social capital and institutional trust evidence from bolivia s popular participation decentralisation reforms this article uses bolivia s emblematic process of decentralisation popular participation to explore the elusive relationship between interpersonal and institutional trust as central components of social capital the evidence corroborates the notion that basic social interaction and more complex institutional settings are strongly co related such as the trust that individuals place in their governments and institutions the data also shows that social capital has a direct effect on civic activism and political behaviour at the individual level the notion of social capital is present throughout the analysis as this type of capital allows observing and measuring changes in social structures that affect more complex institutional arrangements

differences in social capital between 54 western european regions beugelsdijk s and van schaik t 2005 differences in social capital between 54 western european regions regional studies 39 1053 1064 based on the extant literature a newly developed index measuring social capital at the regional level in europe is presented it is shown that there are large regional differences on this social capital index it was tested if higher scores on this social capital index correlate with higher levels of economic development and regional economic growth in 54 western european regions though further research is required these preliminary results suggest a positive relationship exists between social capital and regional economic development the paper concludes with suggestions for future empirical research

on the empirics of social capital this paper critically examines the way in which empirical evidence is developed in support of a role for social capital in socioeconomic outcomes three leading studies of social capital are reviewed and in each case argued to suffer from various identification problems a general set of conditions under which social capital effects may be identified in linear models is given careful attention to these conditions combined with greater openmindedness as to what constitutes appropriate evidence seems the best route to improving empirical studies of social capital

friends acquaintances or strangers partner selection in r d alliances like governance structure and alliance scope partner selection may serve to safeguard firms intellectual assets in r d alliances we categorize potential alliance partners into friends acquainta

social capital access and entrepreneurship we investigate the effect of social capital access on entrepreneurship social capital helps entrepreneurs to overcome resource constraints this is especially important in small communities where we often see a lack of market oriented institutions such as venture capital firms entrepreneurs gain access to social capital via club memberships combining differences in the number of individual club memberships with differences in the importance of social capital across communities we identify a causal small community mark up effect of individual club memberships on entrepreneurship assuming that unobserved heterogeneity that might influence both the individual s selection into clubs and the occupational choice to be an entrepreneur is independent of community size we find that the effect of club membership on the propensity to be an entrepreneur is 2 6 percentage points larger in small communities than in large communities robustness tests support the validity of our identifying assumption and results

gifts as economic signals and social symbols gift giving has often puzzled economists especially because efficient gifts like cash or giving exactly what a person asks for seem crass or inappropriate it is shown in a formal game theoretic model that gifts serve as signals of a person s intentions about future investment in a relationship and inefficient gifts can be better signals other explanations for the inefficiency of gift giving are advanced and some stylized facts about gift giving practices are described many of which are consistent with the signaling view of gifts

the transfer of organizational culture overseas an approach to control in the multinational corporation organizational control has traditionally been described within the framework of the ideal type of weberian bureaucracy in which rules and regulations specify desired behavior and rewards are based on explicit performance measures this paper describes an alternative organizational ideal type that relies on an organizational culture for control in this type of system behavior is specified by the organizational culture and performance is maintained via mechanisms of social pressure an example of this letter type of control is found in the type z organization an american organizational form similar in many ways to the japanese form particularly interesting is the way in which a type z organization manages overseas subsidiaries by establishing the organizational culture in the subsidiary the process by which this is accomplished and by which control is maintained are described in a comparative empirical study of the headquarters and subsidiary of a firm representative of each control type the implications of this approach for management of the multinational firm and for the host country are also discussed

knowledge sharing and the dynamics of social capital abstract mutual aid often entails the sharing of knowledge we investigate how in turn knowledge sharing affects the long run dynamics of mutual aid in our economy agents with specific knowledge are held up by their principals inside communities agents aid each other by sharing their specific knowledge this process generates a new type of knowledge which exacerbates the specificity of the existing types and induces more agents to engage in mutual aid however since the knowledge generated is shared it progressively renders agents inside communities more flexible and thus less dependent on mutual aid we characterize conditions under which in the long run mutual aid spreads or is abandoned

responsibility or autonomy children and the probability of self employment in the usa this paper studies the effect of children on the likelihood of self employment having children can change preferences that are central to the decision whether to be self employed on the one hand individuals preference for autonomy and flexibility increases when having children which increases the willingness to be self employed on the other hand having children entails a responsibility over someone else which increases individual risk aversion and decreases the willingness to be self employed using a pooled cross section of 26 years from the general social survey instrumental variable estimates indicate that in the usa having children under the age of 18 in the household decreases the likelihood of being self employed by 11 i e the responsibility effect dominates this effect is considerable as a child decreases the probability of self employment more than the increase associated with being raised by a self employed father one of the main determinants of self employment

residential mobility and social capital abstract this paper empirically investigates the role of social capital in households residential mobility behavior by considering its spatial dimension this study focuses on a household s social ties with people living nearby which we refer to as its local social capital local social capital may deter residential mobility because the resources stemming from them are location specific and will be less valuable if a household moves we conjecture that a household s possession of local social capital has a negative effect on its residential mobility and this negative effect of local social capital may be stronger on long distance mobility than on short distance mobility our empirical investigation is based on data from the panel study of income dynamics we obtain evidence which is supportive of these conjectures

