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This empirical study uncovers emotional sensemaking factors that cause changes in management perceptions about wicked strategic problems under dynamic complexity. These perception changes improve understanding of, and solutions to, the wicked problem.

Senior managers from three large organizations in different sectors participated in gaming simulation workshops. The strategic issues at stake were intractable and divisive. Qualitative methods captured participants' perceptions of the problems and the dynamic complexity that they faced and how they changed.

Flawed management perceptions were revised as sensemaking processes were catalyzed by emotions of shock/surprise that came from experiencing unexpected stakeholder conduct within a simulation. The plausibility of the conduct was strengthened because managers were role-playing stakeholders. The shock/surprise emotion uncoupled attachment to entrenched beliefs, leading to a willingness to revise the flawed perceptions. The changed perceptions created new insights for a solution to the wicked problem.

Practical implications are how management practitioners can improve the tackling of wicked strategic problems through the use of shock and surprise in a gaming simulation.

This research extends theory on the role of emotions in sensemaking under dynamic complexity. The authors uncover how a hierarchy of managers' emotions used in sensemaking explains the catalytic effect of the shock and surprise of unexpected stakeholder conduct on revisions to their perceptions of the outcomes of the dynamic complexity.

A state space representation of a linearized DSGE model implies a VAR in terms of observable variables. The model is said be non-invertible if there exists no linear rotation of the VAR innovations which can recover the economic shocks. Non-invertibility arises when the observed variables fail to perfectly reveal the state variables of the model. The imperfect observation of the state drives a wedge between the VAR innovations and the deep shocks, potentially invalidating conclusions drawn from structural impulse response analysis in the VAR. The principal contribution of this chapter is to show that non-invertibility should not be thought of as an “either/or” proposition – even when a model has a non-invertibility, the wedge between VAR innovations and economic shocks may be small, and structural VARs may nonetheless perform reliably. As an increasingly popular example, so-called “news shocks” generate foresight about changes in future fundamentals – such as productivity, taxes, or government spending – and lead to an unassailable missing state variable problem and hence non-invertible VAR representations. Simulation evidence from a medium scale DSGE model augmented with news shocks about future productivity reveals that structural VAR methods often perform well in practice, in spite of a known non-invertibility. Impulse responses obtained from VARs closely correspond to the theoretical responses from the model, and the estimated VAR responses are successful in discriminating between alternative, nested specifications of the underlying DSGE model. Since the non-invertibility problem is, at its core, one of missing information, conditioning on more information, for example through factor augmented VARs, is shown to either ameliorate or eliminate invertibility problems altogether.

In an intertemporal decision framework, borrowing and wealth holding decisions will incorporate information relevant to future income realizations. One channel for monetary and real disturbances to influence real activity is through revised anticipations of future income. In this study, evidence was uncovered for contemporaneous nominal shock effects on changes in household leverage with nominal and real shock effects uncovered for the growth of nondurables and services consumption and real financial wealth holdings. Evidence was found for potential opportunities to use short‐run monetary policy to offset the impact of sectoral production shocks on the growth rate or the volatility of the growth rate in consumption. The monetary shock would have to be opposite in sign to the sectoral production shock. A similar feature was found for the financial asset holdings. Evidence was uncovered for volatility and growth rate trade‐offs.

This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies.

This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context.

Managers in firms fear for their own social and firm standing, and are therefore less able to change direction or admit mistakes unless shocked out of their intransience.

The briefing saves busy executives, strategists and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

This study aims to provide new explanation of the new issue puzzle.

This study uses market implied cost of capital (ICC), rather than ex post realized returns, as proxy for ex ante expected returns, and sheds new light on the question why initial public offering (IPO) firms underperform the market within a 3–5 years period after the offerings.

Using ICC, the author finds that the market expects to earn higher risk premium for new listing firms than similar firms, which is contradictory to the documented new issue puzzle. The higher expected returns come from higher idiosyncratic volatility for newly listed firms, which are young and have more growth opportunities. The author also reports that investors are negatively surprised by lower-than-expected performances of newly listed firms.

The author’s results provide new empirical evidence that the new issue puzzle does not exist. Previous results observed IPO firms' under-performance is attributable to that ex post realized returns are a noisy proxy for ex ante expected returns, especially for newly listed firms with limited information.

This study aims to analyze low-cost-carrier (LCC) passengers’ comments about their flight experience on Asian LCCs.

A netnography approach was used to review and content analyzed 230 LCC passengers’ negative feedback on the TripAdvisor website.

LCC service failures generated 17 different negative emotions; among them, shock, disappointment and surprise were the most frequent emotions felt by passengers.

Maintaining a high level of customer service and ensuring easy access to information reduces LCC passenger’s negative emotions and meets LCC passengers’ service expectations and satisfaction. This study provides guidelines for the LCCs management who want to implement a netnography technique as a marketing research strategy.

A better understanding of this concept will help the LCCs industry to build a robust business model than competitors, maintain their competitive advantages in the global market and develop effective marketing strategies to attract more passengers.

