thus makes entrepreneurial efforts more likely. Last, the three segments of cooperation, if practiced simultaneously and improved over time, can achieve most, if not all, the principles in the Rio Declaration without aiming at a specific principle in the Declaration.

Research limitations/implications

This paper should focus on a “win‐win” rather than a mutually exploitative approach to public participation in sustainable development promotion.

Practical implications

This paper should assist policymakers and politicians in understanding how sustainable development may be conceptually modelled.

Originality/value

The paper is the first paper that defines for Hong Kong a model of sustainable development on the basis of Coasian economics, and contrasts it with other proposed models.

Details

Property Management, vol. 24 no. 3
Type: Research Article
ISSN: 0263-7472

Keywords

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