skip to navigation skip to content


Most of our working papers are available online. Please browse by year via the submenu on the left.

All working papers are available for purchase in hard copy from publications at £5 per paper including postage and packaging. Contact to join our quarterly email alert, order publications in hard copy, or request further information.

Download the full list of working paper abstracts (pdf, 721KB)

WP222: Insider Dealing & Market Abuse: The Financial Services & Markets Act 2000

Kern Alexander

The Financial Services and Markets Act 2000 (FSMA) provides the statutory framework for the new UK market abuse regime, which became effective on 1 December 2001. The FSMA market abuse regime provides new powers to the Financial Services Authority (FSA) to sanction anyone who engages in 'market abuse', that is misuse of information, misleading practices, and market manipulation, relating to investments traded on prescribed UK markets. It also applies to those who require or encourage others to engage in conduct that would amount to market abuse. FSMA's stated objective is to fill the 'regulatory gap' by giving the FSA substantial powers to punish unregulated market participants whose market conduct falls below acceptable standards, but does not rise to the level of a criminal offence. This paper analyses the major features of both the UK insider dealing legislation contained in Part V of the Criminal Justice 1993, the FSMA market abuse regime contained in section 118 of the Act, and the proposed European Union Directive on Market Abuse that represents a significant level of convergence in European securities regulation. The paper argues that an efficient price discovery process for securities markets can be facilitated only by a comprehensive regulatory regime that provides substantive standards and rules that ensure high standards of transparency and disclosure through effective enforcement.

WP221: Who Influences Debates In Business Ethics? An Investigation into the Development of Corporate Governance in the UK since 1990

Ian Jones, Michael Pollitt

We investigate the influences behind five major investigations into corporate governance in the UK since 1990: the Cadbury, Greenbury, Hampel and Turnbull Committees, and the Company Law Review. In each case we examine the roles of business, the authorities, public opinion and events in shaping the course of the investigation, its conclusions and its impact. We do this on the basis of interviews with members of the committees and analysis of newspaper coverage of the debates. The picture that emerges is one where the process of forming the investigating committee, its membership and its mode of operation strongly influence its recommendations and effectiveness. We draw conclusions that contrast the strong influence of the accountancy and legal professions in shaping the debate and the varied influence of the authorities, the media and events.

WP220: How Do Multinationals Build Social Capital? Evidence from South Africa

Ian Jones, Chris Nyland, Michael Pollitt

This paper looks at the self-reporting of social engagement by multinational firms in South Africa, developing previous measures of social capital to fit the unique context of the multinational firm - in particular mapping the configurations of declared engagement and the firms' provision. It finds large intersectoral variation which cannot be predicted by one factor alone, and sometimes wide intrasectoral variation. In particular (and for different reasons) 'extractive' and 'industrial' sector firms - traditionally criticised for their impact on communities - and 'medical' sector firms are engaged in practices conducive to the generation of social capital.

WP219: Income Inequality in Advanced Economies: A Critical Examination of the Trade & Technology Theories & an Alternative Perspective

Ajit Singh

This paper critically examines the trade and technology theories which dominate the large and growing literature on the determinants of changes in income inequality in advanced industrial countries during the 1980s and 1990s. Both theories, despite their rather different approaches to the subject are shown to have a common premise: advanced countries have experienced a fall in the relative demand for unskilled labour and an increase in that of skilled labour. This single explanation for both phenomena has been dubbed the 'transatlantic consensus'. This paper argues that this consensus, together with the associated theories based on trade with the Third World and skill biased technological progress respectively, is analytically as well as empirically unsatisfactory. It puts forward an alternative analysis which emphasises the role of institutions (e.g. unions, minimum wages), macro-economic conditions and social norms. It naturally arrives at rather different policy conclusions from those of the orthodox economists.

WP218: University & Technology: Science & Technology Parks in the Cambridge Region

David Keeble

This paper reviews the recent development and growth of small and medium-sized high-technology firms in the Cambridge region of the United Kingdom, as an example of an innovative and R&D-focused business cluster associated with a major international university and successful local science and technology parks. It discusses the concept of a local innovation system and the role of the UK's national innovation system, before attempting to assess the strengths and weaknesses of the Cambridge model of technology transfer and innovation as a possible paradigm of linkages between university research and local high-technology SMEs.