governments reciprocal exchange and trust among business associates both pearce and molm have conducted research in interpersonal trust here we apply their work to international business by deriving hypotheses from their work some compatible some conflicting we test them with data from managers in china the united states hong kong and thailand using measures from the world bank world competitiveness report and transparency international and managerial interviews we find support for pearce s arguments on the effects of governmental facilitation on managers trust in their business partners and for extensions of molm s work on reciprocal exchange to international field settings for the conflicting hypotheses results support pearce s arguments that the structural assurances of facilitative governments lead to higher levels of trust in business associates

equity joint ventures and theory of the multinational enterprise this paper extends the internalization approach to the theory of the multinational enterprise mne to include an expanded role for equity joint ventures using the transaction cost paradigm of williamson this paper explains why joint ventures may sometimes be preferred over wholly owned subsidiaries also presented is empirical work on joint venture performance in developing countries which demonstrates that under certain conditions joint ventures can be the optimal mode of foreign direct investment 1987 jibs journal of international business studies 1987 18 1 16

risk aversion wealth and background risk we use household survey data to construct a direct measure of absolute risk aversion based on the maximum price a consumer is willing to pay for a risky security we relate this measure to consumer s endowments and attributes and to measures of background risk and liquidity constraints we find that risk aversion is a decreasing function of the endowment thus rejecting cara preferences we estimate the elasticity of risk aversion to consumption at about 0 7 below the unitary value predicted by crra utility we also find that households attributes are of little help in predicting their degree of risk aversion which is characterized by massive unexplained heterogeneity we show that the consumer s environment affects risk aversion individuals who are more likely to face income uncertainty or to become liquidity constrained exhibit a higher degree of absolute risk aversion consistent with recent theories of attitudes toward risk in the presence of uninsurable risks jel d1 d8

learning to contract evidence from the personal computer industry organizational forms involving more detailed contracts than are found in traditional spot market exchanges appear to be increasingly prevalent there has been relatively little analysis however of the extent to which firms learn how to use contracts to manage their interfirm relationships over time in this paper we conduct a detailed case study of a time series of 11 contracts concluded during 1989 1997 between the same two partners both of whom participate in the personal computer industry to explore whether and how firms learn to contract we find many changes to the structure of the contracts that cannot be fully explained by changes in the assets at risk in the relationship and evidence that these changes are largely the result of processes in which the firms were learning how to work together including learning how to contract with each other the nature of this learning appears to have been quite incremental and local that is not very far sighted we suggest how and when contracts might serve as repositories for knowledge about how to govern collaborations and suggest some boundary conditions for this phenomenon our findings also provide implications for the debate about whether contracts have a positive or negative effect on interorganizational trust we conclude with suggestions for future research

identification of endogenous social effects the reflection problem this paper examines the reflection problem that arises when a researcher observing the distribution of behaviour in a population tries to infer whether the average behaviour in some group influences the behaviour of the individuals that comprise the group it is found that inference is not possible unless the researcher has prior information specifying the compisition of reference groups if this information is available the prospects for inference depend critically on the population relationship between the variables defining reference groups and those directly affecting outcomes inference is difficult to implossible if these variables are functionally dependent or are statistically independent the prospects are better if the variables defining reference groups and those directly affecting outcomes are moderately related in the population

immigrant self employment the family as social capital and the value of human capital we examine how self employment among asian and hispanic immigrants is affected by family composition and human capital class resources because of collective interests and strong personal ties the family facilitates the pooling of labor power and financial resources enterprising immigrants draw on these resources when establishing and operating small businesses our findings also show the importance of human capital class resources in accounting for immigrant self employment although foreign earned human capital is usually not highly valued in the host labor market immigrants successfully use this human capital to achieve business ownership interethnic variation in personal human capital and family composition accounts for a substantial portion of the observed interethnic variation in self employment the data are drawn from the 1980 five percent pums for greater new york city and los angeles excerpt

key characteristics in the choice of international technology transfer mode the choice between licensing and direct investment as a vehicle for international technology transfer is hypothesized to be related to characteristics of the individual technology parent corporation and the host country involved in the transfer a set of hypotheses regarding these relationships are developed and tested in a logit statistical model for a sample of 1 226 technology transfers we find that hypotheses regarding the effects of technology and parents characteristics are strongly supported by this analysis hypotheses regarding the effect of host country characteristics on transfer patterns receive mixed support

markets hierarchies and networks an agent based organizational ecology markets hierarchies and networks are widely understood to be the three primary forms of social organization in this article we study the choice between these forms in a general agent based model abm of cooperation the organizational ecology is the product an emergent property of the set of choices made by agents contingent on their individual attributes and beliefs about the population of agents this is one of the first attempts to theorize explicitly the choice between different organizational forms especially networks and hierarchies and certainly the first to do so in an abm the insights of the model are applied to current research on transnational networks social capital and the sources of hierarchy and especially autocracy

