strategic demand side response to wind power integration this paper explores the effects of allowing large price responsive consumers to provide reserves in a power system with significant penetration of wind energy a bilevel optimization model represents the utility maximization problem of a large consumer subject to a stochastic day ahead co optimization of energy and reserves that a system operator would solve to clear the market while considering wind power uncertainty an examination of the market outcomes from both an illustrative and a large scale study using this model allows analysis of a the effects of the type of behavior of the large consumer i e strategic vs competitive b limits on the amount of reserves it is allowed to provide and c variability and accuracy of characterization of wind power uncertainty

evaluating the impacts of priority dispatch in the european electricity market this paper compares the impact of the nodal pricing and european market coupling organizations on different economic agents of the power system under two main wind policies under the priority dispatch policy transmission system operators tsos must accommodate all wind energy produced which thus has the priority over energy produced by conventional plants in the no priority dispatch policy tsos can decide not to inject all potential wind power in the grid in order to limit congestion problems the effects of these two wind policies are measured by developing simple stochastic programming models that consider cases with different wind penetration levels existing capacities and endogenous investments as well as assumptions on the eu ets our computational experiments show that when there is priority dispatch nodal pricing and market coupling evolve in a similar way as long as wind penetration is not too high in contrast a significant increase of wind penetration causes the collapse of the market coupling organization while nodal pricing continues to perform well on the other hand no priority dispatch removes most of the problems resulting from market coupling which still exhibits a slightly lower efficiency than nodal pricing these outcomes do not depend on the contextual assumptions fixed capacities vs investment eu ets vs non eu ets that characterize the several cases analyzed this suggested that our policy conclusions are robust furthermore our models overestimate the flexibility of conventional plants which means that these conclusions would likely be reinforced with a more detailed model

control and performance of international joint ventures control is a critical concept for successful management and performance of international joint ventures ijvs this paper reviews and synthesizes prior studies addressing the conceptualization and operationalization of control within ijvs as well as the ijv control performance relationship the paper also presents a new conceptualization of ijv control as well as a conceptual frame work for studying control of ijvs

coordinated price maker operation of large energy storage units in nodal energy markets in this paper a new optimization framework is proposed to coordinate the operation of large price maker and geographically dispersed energy storage battery systems in a nodal transmission constrained energy market the energy storage units are assumed to be investor owned and independently operated seeking to maximize their total profit various design factors are taken into consideration such as the location size efficiency and charge and discharge rates of the energy storage units as well as the joint impact of the energy storage operations on the locational marginal prices while the formulated optimization problem is originally nonlinear and hard to solve nonlinearities are tackled both in the objective function and in the constraints and the problem is transformed into a tractable mixed integer linear program for which the global optimal solutions are found for the charge and discharge schedules of each energy storage unit both deterministic and stochastic design scenarios are addressed various case studies are presented it is observed that transmission line congestion is often but not always desirable for the coordinated storage systems locational diversity practice of arbitrage robust design self scheduling versus economic bidding and the overall power system performance are also investigated

multinationality and firm performance the moderating role of r d and marketing capabilities researchers in international business have long been interested in understanding the relationship between the multinationality of a firm and its market performance this article contributes to this research stream by incorporating firm heterogeneity in examining the multinationality performance relationship the findings based on a time series cross sectional analysis of firms from 12 different industries over a seven year period indicate that the impact of multinationality on both financial and operational performance is moderated by firm s r d and marketing capabilities

market clearing with stochastic security part i formulation the first of this two paper series formulates a stochastic security constrained multi period electricity market clearing problem with unit commitment the stochastic security criterion accounts for a pre selected set of random generator and line outages with known historical failure rates and involuntary load shedding as optimization variables unlike the classical deterministic reserve constrained unit commitment here the reserve services are determined by economically penalizing the operation of the market by the expected load not served the proposed formulation is a stochastic programming problem that optimizes concurrently with the pre contingency social welfare the expected operating costs associated with the deployment of the reserves following the contingencies this stochastic programming formulation is solved in the second companion paper using mixed integer linear programming methods two cases are presented a small transmission constrained three bus network scheduled over a horizon of four hours and the ieee reliability test system scheduled over 24 h the impact on the resulting generation and reserve schedules of transmission constraints and generation ramp limits of demand side reserve of the value of load not served and of the constitution of the pre selected set of contingencies are assessed

dynamic nonlinear income taxation with quasi hyperbolic discounting and no commitment this paper examines a dynamic model of nonlinear income taxation in which the government cannot commit to its future tax policy and individuals are quasi hyperbolic discounters who cannot commit to future consumption plans the government has both paternalistic and redistributive objectives and therefore uses its taxation powers to maximize a utilitarian social welfare function that reflects individuals true long run preferences under first best taxation quasi hyperbolic discounting exerts no effect on the level of social welfare attainable under second best taxation quasi hyperbolic discounting increases resp decreases the level of social welfare attainable when separating resp pooling taxation is optimal in stark contrast to previous studies this result implies that some individuals can actually be better off in the long run as a result of their short run impatience

a contribution to the theory of optimal utilitarian income taxation abstract the paper provides a new formulation of the mirrlees seade theorem on the positivity of the optimal marginal income tax under weaker assumptions and in a more general model the formulation of the theorem is independent of whether the model involves finitely many types or a continuous type distribution the formal argument makes the underlying logic transparent relating the mathematics to the economics and showing precisely how each assumption enters the analysis

time varying risk and long term reversals a re examination of the international evidence long term reversals ltrs have been extensively documented as existing in international markets the predictability of returns opens the question whether investors should continue to diversify across international markets such predictability also has implications for the corporate decision of where and when to raise capital this paper re examines the international evidence for long term contrarian profits using a longer time horizon than all previous studies 81 years of data from 1925 to 2005 and finds that the long term contrarian anomaly disappears when time varying conditional alphas are considered this is true even without transaction costs for the marginal trader conservative transaction costs subsume ltr profits whether returns are risk adjusted or not this suggests that benefits from actual trades on ltrs do not negate a strategy based on diversification although time varying beta has been extensively documented as ineffective in describing ltrs this paper demonstrates that it is important to control for time variation in alpha a full conditional capital asset pricing model captures the ltr premium this suggests that macroeconomic factors are important for understanding ltrs and their associated risk

stochastic security for operations planning with significant wind power generation in their attempt to cut down on greenhouse gas emissions from electricity generation several countries are committed to install wind power generation up to and beyond the 10 20 penetration mark however the large scale integration of wind power represents a challenge for power system operations planning because wind power 1 cannot be dispatched in the classical sense and 2 its output varies as weather conditions change this warrants the investigation of alternative short term power system operations planning methods capable of better coping with the nature of wind generation while maintaining or even improving the current reliability and economic performance of power systems to this end this paper formulates a short term forward electricity market clearing problem with stochastic security capable of accounting for nondispatchable and variable wind power generation sources the principal benefit of this stochastic operation planning approach is that when compared to a deterministic worst case scenario planning philosophy it allows greater wind power penetration without sacrificing security