WP217: How Banks Construct & Manage Risk: A Sociological Study of Small Firm Lending in Britain & Germany

Christel Lane and Sigrid Quack

This paper analyses the role of banks in financing SMEs in Britain and Germany. It applies a sociological institutionalist approach to understand how banks construct and manage risk, relating to SME business. The empirical analysis is based on the results of a comparative survey of a sample of British and German banks and also refers to statistical material produced by the banks themselves. The paper concludes that, even though bank-firm relations are still deeply embedded in national institutional frameworks, some tendencies towards convergence can also be observed, particularly among commercial banks from the two countries. These flow from both internationalisation and from the political influence of the EU.

WP216: Managerial Discretion & Takeover Performance

Andy Cosh, Paul Guest and Alan Hughes

We investigate the relation between long run takeover performance and board share ownership in the acquiring company for a sample of 142 UK takeovers completed between 1985-95. We find evidence of a non-linear relationship both between board ownership and post-takeover share returns. We cast the analysis in a simultaneous equations framework using non-linear two-stage least squares, and find that our results are robust to this alternative specification. The results are therefore consistent with a managerial alignment/entrenchment trade-off.

WP215: The Long-Run Performance of Hostile Takeovers: UK Evidence

Andy Cosh and Paul Guest

This paper examines the long-run pre and post-takeover performance of hostile takeovers. Bidders in hostile takeovers are not superior performers in terms of profit levels, although share returns are significantly high prior to takeover. However, in the post-takeover period hostile takeovers show significant improvements in profit returns, which are associated with significant asset disposals. In contrast, friendly takeovers do not improve profit returns and result in significantly negative long-run share returns.

WP214: Long-Run Share Performance of UK Firms Engaging in Cross-Border Acquisitions

Charlie Conn, Andy Cosh, Paul Guest and Alan Hughes

This study examines the impact of cross-border and domestic acquisitions on the long-run share returns of U.K. acquiring firms. We find evidence that the timing of cross-border acquisitions has a significant effect on post-acquisition returns. Cross-border post-acquisition returns do not differ significantly according to the country of the target company.

WP213: The Management of Pay as the Influence of Collective Bargaining Diminishes

William Brown, Paul Marginson and Janet Walsh

The management of pay in Britain has changed substantially in recent years. The paper starts with a theoretical discussion of the extent to which individual employers can exercise discretion in the management of their employees' pay. It then examines the ways in which pay is used to secure productive effort. An analysis of the influence of trade unions leads on to an examination of the diminishing influence of collective bargaining in British pay determination. The implications of this are discussed for employer pay strategies, within and between firms, and internationally. It concludes with the consequences of diminishing trade union influence for the distribution of pay.

WP212: Markets, Competition, Cooperation & Innovation

Michael Kitson, Jonathan Michie and Maura Quinn

The paper analyses the relationship between, on the one hand, markets, competition and cooperation, and on the other hand, firms' innovative behaviour, drawing on ESRC Centre for Business Research survey results. A high level of domestic competition is positively correlated with the probability of innovating. In addition, inter-firm cooperation is found to be positively correlated with firms' probability of innovating. These results suggest that it is not just the degree of competition that is important but also the nature of the competitive process. Aspects of financial market pressure - such as a take-over bid - are found to be negatively correlated with the probability of innovating, especially in relation to product innovation.

WP211: A Uniform Choice of Law Rule for the Taking of Collateral Interests in Securities: Using Private Law Approaches to Reduce Credit & Legal Risk in Financial Systems

Kern Alexander

Traditionally, securities were held, traded, and settled in direct holding systems in which owners of securities were either recorded on the issuer's register or were in physical possession of bearer securities certificates. Today, most-publicly traded securities are recorded electronically. Credit and liquidity risks arise in the context because there is uncertainty as to which legal system's rules apply to the disposition of collateral interests in securities. This legal uncertainty may lead to increased credit and liquidity risk. This paper analyses a recent Hague Conference Report that proposes a uniform conflict of law rule for determining which law should apply to the disposition of collateral interests in securities held in indirect holding systems. This paper argues that more legal uniformity across national systems is needed to devise common principles and rules for the creation, perfection, and protection of collateral interests in securities.