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

partner nationality and the structure performance relationship in strategic alliances the dramatic growth of global strategic alliances between firms is fundamentally reshaping the nature of international business indeed interfirm cooperation has become a crucial component of the pursuit of global competitive advantage yet such alliances are enormously complex to manage successfully in part because of the opportunity and incentive to cheat and profit at the partner s expense that is an inescapable part of these relationships consequently strategic alliances are frequently subject to high instability poor performance and premature dissolution thus an important question arises is it possible to promote more stable cooperation and higher alliance performance through a realignment of companies incentives this question is addressed empirically in the present paper using recent work in game theory which suggests that high performance is linked to specific elements of the alliance structure further this study applies insights from international business literature suggesting th

the role of trust and contract in the supply of business advice the use of legal contract and personal trust are compared in this paper for the relationships between clients and their different advisers who supply business advice personal trust between client and adviser is found to operate as an exclusive means to manage relational exchange only for social and family relationships using a sample survey of small and medium sized enterprises results demonstrate that trust and legal contract are most commonly overlapping categories comparing different types of adviser the level of trust extent of legal contract service intensity service costs and client impact and satisfaction are each found to interact there are major differences between suppliers but except in the case of social and family relationships to advisers higher reliance on trust alone is generally associated with lower levels of client impact and satisfaction received the combination of trust with contract tends to be the route which is most associated with higher levels of client impact and satisfaction

more labour market flexibility for more innovation evidence from employer employee linked micro data this paper examines labour market flexibility in various definitions and its impact on innovation the results demonstrate that the relationship strongly depends on the type of innovation as well as the predominant innovation regime in which a company operates thereby labour market flexibility does not influence innovation in an entrepreneurial innovation regime characterised by high competition low market entry barriers and generally available knowledge that might explain why the silicon valley has been successful despite of having a labour market with a strong strong hire and fire mentality in contrast labour market flexibility significantly reduces the likelihood of innovation in a routinised innovation regime with leading innovators and high entry barriers similar to the us automobile industry and steel districts that did not succeed these findings emphasise that the currently discussed structural labour market reforms might hamper innovation as technological change still requires a level of security and stability

trust business relationships and the contractual environment the role of trust in vertical contractual relationships between firms in britain germany and italy is investigated with a survey of over sixty firms after a review of the literature in which the nature of trust is discussed and set against a background of social norms and legal systems data are presented to describe resondents perceptions of the role of trust in their trading environment their strategies to foster trust and their reactions to the breakdown of trust while there was some evidence of differences in the basis of trust between countries these were differences of degree rather than of kind copyright 1997 by oxford university press

law finance and innovation the dark side of shareholder protection proponents of minority shareholder protection state that national legal institutions protecting small investors boost stock markets and in turn the long term performance of countries in this paper we empirically challenge this argument we perform three stage least squares estimation on a sample of 48 countries during 1993 2006 and find that countries with stronger shareholder protection tend to have larger market capitalisation but also lower innovative activity we cope with stock market endogeneity and industry heterogeneity and circumvent omitted variables bias so that this finding is unlikely to be driven by misspecification problems the estimation results are interpreted arguing that stronger shareholder protection may depress rather than encourage the most valuable corporate productions because it enables small and diversified shareholders to play opportunistic actions against undiversified stockholders after specific investments are undertaken by the company innovative activity largely based on specific investing is particularly exposed to this problem copyright oxford university press

clusters entrepreneurial ecosystem co creation and appropriability a conceptual framework extant literature on clusters underplays the role of entrepreneurs and entrepreneurial management in creating and co creating organizations markets and supporting ecosystems we employ transaction costs resource knowledge capabilities and power control based theories to provide a comparative static governance based perspective on clusters we embed this into a more general co evolutionary entrepreneurial theory of the emergence evolution and co evolution of markets ecosystems and clusters we suggest that clusters can involve advantages that help engender superior appropriation of co created value as compared to alternatives entrepreneurial managers faced with a degree of choice will help co create clusters and be part of them for as long as they can appropriate more value in this way than through alternatives

perceived trustworthiness and inter firm governance empirical evidence from the uk printing industry the paper describes six representative theoretical positions regarding the impact of trustworthiness on the organisation of inter firm relations the positions are then assessed on the basis of a survey of 184 buyer supplier relationships in the uk printing industry the widely accepted transaction cost argument for trust as a parameter reducing hierarchy is dismissed instead the so called triadic forces argument based on bradach j l and eccles r g 1989 price authority and trust from ideal types to plural forms annual review of sociology vol 15 96 118 receives the strongest support market hierarchy and trust represent alternative mechanisms that can be combined in a variety of ways this pluralistic model is enriched further by the acknowledgement of variable roles for contracts and a sceptic stance regarding rationality in practice copyright 2002 oxford university press