political risk and the benefits of international portfolio diversification this paper examines the benefits of portfolio investment in the stock markets of politically risky countries by evaluating the effects of political risk constraints on the performance of a portfolio of international stocks we use monthly data on political risk ratings and stock returns for a sample of thirty six countries from april 1982 to december 1991 ex post and ex ante portfolio selection strategies are developed to assess the gains from international diversification efficient sets are derived using a quadratic programming technique we use four ex ante portfolio strategies whose optimal portfolio weights are those of the equally weighted portfolio the minimum variance portfolio the certainty equivalence tangency portfolio and the bayes stein portfolio the empirical findings based on the performance tests of jobson and korkie 1981 suggest that diversification among politically risky countries improves the risk return characteristics of optimal portfolios however the most striking benefit of the inclusion of politically risk countries in an international portfolio is the reduction in overall portfolio risk

asset stock accumulation and sustainability of competitive advantage given incomplete factor markets appropriate time paths of flow variables must be chosen to build required stocks of assets that is critical resources are accumulated rather than acquired in strategic factor markets barney barney j 1986 strategic factor markets expectations luck and business strategy management sci october 1231 1241 sustainability of a firm s asset position hinges on how easily assets can be substituted or imitated imitability is linked to the characteristics of the asset accumulation process time compression diseconomies asset mass efficiencies inter connectedness asset erosion and causal ambiguity

state capitalism and performance persistence of business group affiliated firms a comparative study of china and india business groups emerged in developing economies through direct or indirect support from the state in order to overcome a variety of institutional voids and or to further state objectives of economic growth however the efficacy of this organizational form and its associated governance structures have been debated given the dual possibility of business groups to allocate resources among its affiliates for cross subsidization or winner picking we argue that elements of the institutional environment comprising of the state s approach to organizations and the political context of these interactions vary across countries thereby influencing business groups resource allocation strategies and affecting the persistence of affiliated firms superior performance contrasting the types of state capitalism in china and india we develop and test our hypotheses we find that the effect of business group affiliation on firms superior performance persistence is stronger in a state led system of state capitalism e g china than in a co governed system e g india and that this divergence of the business group effect is weakened as affiliated firms internationalize our findings have implications for understanding business groups across institutional contexts and the influence of diversity in the types of state capitalism on organizational strategies

managerial incentives internalization and market valuation of multinational firms this paper examines the role of firm technology investment in concert with managerial incentives alignment to explain the relative market value compared to the accounting value for a multinational firm the results are consistent with internalization theory in that greater multinationality corresponds to a higher valuation of the firm if technology investment is high and the impact is even greater if managerial incentives alignment is high as well however greater multinationality alone does not correlate to a significantly greater value which differs from the tenets of imperfect capital markets theory

monopoly provision of product quality and warranties an exploration in the theory of multi dimensional screening we address the monopoly problem of designing and pricing a product line of goods distinguished by different quality and warranty levels consumers vary in their evaluations of these attributes so that the problem is one of screening it is sufficiently complex that the local approach commonly used does not work instead we use new techniques for dealing with incentive constraints between nonadjacent consumer types these techniques allow us to characterize optimal allocations that may not be monotonic in particular although the more eager types of buyer do pay higher prices and yield the monopoly higher profit they may receive lower quality or lower warranty coverage we find preference restrictions that restore monotonicity concave risk tolerance implies that warranty coverage increases in type and constant absolute risk aversion implies that quality increases in type

how optimal nonlinear income taxes change when the distribution of the population changes abstract the impacts of changing the number of individuals of a particular skill level on the solutions to two versions of the finite population optimal nonlinear income tax problem are investigated in one version preferences are quasilinear in leisure for this version it is shown that it is possible to sign the directions of change in everyone s optimal consumptions and optimal marginal tax rates in the other version preferences are quasilinear in consumption for this version it is shown that it is possible to sign the directions of change in everyone s optimal before tax incomes and optimal marginal tax rates moreover the directions of change in the optimal marginal tax rates are the same for the two specifications of preferences

stochastic unit commitment with uncertain demand response although demand response dr encourages customers to voluntarily schedule electricity consumption based on price signals the response from the consumer side could be uncertain due to a variety of reasons in this letter we study the stochastic unit commitment problem with uncertain demand response to enhance the reliability unit commitment process for independent system operators isos we use a stochastic representation of dr by scenario and each scenario corresponds to a price elastic demand curve contingency constraints are considered and in addition a chance constraint is applied to ensure the loss of load probability lolp lower than a pre defined risk level finally a sample average approximation saa method is applied to solve the problem

connections to distant knowledge interpersonal ties between more and less developed countries less developed countries benefit from being connected to technologically and economically advanced countries the well documented mechanisms for this cross national flow of knowledge all involve interfirm connections such as trade foreign direct investment fdi and alliances we examine the potential of a different mechanism interpersonal ties abroad that has only recently become practicable owing to advances in communication and transportation technologies globalization and increased migration we investigate when business knowledge obtained from interpersonal ties in more developed countries is more useful than locally sourced knowledge using a sample of south african managers we find that knowledge from more developed countries is not always more useful rather overseas knowledge is preferable when novel and accessible that is when new to the industry knowledge is needed when there is already a strong tie and when the knowledge does not involve a long discussion conversely local knowledge is preferable when new to the industry knowledge is not needed when the interpersonal tie is a weak tie and when a longer discussion is warranted this study demonstrates the value of connections between individuals in countries at different levels of development as sources of useful knowledge and suggests that international business research will benefit from exploring further the networks of individuals in addition to those of firms

uncertain outcomes of foreign investment determinants of the dispersion of profits after large acquisitions when u s firms make large international acquisitions the unpredicted component of their profits over the next five years increases with the relative size of the acquired firm degree of product diversification and reliance on r d assets the unpredicted component declines with the acquirer s size experience and previous profits transitory and longer run unpredicted components are distinguished

economic distance and the survival of foreign direct investments taking a theoretical perspective contrasting resource exploitation with resource exploration we argue that foreign direct investments fdis hazard rates are lower in countries that are either m

asset exploitation versus asset seeking implications for location choice of foreign direct investment from newly industrialized economies this study examined several hypotheses regarding the location choice of foreign direct investment from newly industrialized economies nies using a sample of 328 taiwanese firms in the analysis this study found that the firms motivations had a significant impact on the choice of their investment location developed countries vs less developed countries yet this impact was moderated by the capabilities that the firms possessed the results suggest that both asset exploitation and asset seeking aspects of investments are predictive of the nie firms location choice of investment