本文旨在分析低价航空公司乘客对他们在亚洲低价航空飞行体验的评价。

本研究使用网络志方法审查和内容分析了230名低价航空乘客在TripAdvisor网站上的负面评价。

低价航空公司的服务失误共产生了17种不同的负面情况。其中, 震惊、失望、惊讶为乘客最常感受到的情绪。

保持高水平的客户服务并确保其轻松获取有效信息可以减少低价航空公司乘客的负面情绪, 提高他们的服务期望和满意度。本研究为拟实施网络志技术作为营销研究策略的低价航空公司管理人员提供了指导意见。

更好地理解这一概念将有助于低价航空行业建立起比竞争对手更稳健的商业模式, 保持其在全球市场的竞争优势, 并制定有效的营销策略以吸引更多乘客。

Sevicio de aerolineas: problemas con provedores de bajo costo y experiencias emocionales de pasajerosResumen

Este estudio analizó los comentarios sobre la experiencia de vuelo de los pasajeros de las aerolíneas de bajo costo (LCCs, por sus siglas en inglés) de Asia.

Se utilizó un enfoque de netnografía para revisar y analizar el contenido de los comentarios negativos de 230 pasajeros de LCCs en el sitio web de TripAdvisor.

Las fallas en el servicio de las LCCs generaron 17 emociones negativas diferentes; entre ellas, conmoción, decepción y sorpresa fueron las emociones más frecuentes que sintieron los pasajeros.

Mantener un alto nivel de servicio al cliente y garantizar un acceso fácil a la información reduce las emociones negativas de los pasajeros de las LCCs y cumple con sus expectativas de servicio y satisfacción. Este estudio proporciona pautas para los gerentes de las LCCs que desean implementar una técnica de netnografía como estrategia de investigación de mercados.

Entender mejor este concepto ayudará a la industria de las LCCs a construir un modelo comercial más sólido que el de sus competidores, mantener sus ventajas competitivas en el mercado global y desarrollar estrategias de mercadotecnia efectivas para atraer a más pasajeros.

Aerolíneas de bajo costo (LCC), emociones negativas, falla en el servicio, destino turístico

This study aims to shed light on employees' emotional status during the culmination stage of leadership succession.

An inductive research design is adopted, relying on the qualitative data collected from semi-structured interviews conducted with participants.

The qualitative data analysis revealed that subordinates are shocked anytime new leadership practices, contradicting the previous ones that they were used to, are initiated by the successor. Moreover, anger is found to be the dominant negative emotion exhibited by the subordinates during the culmination stage, given that they are nostalgic to the practices of their old transformational leader.

The value of this study lies in its longitudinal qualitative nature, assessing affective response during an organizational change, where subordinates are attempting to digest the change. It adds to the existing literature on emotions during leadership succession, thus assisting people in key managerial positions to better assess the situation and channel their subordinates' negative emotions into a more positive affect while supporting them all the way through.

This paper surveys the treatment of expectations in estimated Dynamic Stochastic General Equilibrium (DSGE) macroeconomic models.

A recent notable development in the empirical macroeconomics literature has been the rapid growth of papers that build structural models, which include a number of frictions and shocks, and which are confronted with the data using sophisticated full-information econometric approaches, often using Bayesian methods.

A widespread assumption in these estimated models, as in most of the macroeconomic literature in general, is that economic agents' expectations are formed according to the Rational Expectations Hypothesis (REH). Various alternative ways to model the formation of expectations have, however, emerged: some are simple refinements that maintain the REH, but change the information structure along different dimensions, while others imply more significant departures from rational expectations.

I review here the modeling of the expectation formation process and discuss related econometric issues in current structural macroeconomic models. The discussion includes benchmark models assuming rational expectations, extensions based on allowing for sunspots, news, sticky information, as well as models that abandon the REH to use learning, heuristics, or subjective expectations.

In this chapter, the authors ask two questions: (i) Is the conduct of monetary policy stable across time and similar across major economies? and (ii) Do policy decisions of major central banks have international spillover effects? To address these questions, the authors build on recent semi-parametric advances in time-varying parameter models that allow us to increase the vector autoregressive () dimension and to jointly model three advanced economies (USA, UK and the Euro Area). The main reduced-form finding of this chapter is an increased connectedness between and within countries during the recent financial crisis. In order to study policy spillovers, we jointly identify three economy-specific monetary policy shocks using a combination of sign and magnitude restrictions. The authors find that monetary policy shocks were larger in magnitude and more persistent in the early 1980s than in subsequent periods. The authors also uncover positive spillover effects of policy between countries in the 1980s and diminished, and sometimes negative ‘beggar-thy-neighbour’ effects in the second half of the sample. Moreover, during the 1980s, the authors find evidence for policy coordination between the Federal Reserve, the Bank of England and the European Central Bank.

Argues that co‐operative education allows students to acquire essential practical skills through exposure to the real world. Uses a qualitative approach to reveal factors students perceive as influencing their experiences. Study methodology allowed students to experience empowerment through participation in the study.