WP210: Changing Use of External Business Advice & Government Supports by SME's in the 1990's

Robert Bennett and Paul Robson

This paper uses cross-sectional surveys of 1991 and 1997, and a panel survey of firms surviving between 1991 and 1997, to compare the levels of use by SMEs of external business advice. The analysis demonstrates only modest changes over time in aggregate use, and these are not statistically significant. This suggests that earlier growth in external business advice services may now have plateaued. Sector differences are shown to be considerable and need to be taken account of in future analyses.

WP209: Understanding the Relationship between Manufacturing Strategy & Competitiveness: Towards a Dynamic Approach

Shekhar Jayanthi

Manufacturing firms are facing a "competitive gridlock" despite implementing strategic organisational and technological changes. Building on the product-process matrix and developments in organisational learning, we develop a two-level model that focuses on balancing the decisions related to the short-term and long-term organisational activities at both the firm and manufacturing levels dynamically. The model indicates that the system behaviour is likely to be dynamically robust as environmental uncertainty increases, suggesting that the set of drivers (practices and capabilities) of competitiveness tends to be bounded; the elements of this set are likely to be closely integrated across the two levels.

WP208: On the Determinants of Industrial Firm Failure in the UK & Russia in the 1990's

John Hunter and Natalia Isachenkova

It has been common approach to apply empirical predictors for the UK and USA to Russian data on corporate insolvency, which would appear poor practice in the context of an economy in transition. The model for Russia indicates that profitability is the dominant predictor as compared with gearing and liquidity for the UK. In the context of softer budget constraints and the common use of barter in Russian payments, the results suggest that policy makers and practitioners should pay specific attention to the profit position of companies.

WP207: Entrepreneurial Collaboration: Terms of Endearment or Rules of Engagement?

Thelma Quince

Small business research has generated little in the way of information or advice on collaborative entrepreneurship. The paper reports the findings of a survey of 106 collaborative entrepreneurs and describes their assessments of the benefits and disadvantages of co-ownership and their evaluation of the factors making for its success. The findings illustrate how those involved saw collaborative entrepreneurship in terms of economic, organisational and interpersonal relationships. Whilst the benefits of collaboration were primarily economic, the affective aspects of the close inter-personal relationship provided the 'glue'.

WP206: Collective Employee Representation & the Impact of Law: Initial Response to the Employment Relations Act 1999

Sarah Oxenbridge, Simon Deakin, William Brown and Cliff Pratten

Using data gathered primarily during interviews with managers and trade union officials, this paper examines how trade unions and employers have reacted to the introduction of the statutory procedure for union recognition in the Employment Relations Act 1999. The Act has had a substantial effect in shifting the balance of employer attitudes towards greater approval of trade unions and have accelerated the rate at which employers are redesigning their relationships with unions. Although employers are tending to restrict unions' influence over traditional issues such as pay-setting, they are increasingly seeking their assistance in implementing difficult organisational changes. The article explores the impact of such changes on trade union activity and collective representation more broadly.

WP205: Mutuality & Corporate Governance: The Evolution Of UK Building Societies following Deregulation

Jackie Cook, Simon Deakin and Alan Hughes

This paper studies the effects of deregulation following the UK Building Societies between building societies and commercial banks and introduced a procedure for the demutualisation of a building society. The main Act 1986, which opened the way for competition beneficiaries of demutualisation were corporate managers who used conversion to boost their earnings and status, and speculative investors who profited from windfall gains. Losses to borrowers and to communities most likely outweighed these private gains.

WP204: Insolvency, Employment Protection & Corporate Restructuring: The Effects of TUPE

John Armour and Simon Deakin

The statutory protection currently provided by UK law to employees during transfers of undertakings and other restructurings has been criticised on the grounds that it undermines insolvency procedures and interferes with the 'rescue' process. Case-study evidence is presented to show that while in some situations employment rights may obstruct reorganisations, in others they allow employee interests to be factored into the bargaining process in such a way as to enhance the survival chances of enterprises undergoing restructuring.

WP203: The Contract of Employment: A Study in Legal Evolution

Simon Deakin

This paper reconstructs the evolutionary path of the contract of employment in English law. It demonstrates that the contract of employment is a more recent innovation than is widely thought, and that its features owe as much to legislation as they do to the common law of contract. The master-servant model of the nineteenth century was only displaced by the modern contract of employment as a result of twentieth century social legislation and collective bargaining. The paper discusses present-day mutations in the legal form of employment in the light of this analysis.