corporate combinations and common stock returns the case of joint ventures the gain to stockholders from mergers is well documented however there is little evidence as to whether the source of the gain is due to synergy or management displacement merger is just one of an almost limitless variety of ways in which firms combine resources to accomplish some objective a joint venture is another in addition to being of interest as an independent phenomenon because the original managements of the parent firms remain intact under a joint venture investigation of wealth gains from joint ventures provides an opportunity to isolate the management displacement hypothesis from the synergy hypothesis as the source of gains in corporate combinations our results are 1 there are significant wealth gains from joint ventures 2 the smaller partner earns a larger excess rate of return while the dollar gains are more equally divided and 3 the gains scaled by resources committed yield premiums similar to those in mergers we are inclined to interpret our results as supportive of the synergy hypothesis as the source of gain from corporate combinations this paper is an empirical investigation of the common stock returns of u s companies that enter into joint ventures with other u s companies we consider joint ventures in the context of what is by now a burgeoning literature examining the security returns of companies involved in intercorporate mergers and tender offers 1 in this context our objective is to provide evidence as to the source of the well documented gains to stockholders of firms involved in mergers and tender offers in addition joint ventures are an interesting economic phenomenon in their own right they are undertaken by many of the largest u s companies involve billions of dollars in capital expenditures annually and are subject to considerable scrutiny in the popular press in this regard our analysis provides data on what is as yet a relatively unexplored area of economic activity 2 a corporate merger represents the joining together of all the resources of two companies under a single management to accomplish some set of objectives empirical studies have found that mergers generally result in significant increases in the total market values of the merging firms with the stockholders of the

accounting for endogeneity when assessing strategy performance does entry mode choice affect fdi survival firms choose strategies based on their attributes and industry conditions therefore strategy choice is endogenous and self selected empirical models that do not account for this and regress performance measures on strategy choice variables are potentially misspecified and their conclusions incorrect i highlight how self selection on hard to measure or unobservable characteristics can bias strategy performance estimates and recommend an econometric technique that has been developed to account for this effect although this concern applies to a wide range of strategy questions to demonstrate its effect i empirically examine if entry mode choice acquisition versus greenfield influences foreign direct investment survival in specifications that do not account for self selection i find that greenfield entries have survival advantages compared to acquisitions this confirms previous findings however the significance of this effect disappears once i account for self selection of entry mode in the empirical estimates the results confirm that estimates from models that do not account for self selection of strategy choice can lead to incorrect or misleading conclusions

do country level institutional frameworks and interfirm governance arrangements substitute or complement in international business relationships interfirm relationships among partners from institutionally distant environments are subject to governance difficulties owing to the paucity of shared cognitive and regulatory frameworks we examine the potential of formal contracting and relational governance developed at the partnership level to overcome the formal and informal institutional gap at the country level empirical results from a sample of 184 international partnerships of large us firms support an overall substitutive relationship between informal institutional frameworks and interorganizational relational arrangements whereby the performance benefits of relational governance are reinforced at higher degrees of informal institutional distance contrastingly formal institutional frameworks and contractual governance are found to have a complementary relationship with performance gains from formal contracting undermined at higher degrees of formal distance

on the market impact of wind energy forecasts this paper presents an analysis of how day ahead electricity spot prices are affected by day ahead wind power forecasts demonstration of this relationship is given as a test case for the western danish price area of the nord pool s elspot market impact on the average price behaviour is investigated as well as that on the distributional properties of the price by using a non parametric regression model to assess the effects of wind power forecasts on the average behaviour the non linearities and time variations in the relationship are captured well and the effects are shown to be quite substantial furthermore by evaluating the distributional properties of the spot prices under different scenarios the impact of the wind power forecasts on the price distribution is proved to be considerable the conditional price distribution is moreover shown to be non gaussian this implies that forecasting models for electricity spot prices for which parameters are estimated by a least squares techniques will not have gaussian residuals hence the widespread assumption of gaussian residuals from electricity spot price models is shown to be inadequate for these model types the revealed effects are likely to be observable and qualitatively similar in other day ahead electricity markets significantly penetrated by wind power

the eclectic paradigm of international production a restatement and some possible extensions this article reviews some of the criticisms directed towards the eclectic paradigm of international production over the past decade and restates its main tenets the second part of the article considers a number of possible extensions of the paradigm and concludes by asserting that it remains a robust general framework for explaining and analysing not only the economic rationale of economic production but many organisational and impact issues in relation to mne activity as well

autonomy delegation to foreign subsidiaries an enabling mechanism for emerging market multinationals current theory on foreign subsidiary autonomy is insufficient to examine a situation where a multinational lacks experience to organize global operations and yet intends to compete extensively with established multinational enterprises mnes from advanced economies by building on theoretical perspectives developed for emerging market multinational enterprises emnes we advance the idea that foreign subsidiary autonomy is a strategic mechanism to overcome the emne s weaknesses in managing globally dispersed businesses and their home country disadvantages after foreign entry subsidiary autonomy delegation assists in performing the learning functions necessary for overcoming resource and capability voids as well as for distancing the subsidiary administratively from the parent s negative home country institutional heritage analyses of survey data collected from headquarter senior executives of 240 chinese mnes suggest that subsidiary autonomy delegation is higher among firms relying on foreign markets as a springboard to acquire strategic assets whose top managers at the headquarters perceive high domestic institutional constraints and which do not count on government assistance to expand internationally further we demonstrate that these relationships are strengthened with greater inward foreign direct investment cooperative experience and with the use of merger and acquisition entry modes these findings have important implications for theories on subsidiary autonomy

insider trading and the valuation of international strategic alliances in emerging stock markets because stock markets in emerging economies are relatively new under regulated and often segmented investors responses to public announcements by firms in these economies may differ from responses in developed economies stock markets we draw on the institutional and corporate governance literatures to explain investor reactions to announcements of international strategic alliances isas between foreign and emerging market firms we argue that emerging economies stock markets positively value isas however information leakages due to weak regulatory environments siphon off the good news before the isa announcement date the level of state ownership of publicly traded firms and the nationality of foreign partners both affect the size and timing of market reactions