trust institutions and the generally speaking question a reply to uslaner in his critical reply on my article uslaner points to several issues amongst others the lack of observations in the principal components analysis and the fundamental relationship between micro and macro trust on the one hand and institutions on the other hand of these two i hold the second one to be most important and i will therefore focus on this issue i will also use this opportunity to position our trust discussion in the broader context of contemporary economic research on culture copyright the author 2008 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

pollution taxes and revenue recycling abstract discussions of environmental policy and the tax system have emphasized the value of pollution tax revenues which can be used to reduce other tax distortions in the economy however by raising private marginal production costs environmental taxes also tend to reduce gdp and exacerbate the welfare costs of conventional taxes for environmental taxes in consumption goods industries the net welfare change from these two effects is negative unless this good is a relatively weak substitute for leisure an estimate for the optimal pollution tax with full revenue recycling is 63 to 78 of marginal environmental damages

little innovation many jobs an econometric analysis of the italian labour productivity crisis during the past twenty years italy has realized changes in labour legislation leading to a decentralization of wage bargaining and increased flexibility in labour relations both these factors have helped to curb wage growth and to enhance employment growth but have also led to a crisis in italian labour productivity growth our estimates among 3 000 firms show that firms with high shares of flexible workers a high labour turnover and lower costs of labour relative to capital experienced significantly lower rates of labour productivity growth our findings raise doubts about the mainstream call for flexibilisation of european labour markets we argue hat the italian shift towards a low productive and labour intensive growth path is problematic gainst the background of an ageing population

economics and identity this paper considers how identity a person s sense of self affects economic outcomes we incorporate the psychology and sociology of identity into an economic model of behavior in the utility function we propose identity is associated with different social categories and how people in these categories should behave we then construct a simple game theoretic model showing how identity can affect individual interactions the paper adapts these models to gender discrimination in the workplace the economics of poverty and social exclusion and the household division of labor in each case the inclusion of identity substantively changes conclusions of previous economic analysis

measuring performance of international joint ventures international joint ventures ijvs are increasing in frequency and strategic importance however efforts to identify variables associated with ijv performance have been constrained by disagreements regarding the comparability and reliability of alternative performance measures and methods this study tests several hypotheses regarding the reliability and comparability of a range of objective and subjective measures of ijv performance as well as evaluating the relative utility of different data collection approaches

causal parameters and policy analysis in economics a twentieth century retrospective the major contributions of twentieth century econometrics to knowledge were the definition of causal parameters within well defined economic models in which agents are constrained by resources and markets and causes are interrelated the analysis of what is required to recover causal parameters from data the identification problem and clarification of the role of causal parameters in policy evaluation and in forecasting the effects of policies never previously experienced this paper summarizes the development of these ideas by the cowles commission the response to their work by structural econometricians and var econometricians and the response to structural and var econometrics by calibrators advocates of natural and social experiments and by nonparametric econometricians and statisticians this paper considers the definition and identification of causal parameters in economics and their role in econometric policy analysis it assesses different research programs designed to recover causal parameters from data at the beginning of this century economic theory was mainly intuitive and empirical support for it was largely anecdotal at the end of the century economics has a rich array of formal models and a high quality database empirical regularities motivate theory in many areas of economics and data are routinely used to test theory many economic theories have been developed as measurement frameworks to suggest what data should be collected and how they should be interpreted econometric theory was developed to analyze and interpret economic data most econometric theory adapts methods originally developed in statistics the major exception to this rule is the econometric analysis of the identification problem and the companion analyses of structural equations causality and economic policy evaluation although an economist did not invent the phrase correlation does not imply causation 1 economists clari

self employment and married women abstract this paper examines the determinants of self employment among married women the study uses these results to assess the impact of selectivity bias due to self employment decisions on the earnings of wage salary and self employed workers

the great recession and the bulimia of us consumers deep causes and possible ways out this paper focuses on the apparent bulimia of us consumers and its role in the recent crisis we seek to show how various characteristics of american society and the us economy are related to this phenomenon we illustrate some structural features of the us economy and public policies that may have created a difference in terms of patterns of consumption and market participation between the usa and continental europe we then present some explanations of us hyperconsumerism put forward by psychologists and sociologists thus relating this phenomenon to the decline in subjective well being and social capital documented in the usa we also discuss how the negative endogenous growth paradigm may help to account for it finally we review the debate on the us policy agenda by underlining some weaknesses in the two politically more realistic options and by outlining a third policy strategy which is possibly preferable for people s long term well being

contracts opportunism and trust self interest and social orientation this paper analyses the role of trust in facilitating efficient exchange relations when agents are vulnerable to opportunistic behaviour two distinct mechanisms supporting trust are distinguished self interested trust sit which is forwardlooking and socially oriented trust sot which has its roots in the past the former is the only source of trust recognised in the mainstream economics literature while the latter draws heavily from sociology we develop the implications of isolated and of repeated exchange for the existence of sit or sit and for the role of formal contracts in exchange relations the paper concludes with a discussion of the feasibility of empirical testing to distinguish sit from sot