WP202: Taking Risks in Regions: The Geographical Anatomy of Europe's Emerging Venture Capital Market

Ron Martin, Peter Sunley and Dave Turner

Over the past twenty-five years, the USA has pioneered a new technological revolution, based on large numbers of new small enterprises, financed by a dynamic venture (risk) capital market. The European Union, meanwhile, has lagged behind in this sector of economic activity, and compared to the US innovative small and medium enterprises appear to find it more difficult to get started and grow.This paper charts the growth and geographical anatomy of the emerging European venture capital market and examines its spatial development and regional implications.

WP201: The Theory & Practice of Wage Subsidisation: Some Historical Reflections

Frank Wilkinson

Economists explain welfare dependency of the unemployed and in-work poverty by the low labour market quality of the poor. Work can be made to pay by working family tax credits. But these might lower wages and price non-recipients out of the market, widening the eligibility for the wage supplementation and raising social welfare bills. This was precisely the effect of the Speenhamland system of wage supplementation of the early 19th Century which permanently affected labour markets, and attitudes to welfare and the poor. The possibility of working family tax credit having a similar effect cannot be ruled out.

WP200: Partnership, Ownership & Control: The Impact of Corporate Governance on Employment Relations

Simon Deakin, Richard Hobbs, Sue Konzelmann and Frank Wilkinson

Most large UK private-sector organisations are listed companies that are subject to intense pressures to enhance shareholder value. The question arises of whether this constrains the ability of UK managers to pursue genuine partnership arrangements with long-term stakeholders, including employees. The corporate governance system can be seen to support partnership, but in conjunction with market regulation underpinning quality standards, relative stability in product markets, and a willingness on the part of senior management to mediate between the claims of different stakeholder groups.

WP199: The Limits of Statutory Trade Union Recognition

William Brown, Simon Deakin, Maria Hudson and Cliff Pratten

The paper assesses the prospects for Britain's new statutory trade union recognition procedure in the light of empirical evidence concerning union derecognition practice in the 1990s. It is shown that in practice, the line between recognition and non-recognition was extremely blurred. A move towards more cooperative workplace arrangements, associated with a 'partnership' model of industrial relations, was common to employers in both categories.

WP198: Corporate Governance, the Limits of Rationality & Proceduralisation

John Paterson

A striking feature of theorising about corporate governance, whether from the perspective of economics or in terms of a stakeholder model of the company, is that even quite basic questions posed at the outset remain to be answered. A range of alternatives from both law and economics which this paper considers may be described as procedural theories. Including conventionalist economics and autopoiesis, these alternative theories are seen to offer tantalising possibilities of answering some of the questions currently confronting traditional approaches.

WP197: The Law & Economics of Corporate Insolvency: A Review

John Armour

After an overview of law and economics literature, this paper asks whether a solution to the common pool problem might be sought through contract, or reliance on social norms.

WP196: Enhancing Corporate Governance for Financial Institutions: The Role of International Standards

Kern Alexander and Rahul Dhumale

This paper analyses corporate governance within framework of international financial markets and examines how international standards can be applied to effectively reduce systemic risk.

WP195: External Networks & Geographic Clustering as Sources of MNE Advantages: Foreign & Indigenous Professional Service Firms in Central London

Lilach Nachum and David Keeble

This study suggests that MNE internal networks partially replace the advantages provided by external networks of indigenous professional service firms in Central London.

WP194: Why Do Business Service Firms Cluster? Small Consultancies, Clustering & Decentralisation in London & Southern England

David Keeble and Lilach Nachum

This paper compares clustering of management and engineering consultancies in central London and their growth in decentralised locations of East Anglia and South West England.

WP193: Crisis & Innovation in Japan: A New Future through Techno-Entrepreneurship?

Hugh Whittaker

This paper looks at the profound transitions Japan is currently experiencing, focusing on 'techno-entrepreneurship' and ideological currents of nationalism and internationalism.

WP192: The Macroeconomic Environment & the Size Pattern of Business Firms

Fabrizio Traù

This paper explores changes affecting the macroeconomic environment, notably global competition and market uncertainty, which have led to a gradual decrease in the average size of firms since the 1970s.