a stochastic two settlement equilibrium model for electricity markets with wind generation incentives to encourage the uptake of renewable energy generation have fostered wind energy in many power systems these incentives usually take the form of market instruments e g feed in tariff or premium that are not directly amenable to optimization representations of the market in this paper we propose an equilibrium model of the short term market to address the impact of wind operation under different structural assumptions the model is formulated for several price taking risk averse firms in competition it accounts for wind generation uncertainty and embeds a representation of the day ahead and balancing mechanisms the consumer is modeled by a linear inverse demand function we focus on feed in premium as the incentive to wind as this is the instrument most favored today in european discussions the model is formulated as a stochastic equilibrium problem where the karush kuhn tucker kkt conditions from the optimization problem of each firm are simultaneously solved together with market clearing conditions on energy capacity for reserve and energy for reserve the problem for each firm consists of a two stage stochastic optimization problem with a recourse function based on the conditional value at risk cvar as a risk measure due to price taking assumptions the model is a single stage complementarity problem it is implemented and solved using the software gams an example based on a stylized simplification of the spanish power market and motivated by the impact of wind penetration on the revenue of conventional plants is used to illustrate the proposed approach

three or two stage stochastic market clearing algorithm as the power industry considers moving from a deterministic paradigm to a stochastic one to clear the day ahead market in systems with significant stochastic production the following question arises how should a stochastic clearing algorithm be formulated our analyses indicate that a three stage stochastic approach is clearly superior to a two stage one to show this we propose a model that includes three stages the first one represents the day ahead market the second stage the intraday market and the third one the real time operation the objective is to clear the day ahead market but with a prognosis of the future the intraday market and the real time operation to assess the impact of the intraday market on the day ahead outcomes we compare the results obtained from the proposed model with those of a simpler but more common two stage model which represents the day ahead market and the real time operation

international expansion of emerging market enterprises a springboard perspective in this article we present a springboard perspective to describe the internationalization of emerging market multinational corporations em mnes em mnes use international expansion as a springboard to acquire strategic resources and reduce their institutional and market constraints at home in so doing they overcome their latecomer disadvantage in the global stage via a series of aggressive risk taking measures by aggressively acquiring or buying critical assets from mature mnes to compensate for their competitive weaknesses we discuss unique traits that characterize the international expansion of em mnes and the unique motivations that steer them toward internationalization we further delineate peculiar strategies and activities undertaken by these firms in pursuit of international expansion as well as internal and external forces that might compel or facilitate their propulsion into the global scene we finally explain the risks and remedies associated with this international springboarding strategy and highlight major issues meriting further investigation

monopoly with incomplete information recent theoretical research on principal agent relationships has emphasized incentive problems that arise when the parties involved are constrained by either asymmetric information or their inability to monitor each other s actions here we concentrate on the former constraint and consider the case of a single principal the monopolist the main contribution is to show that under a separability assumption strong conclusions can be drawn about the nature of optimal incentive schemes although the primary focus is on optimal quantity discounts in a monopolized market the results also shed light on related topics such as optimal income taxation and commodity bundling

the role of path dependency and managerial intentionality a perspective on international business research several decades of research in the field of international business have advanced various theories and studies on the internationalization of firms our assessment of the literature on internationalization shows that the focus has been primarily on path dependency and learning based aspects of internationalization while managerial intentionality and the possibility of managers making deliberate strategic choices towards further internationalization have not been very prominent in the ib literature we argue that internationalization paths and processes should be approached as a joint outcome of management intentionality and experience based learning in other words managers are assumed to have the ability and the intention to influence the evolutionary paths of the firm we derive a future research agenda that calls for the pursuit of this promising and emergent research stream moreover we develop a model integrating managerial intentionality knowledge experience and other factors institutional and selection forces to explain heterogeneous outcomes of internationalization positions paths and processes

external technology sourcing through alliances or acquisitions an analysis of the application specific integrated circuits industry in today s turbulent business environment innovation is the result of the interplay between two distinct but related factors endogenous r d efforts and quasi external acquisition of technology and know how given the increasing importance of innovation it is vital to understand more about the alternative mechanisms such as alliances and acquisitions that can be used to enhance the innovative performance of companies most of the literature has dealt with these alternatives as isolated issues companies however are constantly challenged to choose between acquisitions and strategic alliances given the limited resources that can be spent on research and development this paper contributes to the literature because it focuses on the choice between innovation related alliances and acquisitions we focus on the question of how the trade off between strategic alliances and acquisitions is influenced by previous direct and indirect ties between firms in an industry network of interfirm alliances we formulate hypotheses pertaining to the number of direct ties between two companies their proximity in the overall alliance network and their centrality in that network in so doing we distinguish between ties that connect firms from the same and from different industry segments and those that connect firms from the same or from different world regions these hypotheses are tested on a sample of strategic alliances and acquisitions in the application specific integrated circuits asic industry the findings show that a series of strategic alliances between two partners increases the probability that one will ultimately acquire the other whereas previous direct contacts tend to lead to an acquisition this is not true of previous indirect contacts which increase the probability that a link between the companies once it is forged takes the form of a strategic alliance in the case of acquisitions firms that are more centrally located in the network of interfirm alliances tend to be acquirers and firms with a less central position tend to become acquired these findings underscore the importance of taking previously formed interfirm linkages into account when explaining the choice between strategic alliances and acquisitions as these existing links influence the transaction costs associated with both alternatives

determinants of the share of equity sought in cross border acquisitions the extent of ownership in foreign market entry is an important topic in the entry mode literature yet the determinants of the share of ownership sought in cross border acquisitions cbas have not received much research attention drawing on multiple theoretical explanations we develop and test hypotheses on factors influencing the share of equity sought by foreign firms in cbas findings based on a sample of cbas by us firms show that the share of equity sought is influenced by many factors including the cost of valuing local firm assets difficulty in integrating local firm managers in culturally distant countries the cost of separating desired assets from the rest of the local firm and the cost of resource commitment under exogenous uncertainty

unraveling the mne wage premium whereas ib has extensively studied mnes generic positive impact on host economies but rarely on employee wages economics research has only shown an overall mne wage premium we unravel this premium considering multiple levels of analysis and accounting for host country contextual contingencies to unveil mnes different positive or negative distributional effects using unique micro level data from over 40 000 employees in 13 countries we examine mnes distributional effects for employees gender experience and immigrant status the influence of host country property rights protection and labor regulation and interplays with region and industry effects mnes distributional effects show marked differences that largely depend on the host country context and that are positive for experienced and foreign born employees in developed countries but negative for females working in developing countries whereas in developed countries the gender wage gap is smaller in mnes than in domestic firms as hypothesized we find evidence of a larger wage gap in developing countries the analysis also reveals that the higher host countries level of property rights protection the lower the mne wage premium our study points at the need to reassess statements about the generic positive impact of mnes in host countries particularly in developing countries and discusses further research implications

