In this introduction we examine the role of wars and economic crises as socially constructed openings for change. We attempt three things:
You are not able to control all endogenous business factors.
It is important to digest how these factors affect your unique business situation so you can implement strategies and changes building a stronger company.
Endogenous Business Factors Endogenous factors are factors found within a business model that pertains to the economy pertaining to a specific product. Many businesses have natural annual business cycles where demand is higher at certain periods and lower at others.
As demand goes up in the market, prices may also rise. Think about gas prices around major travel holidays such as Memorial Day. Prices go up because the cyclical demand is up. This is an endogenous business factor along with location and supply that might affect the pricing of gas in any one gas station.
Exogenous Business Factors To define exogenous factors means looks beyond the internal models of pricing and looks for outside reasons that affect the business. These are external shocks to the business model. In the situation of a gas station, while the holiday travel schedule increases demand based on cyclical trends, the overall cost of gasoline could be affected by oil reserve prices, conflicts in the Middle East or disasters such as oil tanker accidents leading to tremendous losses of raw materials for gasoline.
These external factors could drive prices up regardless of the internal factors at play. State, city and federal taxes are also exogenous factors that affect business models. Two companies selling the same product with the same exogenous factors posing obstacles might have very different results because of the endogenous factors.
For example, two companies might sell solar panels in Oregon. Both face the same endogenous factors or high-rainfall and cloudy days limiting solar cell power capture, thus reducing sales. If one company focuses on a solution that captures enough power in a storage battery for extended cloudy days, it has given itself an endogenous advantage.
However, if the second company is able to get the same battery made locally rather than overseas, the second company is not subject to potential tariffs and restrictions — an exogenous development that factors into cost and competition.2 impact.
Hence the outcomes (of price shocks) could be because of both exogenous shocks (such as crop failure) as well as endogenous shocks (because of policy responses). Do Business Cycles Cast Long Shadows?
3 implications for several features of the business cycle. It is consistent with the time series evidence of output without relying on exogenous technology shocks and it.
We identify important interactions with exogenous shocks. In more turbulent economic times, employment protection systems can affect labor market performance for some periods even after the shock has subsided. Market Exposure and Endogenous Firm Volatility over the Business Cycle (), a literature has interpreted the cyclical changes in ﬁrm-level risk as exogenous shocks movements in ﬁrm-level risk represents an endogenous response to ﬁrst-moment shocks.
Countercyclical Endogenous Uncertainty Shocks, Efficiency Wages and Procyclical Precautionary Labor Productivity Jean-Michel GRANDMONT November 15, Countercyclical Endogenous Uncertainty to postulate exogenous (unexplained) stochastic shocks to either the global 1.
stages of development due to various endogenous and exogenous shocks related to unexpected market, and cash flow events. In some case, however, these types of organizations are able to remain intact after such shocks even without additional financial capital injections or external mediation.