the dark side of chinese growth declining social capital and well being in times of economic boom summary over the last two decades subjective well being in china declined using data from the world values survey we identify predictors of the trend in life satisfaction in china during 1990 2007 social comparisons and the decline of social capital explain the decrease in well being and they are strictly connected to the increasing orientation of chinese people toward materialistic values the increasing role of social comparisons is also a key factor in the increase of well being inequalities between income classes

endogenous growth decline in social capital and expansion of market activities abstract we model in an endogenous growth set up the hypotheses that the expansion of market activities weakens social capital formation and that firms can invest in formal mechanisms of control and enforcement to substitute for social capital trust work ethics honesty the model shows that the economy tends to grow faster when it is relatively poorer in social capital and that perpetual growth can be consistent with the progressive erosion of social capital these results may help to reconcile putnam s claim that social capital has declined in the u s with the satisfactory growth performance of the u s over the same period

the productivity of trust this paper tests whether social trust affects total factor productivity tfp using both development and growth accounting we find strong evidence of a causal positive effect of social trust on the level and growth of tfp we moreover observe that the effect of social trust on tfp runs through economic judicial institutions but not through political institutions those findings resist a series of robustness checks

environmental tax reform and government expenditure in a simple model of production with an imported polluting resource and involuntary unemployment we consider the effects of energy taxes holding the real wage constant under differing levels of government expenditure and externalities simulations reveal conflict between the goals of net welfare employment and profitability over much of the relevant parameter range thus extending the usual discussion of multiple dividends however potential net welfare and employment gains are substantial for plausible parameters the optimal energy tax declines as government expenditure rises and is less than the pigovian tax for plausible externalities

evaluating innovation and labour market relationships the case of italy in this paper the link between labour market flexibility and innovation is analysed paying particular attention to the different technological regimes of economic activities and the different geographical areas of the italian economy a dynamic panel data specification is used to assess the endogenous relationship between patents included as a proxy of the innovation and job turnover and wages which represent labour market indicators the results show that higher job turnover only has a significant and negative impact on patent activities in regional sectors of northern italy while a positive and significant impact of blue and white collar wages has been generally found

social capital in dis similar democracies the development of generalized trust in japan and switzerland this article evaluates the foundations of a key component of social capital namely generalized trust in japan and switzerland although the two countries are remarkably different they share a nu

trust and efficiency abstract agency problems within the firm are a significant hindrance to efficiency we propose trust between coworkers as a superior alternative to the standard tools used to mitigate agency problems increased monitoring and incentive based pay we model trust as mutual reciprocal altruism between pairs of coworkers and show how it induces employees to work harder relative to those at firms that use the standard tools in addition we show that employees at trusting firms have higher job satisfaction and that these firms enjoy lower labor cost and higher profits we conclude by discussing how trust may also be easier to use within the firm than the standard agency mitigation tools

trust contract and economic cooperation after providing a brief overview of the standard economic analysis of incomplete contracts in terms of property rights transaction costs and self enforcing implicit contracts the author shows why in the orthodox view trust is not a pertinent category to their negotiation or effectiveness drawing on various empirical studies which he has undertaken in the area of industrial relations the author develops an alternative approach to the study of incomplete contracts in which the concept of trust is central in this alternative vision boundedly rational agents with limited foresight form provisional judgements about the trustworthiness of their trading partners based on the success of their past encounters a consequence of this alterna tive understanding of incomplete contracts is that there is no guarantee that coopera tion will succeed even when the circumstances appear to promise mutual gain the author argues however that by establishing an appropriate set of procedural rules to guide their response to the unanticipated agents can promote the kinds of mutual learning that contribute to the build up of trust and that increase the likelihood of successful cooperation

interfirm diversity organizational learning and longevity in global strategic alliances organizational theorists have correctly argued that the emergence and maintenance of robust cooperation between global strategic alliance partners is related to the diversity in the partners characteristics yet previous research has failed to systematically delineate the important dimensions of interfirm diversity and integrate the dimensions into a unified framework of analysis this paper develops a multilevel typology of interfirm diversity and focuses on organizational learning and adaptation as critical processes that dynamically moderate diversity s impact on alliance longevity and effectiveness

equity joint ventures and the theory of the multinational enterprise this paper extends the internalization approach to the theory of the multinational enterprise mne to include an expanded role for equity joint ventures using the transaction cost paradigm of williamson this paper explains why joint ventures may sometimes be preferred over wholly owned subsidiaries also presented is empirical work on joint venture performance in developing countries which demonstrates that under certain conditions joint ventures can be the optimal mode of foreign direct investment

a note on the theory and measurement of trust in explaining differences in economic growth this paper takes issue with the trend to attribute differences in economic growth rates to differences in interpersonal trust i discuss the world values survey wvs measure that is used to operationalise trust at the macro level i hypothesise that there is a mismatch between the theoretical argument and the empirical operationalisation of trust instead of measuring trust the wvs measure may instead proxy the well functioning of institutions i provide circumstantial evidence for this thesis by a principal components analysis of trust and institutions and a robustness test of zak and knack s 2001 trust and growth economic journal vol 111 295 321 seminal study on trust and economic growth