do international acquisitions by emerging economy firms create shareholder value the case of indian firms while overseas acquisitions by emerging economy firms are gaining increased attention from the business press our understanding of whether and why this inorganic mode of international expansion creates value to acquirer firms is limited we argue that international acquisitions facilitate internalization of tangible and intangible resources that are both difficult to trade through market transactions and take time to develop internally thus constituting an important strategic lever of value creation for emerging economy firms furthermore the magnitude of value created will be higher when the target firms are located in advanced economic and institutional environments country markets that carry the promise of higher quality of resources and therefore stronger complementarity to the existing capabilities of emerging economy firms an event study of 425 cross border acquisitions by indian firms during 2000 2007 supports our predictions

a single settlement energy only electric power market for unpredictable and intermittent participants we discuss a stochastic programming based method for scheduling electric power generation subject to uncertainty such uncertainty may arise from either imperfect forecasting or moment to moment fluctuations and on either the supply or the demand side the method gives a system of locational marginal prices that reflect the uncertainty and these may be used in a market settlement scheme in which payment is for energy only we show that this scheme is revenue adequate in expectation

the motives for international acquisitions capability procurements strategic considerations and the role of ownership structures multinationals can start up greenfield entities or acquire existing firms to enter foreign nations regardless of the choice of greenfield investment vs acquisition they can control full equity i e wholly owned subsidiaries or share ownership with local partners i e joint ventures depending on the stake taken in the targets therefore international acquisitions can be classified into two major categories full or partial although this distinction is missing in most previous studies in this paper i propose that the motives for acquisitions vs greenfield investments are specific to whether entries are made through full or partial ownership in that full acquisitions are driven mostly by capability procurements whereas partial acquisitions are motivated by other strategic considerations by splitting a sample of japanese investments in the us into two sub regimes the study has found that the decision on joint ventures vs wholly owned subsidiaries dictates the determinants that shape the choice between greenfield and acquisitive entries there is also evidence that japanese investors self select the decision on full or partial ownership to justify the strategy that they have chosen to enter the us these findings offer new insights into the role of ownership structures in shaping the choice of entry strategies

a note on the marginal tax rate in a finite economy abstract the marginal tax rate is shown to be non negative in guesnerie and seade s model of nonlinear pricing in a finite economy under assumptions that are as mild as those customarily adopted in nonlinear tax models with a one dimensional continuum population

a reduced form optimal nonlinear income tax problem abstract for a finite population with quasilinear preferences it is shown how mirrlees optimal nonlinear income tax problem can be simplified to a reduced form problem involving only the allocation of the consumption good this result is a finite version of a proposition established in the continuum by s lollivier and j c rochet

internationalization and the performance of born global smes the mediating role of social networks this paper offers a social network explanation for the purported relationship between internationalization and firm performance in the context of born global small and medium enterprises smes we argue that home based social networks play a mediating role in the relationship between inward and outward internationalization and firm performance the mediating mechanism is attributed to three information benefits of social networks 1 knowledge of foreign market opportunities 2 advice and experiential learning and 3 referral trust and solidarity using survey data from smes in the largest emerging economy of china we found some support for this mediating role of social networks in the form of guanxi the results imply that international business managers should consider social networks as an efficient means of helping internationally oriented smes to go international more rapidly and profitably

an assessment of the measurement of performance in international business research a sizeable body of international business ib research is devoted to building knowledge about the determinants of organizational performance a key precursor to accurately diagnosing why some organizations succeed in the international marketplace while others struggle is operationalizing performance appropriately yet to date no systematic investigation has considered how well ib research measures performance we examine the measurement of performance in 96 articles published in the academy of management journal administrative science quarterly journal of marketing journal of marketing research journal of international business studies management science organization science a nd thestrategic management journal between 1995 and 2005 the findings reveal that most studies do not measure performance in a manner that captures the multifaceted nature of the construct we describe the implications of these results and offer suggestions for improving future practice journal of international business studies 2008 39 1064 1080

financing education using optimal redistributive taxation abstract in this article the joint use of an income tax and public provision of education as instruments to achieve the government s distributional objectives is considered individuals differ in innate labour productivity and in aptitude to acquire skills through education actual labour productivity depends on both innate skill and the amount of education received using a generalized version of the mirrlees tax problem that incorporates these features qualitative properties of an optimal tax schedule are investigated

fdi by firms from newly industrialised economies in emerging markets corporate governance entry mode and location previous studies emphasise that the foreign direct investment fdi strategies of firms from newly industrialised economies nies are different from the fdi strategies of firms from developed economies it has also been shown that nie firms are often controlled by founding families who make key strategic decisions and that they rely heavily on network linkages when developing their fdi strategies what is less clear however is how the corporate governance factors in nies the risk preferences of the main shareholder constituencies and the network based business culture affect the decision to undertake fdi in emerging markets this paper explores the entry mode and location choices of firms from an asian nie taiwan in an emerging market the people s republic of china it shows that the choice of equity stake in an affiliate depends upon the extent of family and institutional share ownerships in the parent company high commitment entry is found to be positively associated with the affiliate being located in areas with strong economic cultural and historic links with the parent company furthermore the entry mode and location decisions appear to be interrelated with the parent s equity stake in the affiliate depending inter alia upon the location within china and the favoured location depending inter alia upon the equity stake

country level institutions firm value and the role of corporate social responsibility initiatives drawing on transaction cost theories and the resource based view of a firm we posit that the value of corporate social responsibility csr initiatives is greater in countries where an absence of market supporting institutions increases transaction costs and limits access to resources using a large sample of 11 672 firm year observations representing 2445 unique firms from 53 countries during 2003 2010 and controlling for firm level unobservable heterogeneity we find supportive evidence that csr is more positively related to firm value in countries with weaker market institutions we also provide evidence on the channels through which csr initiatives reduce transaction costs we find that csr is associated with improved access to financing in countries with weaker equity and credit markets greater investment and lower default risk in countries with more limited business freedom and longer trade credit period and higher future sales growth in countries with weaker legal institutions our findings provide new insights on non market mechanisms such as csr through which firms can compensate for institutional voids

market valuation of joint ventures joint venture characteristics and wealth gains abstract along with rd that is the nature of relationship between partners the relatedness and the strategic implication of joint ventures to partners the extent of partners control over joint ventures and the corporate governance in parent firms the data set consists of two party equity joint ventures in the electronics industry that were launched between 1979 and 1988 the unit of analysis is the 174 u s firms out of 158 joint ventures of which 113 were cross border agreements and 45 were between u s firms the study applies the event study method to assess stockholders risk adjusted wealth gains and a cross sectional analysis based on a generalized least squares model to test the hypotheses contrary to popular belief our results show an overall favorable reaction to joint venturing in the stock market even though there is substantial variation according to contextual influences the findings show that stock market valuations reflect the economic potential of joint ventures and are affected by the degree and type of control shareholders and partners can exercise the first key finding in the study is that the valuation effect of joint ventures is multifaceted the market valuation of joint ventures depends on the relationship between partners the nature of partners contributions the extent of partners control over joint ventures and the corporate governance in parent firms our findings also show that partner size which has not been studied in prior studies is a critical variable affecting wealth gains from joint ventures our results certainly shed light on understanding the effect of size on corporate wealth gains from joint ventures the results provide conflicting support for most hypotheses depending on firm size implying that joint ventures have different strategic and managerial implications for the partners depending on size shareholders tend to perceive joint ventures as a risky entrepreneurial operation particularly for the smaller partners it is indeed difficult to protect the smaller partners firm specific know how from being appropriated by the other partners accordingly smaller firms role and degree of control in a joint venture substantially affect wealth gains from their joint venturing with larger corporations shareholders value majority equity sharing by smaller partners as an important governance mechanism to control resource flows and avoid opportunistic behaviors by the larger partners whereas this study extends the previous findings on positive wealth gains of joint ventures by examining contextual influences it also attempts to fill the void in the field of corporate entrepreneurship despite the growing interest in corporate entrepreneurship there has been little attempt to empirically examine its potential association with corporate financial performance in particular with market based performance measures or wealth gains financial theory posits that accounting based performance measures do not properly measure the value of managers entrepreneurial decisions rappaport 1986 argued that the true measure of the long run value of an investment decision is economic value for shareholders as measured by abnormal stock returns i e wealth gains our study is an extension of this fast emerging field of study on the relationship between corporate entrepreneurship and financial performance by focusing on corporate wealth gains from joint venturing with other firms in pursuit of entrepreneurial goals

the choice between mergers acquisitions and joint ventures the case of japanese investors in the united states this paper investigates the determinants of the choice between two alternative methods of pooling similar and complementary assets the merger acquisition and the greenfield equity joint venture two theories of the determinants of that choice are tested on a sample of japanese investments in the united states the results show that equity joint ventures are preferred over acquisitions when the desired assets are linked to nondesired assets because the u s firm owning them is large and not divisionalized when the japanese investor has little previous experience of the american market and hence seeks to avoid postmerger integration problems when the japanese investor and the u s partner manufacture the same product and when the industry entered is growing neither very rapidly nor very slowly

pricing electricity in pools with wind producers this paper considers an electricity pool that includes a significant number of wind producers and is cleared through a network constrained auction one day in advance and on an hourly basis the hourly auction is formulated as a two stage stochastic programming problem where the first stage represents the clearing of the market and the second stage models the system operation under a number of plausible wind production realizations this formulation co optimizes energy and reserve and allows deriving both pool energy prices and balancing energy prices these prices result in both cost recovery for producers and revenue reconciliation a case study of realistic size is used to illustrate the functioning of the proposed pricing scheme

event studies in economics and finance the event study is an important research tool in economics and finance the goal of an event study is to measure the effects of an economic event on the value of firms event study methods exploit the fact that given rationality in the marketplace the effects of an event will be reflected immediately in security prices thus the impact can be measured by examining security prices surrounding the event in this paper event study methods are described including some of the potential complications an example is included to illustrate the approach

causes of the difficulties in internationalization we study the causes of the difficulties faced by firms when they internationalize in search of new markets we build on the resource based theory to argue that the difficulties in internationalization can be separated into three main sets based on their relationship to advantage loss of advantage provided by resources transferred abroad creation of a disadvantage by resources transferred abroad and lack of complementary resources required to operate abroad in each set we further distinguish difficulties that are specific to a firm from those that are common to a set of firms we argue that only a few of the resulting types of difficulties of internationalization are exclusive to the cross border expansion and propose solutions that address the root cause of each type

assessing environmental economic and reliability impacts of flexible ramp products in miso s electricity market abstract increased variability and uncertainty of net electrical load due to high penetration of wind and solar power augments the need for dispatching conventional generators with sufficient ramping capability rc needed to balance demand with supply having sufficient rc reduces the need of last minute dispatch schedule modifications which cause cost reliability and environmental outcomes that reduce the benefits of renewables the midcontinent independent system operator miso has modified its unit commitment and economic dispatch algorithms to account for the economic value of provisioning adequate rc levels this paper explores the outcomes of this modified market clearing process by simulating 10 minute operations of a scaled miso test system for three representative months under low and high wind penetration scenarios changes in system performance are quantified by comparing system costs scarcity events pricing energy prices generation fuel mix wind power curtailment and co 2 emissions between the conventional market clearing algorithm and one with flexible rc products results indicate that adding rc products lowers co 2 emissions and system costs facilitates wind integration and improves reliability these benefits are robust to changes in the market clearing algorithm parameters such as over under generation penalties and reserve scarcity prices

third world copycats to emerging multinationals institutional changes and organizational transformation in the indian pharmaceutical industry this article investigates how indian pharmaceutical firms facing discontinuous institutional changes in their domestic environment due to economic liberalization and intellectual property reforms have undertaken organizational transformation internationalization of resources and product markets constitutes an important component of organizational transformation for local firms in emerging economies using longitudinal data on 206 indian pharmaceutical firms from 1995 2004 we find that firms access to international technological and financial resources enables product market internationalization furthermore we theorize and find support for our predictions that the association between international resources and markets is conditioned by time and business group affiliation and product market internationalization affects financial performance several implications thus emerge for theory and practice associated with the sources of competitiveness in emerging economy firms and their transformation into globally competitive multinational firms

foreign direct investment and the sourcing of technological advantage evidence from the biotechnology industry this paper investigates the proposition that foreign direct investment in a high technology industry is motivated in part by the sourcing of country specific technological advantages embedded in foreign firms the empirical findings show that foreign equity investment is drawn to american biotechnology firms with high levels of patent activity we suggest that in the biotechnology industry foreign direct investment in the form of equity participation can be an efficient vehicle for tapping into country specific firm embodied technological advantages

the boundaries of the firm revisited why do firms exist what is their function and what determines their scope these remain the central questions in the economics of organization they are also central questions for business executives and corporate strategists the worldwide volume of corporate mergers and acquisitions exceeded 1 6 trillion in 1997 it is hard to imagine that so much time effort and investment bankers fees would be spent on adjusting firm boundaries unless there was some underlying economic gain indeed the exceptional levels of merger and acquisition activity over the past two decades are a strong indication that economically significant forces do determine organizational boundaries the study of firm boundaries originated with the famous essay by coase 1937 who raised the question of why we observe so much economic activity inside formal organizations if as economists commonly argue markets are such powerful and effective mechanisms for allocating scarce resources coase s answer was in terms of the costs of transacting in a world of imperfect information when the transaction costs of market exchange are high it may be less costly to coordinate production through a formal organization than through a market in large part thanks to the work of williamson 1975 1985 recent decades have seen a resurgence of interest in coase s fundamental insight that firm boundaries can be explained by efficiency considerations our understanding of firm boundaries has been sharpened by identifying more precisely the nature and sources of transaction costs in different circumstances in the process the focus of