children and household economic behavior this paper looks at some of the methodological issues that arise in modeling the effects of children on household behavior and presents some estimates for selected areas for our purposes household behavior will be taken to refer to household decisions on labor supply the allocation of expenditure to different periods and the decision as to what to do with the difference between income and expenditure i shall be concerned mainly with the effects of dependent children and i restrict attention largely to western societies excerpt

repeated games played by overlapping generations of players the present paper tries to explain cooperative behaviour in an organization run by a sequence of long but finitely lived agents we show that the folk theorem holds for infinitely repeated games with overlapping generations of finitely lived players any mutually beneficial outcome can approximately be sustained if the player s life span and the overlapping periods are long enough the result is stronger than the usual folk theorems in that it employs no assumption on the stage game such as the full dimensionality of payoff set or multiplicity of equilibria

a dynamic analysis of protection and environmental policy in a small trading developing country abstract we analyze a dynamic model of protection and environmental policy in a small trading developing country dc the dc government protects the import competing and the polluting sector of the economy with a tariff the employment and output effects of three different pollution taxes are analyzed these taxes incorporate different assumptions about the dc government s ability to commit to its announced policy first we describe the taxes we study the dependence of these taxes on the tariff and we show that in general an activist environmental policy is called for irrespective of the length of time to which the government can commit to its announced policy second we identify a situation in which the conduct of environmental policy raises welfare unambiguously and the situations in which it does not do so finally we show that the time inconsistency of certain optimal programs can prevent the dc government from achieving its environmental and employment objectives

towards an economic theory of the multiproduct firm this paper outlines a theory of the multiproduct firm important building blocks include excess capacity and its creation market imperfections and the peculiarities of organizational knowledge including its fungible and taut character a framework is adopted in which profit seeking firms are seen to diversify in order to avoid the high transactions costs associated with using various markets to trade the services of various specialized assets neoclassical explanations of the multiproduct firm are shown to be seriously deficient

when labour market rigidities are useful for innovation evidence from german iab firm level data abstract supply side economists made numerous pleas for removing labour market rigidities through structural reforms from a schumpeterian viewpoint however one can argue that labour market rigidities create useful incentives for innovation our estimates on german panel data 2007 2015 support the schumpeterian view using the taxonomy of industries by peneder 2010 we find that evidence of the schumpeterian view is particularly strong in r d intensive manufacturing industries as well as in service industries with high degrees of cumulativeness of knowledge evidence of the schumpeterian view is weaker in low technology industries and in start ups when firms rely more on generally available knowledge rather than on firm specific and tacit knowledge accumulated in the past

learning from failure towards an evolutionary model of collaborative ventures this paper reports on a longitudinal case study of the interaction between two partners to a failed international joint venture we develop a model of the collaboration process in partnership and alliances based on earlier work by ring and van de ven 1994 and by doz 1996 we employ a series of events that occurred in the course of the relationship as the unit of analysis in order to trace the interactions between the partners and to explicate the impact that external shocks have on their perceptions of efficiency and equity the impact of these events as well as the responses they elicit on the quality of the relationship and vice versa are also considered we find that the partners assessments cause them to either engage in renegotiation of the terms of the contract or to modify their behavior unilaterally in an attempt to restore balance to the relationship the process feeds back until a new mutual understanding of equity is restored or else the relationship deteriorates gradually until a point when the venture is dissolved we conclude that positive feedback loops are critical in the evolutionary process that relationship quality is both an outcome and a mediating variable and that procedural issues are critical from the start in fostering a climate for positive reinforcement and the building of mutual trust and confidence in the relationship

who wants and gets flexibility changing work hours preferences and life events using panel data for 2001 2005 from the household income and labour dynamics in australia hilda survey the authors examine workers desires for and achievement of work hour flexibility they estimate a dynamic model that controls for preferences in previous years and tests for the effects of life events on both desired employment and desired work hours many life events such as motherhood and retirement are found to have predictable effects parallel regressions are estimated for actual employment and the number of hours usually worked and the results are compared to those for preferences the dynamics of usual hours often mirror those for preferences suggesting that labor markets function effectively for many employees however mismatches are associated with three life events motherhood widowhood for men and job loss the results also suggest that many men and women would extend employment under phased retirement programs although only for a brief period

individual risk attitudes measurement determinants and behavioral consequences this paper studies risk attitudes using a large representative survey and a complementary experiment conducted with a representative subject pool in subjects homes using a question asking people about their willingness to take risks in general we find that gender age height and parental background have an economically significant impact on willingness to take risks the experiment confirms the behavioral validity of this measure using paid lottery choices turning to other questions about risk attitudes in specific contexts we find similar results on the determinants of risk attitudes and also shed light on the deeper question of stability of risk attitudes across contexts we conduct a horse race of the ability of different measures to explain risky behaviors such as holdings stocks occupational choice and smoking the question about risk taking in general generates the best all round predictor of risky behavior