a geographic relational perspective on the internationalization of emerging market firms the growth of outward foreign direct investment from emerging markets has led to increased scholarly attention on the internationalization of emerging market firms emfs we break from the recent strategic approach on internationalizing emfs to develop a problematization approach which permits us to introduce a geographic relational perspective we use this perspective to highlight process thinking complex social realities and relational practice as means by which to better develop theory on the internationalization of emfs our emergent approach emphasizes the need to view emf internationalization as deeply situated in multifaceted contextual influences as influenced by path dependence and as manifested in practice these three relational tenets contextuality path dependence and practice are central to our geographic relational approach s ability to generate new challenging research questions for understanding emf internationalization consequently we add novelty to the international business domain by bringing space and process to the forefront of the emf research agenda

economic valuation of reserves in power systems with high penetration of wind power this paper proposes a methodology to determine the required level of spinning and nonspinning reserves in a power system with a high penetration of wind power the computation of the required reserve levels and their costs is achieved through a stochastic programming market clearing model spanning a daily time horizon this model considers the network constraints and takes into account the cost of both the load shedding and the wind spillage the methodology proposed is illustrated using an example and a realistic case study some conclusions are finally drawn

how do international joint ventures create shareholder value this study attempts to identify conditions under which announcements of international joint venture jv formation lead to increases in shareholder value of participating u s firms it does so by combining the singular theoretical foci of previous work on the topic and specifying previously unconsidered but conceptually important influences on firms expected jv performance the study s findings indicate support for the hypothesized effect of variables in partners task related competitive and structural context s but not those in these firms partner related and institutional context s specifically partner venture business relatedness the pursuit of r d oriented activity greater equity ownership and large firm size all are found to have a positive impact on firms jv based value creation although this study finds support for the performance impact of firm level competition the direction of this impact is contrary to that hypothesized no support is found for hypothesized effect of partner partner business relatedness previous jv experience partners relative firm size national cultural relatedness and jv host country political risk copyright 2000 john wiley sons ltd

failure to complete cross border m as to vs from emerging markets while cross border mergers and acquisitions m as involving emerging markets have been increasing in recent years a high percentage collapse before completion this study investigates how the predictors of cross border m a completion involving emerging markets depend upon the direction of global expansion i e investment inbound to a developing market or outbound from a developing market analysis based on 15 years of data from four emerging economies brazil russia india and china from 1995 to 2010 reveals fundamental differences in the predictors of inbound vs outbound m a completion country level factors reflecting differences in political trade and legal environments strongly affect the completion for inbound m as but have a much weaker influence on outbound m as by contrast firm level factors such as past m a experience have a significantly stronger effect on completion for outbound than for inbound m as most interestingly two deal level factors the percentage of stake sought by the acquirer and whether or not the deal is a cash transaction increase the likelihood of completion for inbound but decrease it for outbound m as these findings have important managerial implications for enhancing the success of global expansions

towards a renaissance in international business research big questions grand challenges and the future of ib scholarship in this article we review critiques of international business ib research with a focus on whether ib scholarship tackles big questions we identify three major areas where ib scholars have addressed important global phenomena but find that they have had little influence outside of ib and only limited effects on business or government policy we propose a redirection of ib research towards grand challenges in global business and the use of interdisciplinary research methods multilevel approaches and phenomena driven perspectives to address those questions we argue that ib can play a more constructive and vital role by tackling expansive topics at the business societal interface

mitigating risk in international mergers and acquisitions the role of contingent payouts previous internationalization studies have focused on the entry modes employed by multinational firms but have not considered the contractual heterogeneity that underlies each mode it is important to examine these contractual details as the firm may be able to obtain some of the benefits typically associated with one entry mode while selecting another in the case of international mergers and acquisitions m as a key contractual variable is whether the parties agree to a performance contingent payout structure which can mitigate the risk of adverse selection in this paper we examine the antecedents of contingent payouts in the form of earnouts and stock payments the results indicate that firms lacking international and domestic acquisition experience turn to contingent payouts when purchasing targets in high tech and service industries firms tend to avoid contingent payouts in host countries with problems with investor protection and legal enforceability

standard errors in event studies even if true abnormal returns are uncorrelated estimated abnormal returns are not this paper presents a simple formula for the variance of estimated cumulative abnormal re turns both returns and dummy variable procedures for estimating the standard error correctly taking account of both intertemporal and contemporaneous correlation of esti mated residuals are discussed they are then applied to an event study of post merger performance it is shown that ignoring either the intertemporal or contemporaneous correlation of residuals can result in significant underestimates of standard errors

eco efficiency outcomes of mergers and acquisitions in the european electricity industry abstract the european electricity industry was recently liberalized in response there was a surge of mergers and acquisitions m as this study addresses the effects of m as on the eco efficiency of european electricity producers in 2005 2013 the environmental production technology comprises co2 emissions as an undesirable output i compute eco efficiency using data envelopment analysis dea and the malmquist luenberger productivity index which are both based on radial directional distance function i observe a decreasing trend in average eco efficiency which contradicts the previously documented moderate efficiency gains of liberalization the effects of m as are isolated using second step fractional regression the domestic horizontal m as which are systematically regulated by the european commission have no impact although one cross border horizontal deal has a same year effect of roughly 3 this effect becomes approximately 1 5 over a two year timespan vertical domestic m as have a short run negative impact of 3 6 that does not persist over time vertical international m as reduce the eco efficiency by 2 1 two years after their completion limited evidence suggests that the conglomerate deals are at least not harmful the policy implication is that the merger regulation should be based on dea eco efficiency measures regulators should devote more attention to cross border m as and particularly to vertical deals

international venturing by emerging economy firms the effects of firm capabilities home country networks and corporate entrepreneurship past literature on foreign direct investment generally supports an economics perspective that there is a direct relationship between firm specific ownership advantages and international expansion however in emerging economies with their institutional environment context characterized by low resource munificence and continuous economic liberalization a theoretical extension of the current perspective is needed this paper introduces new parameters by focusing on specific ownership advantages and strategic actions that firms have to develop in response to the institutional characteristics of the emerging economies when they decide to pursue outward fdi the focus here is on international venturing that requires a firm to engage in activities for new business creation in a foreign country rather than simply seek to distribute a product in another nation it is shown empirically that the relationship between firm specific ownership advantages and international venturing is moderated by the degree of home industry competition and export intensity in addition such a relationship is mediated by the intensity of corporate entrepreneurial transformation in the form of innovation new business creation and strategic renewal

event studies in management research theoretical and empirical issues we examined the use of event studies in management research and found that there was inadequate attention paid to theoretical and research design issues this lack of attention may lead to false in

the impact of changing skill levels on optimal nonlinear income taxes abstract the impact of changing an individual s skill level on the solution to a finite population version of the mirrlees optimal nonlinear income tax problem with quasilinear in leisure preferences is investigated it is shown that it is possible to sign the directions of change in everyone s optimal consumptions and optimal marginal tax rates in response to such a change

springboard internationalization by emerging market firms speed of first cross border acquisition according to the springboard perspective emerging market multinationals seek strategic assets aggressively from the outset in this paper we investigate the role of firms institutional embeddedness in terms of age and affiliation to business group on their aggressive internationalization pursuits an issue which has remained less explored in international business scholarship this study based on 8163 indian listed firms over 18 years identifies a trend that younger firms founded in the liberalized era post 1991 and unaffiliated firms are more likely to pursue aggressive internationalization by conducting their first cross border acquisition cba faster among affiliated firms younger ones are relatively faster in conducting their first cba furthermore the evidence signals a moderating impact of inter group heterogeneity in terms of group level assets and foreign investments on the relationship between firm age and aggressive internationalization

a general theory of springboard mnes the springboard view has become one theoretic lens to analyze emerging market multinationals emnes in the past decade a decade after its first introduction in 2007 new developments offer keen insights on these firms and mnes in general that aggressively engage in critical asset seeking we compare this view with other ib theories highlighting their differences as well as complementarity we articulate unique strengths and weaknesses of emnes including their vulnerability and complexity caused in part by home country institutions we discuss amalgamation ambidexterity and adaptation advantages that differentiate springboard mnes from more established advanced country mnes and explain why and how springboard acts should be analyzed along with global competitiveness augmentation we introduce an upward spiral concept to advance our understanding of linkages between springboard and post springboard activities and explain some critical cross cultural and human resource management issues in the process to help continued research on springboard mnes we highlight macro and micro management issues that are particularly worth exploring

economic and environmental implications of different approaches to hedge against wind production uncertainty in two settlement electricity markets a pjm case study abstract this paper examines the economic and environmental outcomes of four two settlement electricity market clearing designs the first design corresponds to a deterministic market clearing dmc similar to the mechanism currently used in organized wholesale electricity markets in the united states the other three designs account for the day ahead da wind power production uncertainty into the da market mechanisms either implicitly or explicitly an augmented deterministic market clearing admc design introduces da ramp capability products these products ensure adequate and ramp feasible electricity generation capacity commitments in the da stage to cope with the real time realization of wind power generation a hybrid deterministic market clearing hdmc design augments admc by explicitly integrating a characterization of wind power production uncertainty into the residual unit commitment ruc process which is run after the da market is closed using stochastic programming the last design referred to as stochastic market clearing smc uses stochastic optimization to explicitly account for wind power production uncertainty in the da market clearing mechanisms i e da unit commitment and economic dispatch the four market clearing designs are assessed by simulating the electricity market operations of a test system and comparing their results in terms of operating costs prices costs and revenues of different types of producers consumer s payments integration of wind power and air emissions the test system has 12 of the capacity of pjm s fossil fired power generation fleet and uses data on coincident demand and wind power production from the bonneville power administration bpa system during years 2010 2014 the simulations are performed hourly for a whole year results show that smc is superior as its costs reductions are more than two times the improvements attained by admc and hdmc also smc results in electricity prices that are better aligned with operation costs cuts the spread between the day ahead and real time prices by 40 reduces out of market short term revenue sufficiency payments by 58 reduces co2 emissions by 3 52 and decreases power plants cycling hdmc is a distant second best market design relative to dmc it achieves a reduction in total costs that is less than half the reduction achieved by smc a reduction in out of market payments that is 80 of the reduction attained by smc and an increase in wind power integration that is

conceptualizing and measuring distance in international business research recurring questions and best practice guidelines distance is a central concept in international business research yet there is debate about the construct as well as its operationalization in this editorial we address three of the most important recurring questions posed by authors editors and reviewers by examining the theory methods and data of distance research we discuss 1 how to theorize on distance and 2 what method and 3 what data to use when constructing a distance index we develop practical recommendations grounded in theory illustrating and supporting them by calculating cross country distance indices for all available country pairs and two of the most used distance indices cultural and institutional we show that whereas a specific method to calculate distance may matter to some extent the choice for a specific cultural or institutional framework to measure cultural or institutional distance has a major impact on country pair distances overall this editorial highlights the importance of matching data and method to the theoretical argument

international investment location decisions abstract in international location tournaments governments compete for foreign investment with tax and other short run incentives such tournaments can be won if agglomeration economies are sufficiently powerful to overcome investors desire to spread investments as a hedge against risk we focus on manufacturing investments by u s multinationals in the 1980s our econometric results suggest that agglomeration economies are indeed the dominant influence on investor calculations paradoxically short run incentives have limited apparent impact on location choice we conclude that high cost tournament play is unnecessary for countries with good infrastructure development specialized input suppliers and an expanding domestic market

the construct of institutional distance through the lens of different institutional perspectives review analysis and recommendations this paper presents a review and critique of the 20 year old literature on institutional distance which has greatly proliferated we start with a discussion of the three institutional perspectives that have served as a theoretical foundation for this construct organizational institutionalism institutional economics and comparative institutionalism we use this as an organizing framework to describe the different ways in which institutional distance has been conceptualized and measured and to analyze the most common organizational outcomes that have been linked to institutional distance as well as the proposed explanatory mechanisms of those effects we substantiate our qualitative review with a meta analysis which synthesizes the main findings in this area of research building on our review and previous critical work we note key ambiguities in the institutional distance literature related to underlying theoretical perspectives and associated mechanisms distance versus profile effects and measurement we conclude with actionable recommendations for improving institutional distance research

public good provision and the comparative statics of optimal nonlinear income taxation comparative static properties of the solution to an optimal nonlinear income tax problem are provided for a model in which the government both designs an income tax schedule for redistributive purposes and provides a public good optimally there are two types of individuals distinguished by their skill levels who have the same quasilinear preferences for labor supply and the consumption of a private and a public good comparative statics are obtained for the weights in a weighted utilitarian social welfare function the prices of the two goods a taste parameter that measures the onerousness of working and the skill levels