creation adoption and diffusion of innovations by subsidiaries of multinational corporations this paper reports some of the findings of a multi phased and multi method study on the organizational attributes that facilitate creation adoption and diffusion of innovations by subsidiaries of multinational companies comparison of results obtained through case research in nine companies multiple respondent questionnaire surveys in three companies and a single respondent survey in 66 north american and european multinationals reveal unambiguous and positive impacts of normative integration through organizational socialization and dense intra and inter unit communication on an mnc subsidiary s ability to contribute to the different innovation tasks the findings are less consistent with regard to the effects of local resources and autonomy and it appears that the influences of these two attributes are strongly mediated by the levels of normative integration and organizational communication

is social capital declining in the united states a multiple indicator assessment despite a great deal of interest in a possible decline of social capital in the united states scholars have not reached a consensus on the trend this article improves upon previous research by providing a model of social capital that has explicit links to theories of social capital and that analyzes multiple indicators of social capital over a 20 year period the results do not consistently support putnam s claim of a decline in social capital showing instead some decline in a general measure of social capital a decline in trust in individuals no general decline in trust in institutions and no decline in associations

cost value and foreign market entry mode the transaction and the firm this paper compares and contrasts the mode of foreign market entry decision from the transaction cost internalization and organizational capability perspectives each of these perspectives operates at a different level of analysis respectively the transaction and the firm and consequently differs in the primary arena of attention namely transaction characteristics and the capabilities of firms in making the comparison a key distinction is made between the cost and the value aspects in the management of know how based on which issues pertaining to the transfer of knowledge within and across firm boundaries and the exploitation and enhancement of competitive advantage are closely examined the main purpose of this paper is to demonstrate the implications of a shift in frame from cost to value in the analysis of decisions related to firm boundaries entry into foreign markets is used primarily as a vehicle for the accomplishment of this purpose the paper shows how the value based framework of the organizational capability perspective radically and fundamentally shifts the approach towards the governance of firm boundaries and argues that even though tc internalization theory raises some valid concerns the organizational capability framework may be more in tune with today s business context some of the assumptions of the tc internalization perspective both direct opportunism exploitation of existing advantage and indirect preservation of the value of know how across locational contexts asymmetry between bounded rationality for transaction and production purposes are critically examined and questioned implications of a shift from a cost to a value based framework are discussed and the need for a shift in research focus is emphasized

the foundations of trust macro and micro this comment on beugelsdijk s 2006 critique of trust and its measurement argues that it misses the mark and that there is neither a theoretical nor an empirical foundation for thinking that the macro and micro foundations of trust or its measurement are different from each other generalised trust is more than a simple illusion hiding behind institutional structures

a comparative study of the work values of north and south vietnamese managers we examine managerial work values and subsequent behaviors of vietnamese managers that foreign investors may face doing business in vietnam to establish a global reference point we compare the managerial values of vietnamese managers with those of chinese and u s managers the findings from this exploratory study while not always intuitive should help foreign investors to better understand vietnam furthermore the study raises important theoretical issues concerning individualism and collectivism as cross cultural measures

who trusts others community and individual determinants of social capital in a low income country this study presents new evidence on individual and community specific determinants of social trust using data from 96 villages in bangladesh we find perceived institutional trust to be positively correlated with stated inter personal trust at the same time there is significant social distance among various faith groups in our data both hindus and muslims trust their coreligionists more than they trust those from other religions moreover hindus trust christians buddhists and ngo workers more than muslims and are not distrustful of the wider society trust towards non muslims is negatively correlated with islamic school attendance among muslim respondents while religiosity tends not to play any role compared to religion the effects of institutional trust and local economic development are modest these findings are robust to control for a range of individual and community level correlates and enumerator fixed effects

the environmental kuznets curve under a new framework the role of social capital in water pollution we advance a case for including social capital in an environmental kuznets curve analysis using highly disaggregated data of water pollution in louisiana we create a social capital index and employ parametric and spatial panel regression models to explain water pollution dynamics

an intergenerational model of wages hours and earnings we develop a model in which a set of unobserved parental and sibling factors drives wages and work preferences these factors lead to similarities within families in wages work hours and earnings we estimate the model using data on parents and siblings in the national longitudinal surveys we find that parental and sibling wage factors influence the wages of both sons and daughters we also find strong similarities in work hours that run along gender lines and are due primarily to linkages in preferences the effect of wages on earnings is direct rather than through a labor supply response

a theory of trust based systems of intermediation recent studies have analysed the economic benefits of belonging to high trust networks and the biological foundations of individual trust but much scepticism remains regarding the precise role of trust in economic transactions as well as gaps between micro and macro concepts of trust this paper links individual and institutional trust by modelling the costs associated with accessing market law and trust based intermediation systems and identifies the conditions under which one of the three systems may be more advantageous for rational actors and thus more likely to emerge the discussion concentrates on examples drawn from development policy to illustrate how the three systems operate together and how the failing of the trust system affects the legal and market systems

performance and survival of joint ventures with non conventional ownership structures the international joint venture jv literature has focused on two parent jvs formed between one foreign and one local firm yet other types of jvs exist this paper identifies four distinct forms of jvs based on the jv partners nationality and equity affiliation these are i jvs that are formed between affiliated home country based firms ii jvs that are formed between unaffiliated home country based firmsl iii jvs that are formed between home country based and local firms and iv jvs that are formed between home country and third country based firms our analysis of 737 japanese jvs in asia demonstrates that the conventionally assumed form of jv represented only 30 percent of the total further each of the four jv forms significantly differed in terms of incidence performance and survival likelihood

strategic urban projects in amsterdam and new york incomplete contracts and good faith in different legal systems contracts between local government and private investment agencies play an important role in strategic urban projects real estate cycles provide only a narrow window of opportunity within which to draft such contracts a legal system should therefore not impede the possibility of reaching an agreement quickly instead it should facilitate efficient ways of reaching an agreement lengthy contracting may contribute to the persistence of real estate market cycles this paper explores the question of whether the civil law principle of good faith facilitates the drafting of incomplete contracts which may be efficient in situations of high uncertainty and complexity as was the case with two strategic inner city projects the south axis in amsterdam and battery park city in new york city the paper further establishes that good faith does play a considerable role in the differences in contracting practice

strategy complexity and economic rent this paper discusses important friction forces that future theories of strategy must incorporate some of these are technological and environmental but the most important ones it is argued are psychological the view is developed that strategy at its core concerns the development and testing of heuristics for high stake decisions in environments too unstable and complex to be optimized the paper especially highlights the behavioral dimension in the belief that strategies should incorporate both the rational and suboptimal aspects of human behavior the rational approach is in many ways the easier as there may be only one way to be right yet the great variety in which people and companies can err gives strategy its creative and real world challenge the tension between the rational and behavioral components is what the field of strategy should seek to exploit

supply side economics and endogenous growth abstract in a simple convex model of endogenous growth the expansionary effects of a deficit financed tax cut are often strong enough to allow the government debt to be paid off in the long run without the need for subsequent tax increases a permanent and substantial reduction in marginal rates of income taxation can provide for both vigorous real economic growth and long run government budget balance

the social regulation of inter firm relations in britain and germany market rules legal norms and technical standards an analysis of institutionalised rule systems particularly of technical standards traces their effects on various aspects of supplier relations in britain and germany and attempts some evaluation of performance outcomes drawing on the insights of new institutionalism in economics and sociology it is shown that the higher degree of stability and consistency in systems of social regulation in germany as compared with britain leads to more predictable and consensual relations between firms the resulting development of greater mutual trust encourages more long term and closer technological collaboration the paper utilises data from a recent comparative study of supplier relations in two traditional industries and supplements them with information from more general studies of the technical regulation of inter firm relations

bowling alone a review essay abstract this paper is a critical review of robert putnam s influential analysis of social capital in america bowling alone the review argues that bowling alone reflects many of the strengths and weaknesses of the social capital literature like this literature bowling alone describes a remarkable number of facts concerning community life in america at the same time the book suffers from many of the conceptual problems and empirical weaknesses that have plagued the social capital literature i conclude that bowling alone does not succeed in establishing the importance of social capital in understanding various socioeconomic phenomena it purports to explain

revisiting multinational firms tolerance for joint ventures a trust based approach in spite of the increasing popularity of international joint ventures managers express a high level of dissatisfaction with them this paper argues that overemphasis on the outcome has resulted in a neglect of the social processes underlying the outcome the paper elaborates upon the rationale for a cooperative approach towards interorganizational collaborative relationships based on trust and discusses it in the context of joint ventures this is then applied towards understanding multinational ownership preferences and tolerance for joint ventures it is argued that trust centered logic is largely consistent with approaches that emphasize the issue of ownership and deepens and enriches the insights provided by the latter a shift in focus from ownership to relational dynamics is encouraged

collective wage bargaining and the role of institutional stability a cross national comparison of macroeconomic performance since the advent of the economic crisis interest in the efficacy of collective wage bargaining institutions has increased as the labour market was required to bear the burden of economic adjustment and became an important policy field for institutional reform in many countries in this article the role of institutional stability trust and certainty for the efficacy of collective bargaining systems is investigated and their effects on macroeconomic outcomes inflation and unemployment are analysed we argue that stability of the institutional framework of collective bargaining is of major importance for its efficacy as it reduces uncertainty and provides the necessary basis for trust among bargaining actors thus we hypothesise that institutional change and instability are associated with significant transaction costs and have at least temporarily negative effects on economic outcomes the hypotheses are confirmed by an empirical analysis which uses data of 34 industrialised countries from 1965 to 2014

social capital and the dynamics of trust in government it is well understood that trust in government responds to the performance of the president congress and the economy despite improved government performance however trust has never returned to the levels witnessed in the 1950s and 1960s social capital may be the force that has kept trust low if so we need to assess the relative contributions of both government performance and social capital at the macro level using macrolevel data the analysis here is designed to capture the variation over time in both social capital and government performance and let them compete to explain the macro variation in trust the empirical results demonstrate that both government performance and social capital matter but that social capital appears to be the force which accounts for the decline in trust over the last 40 years

is flexible labour good for innovation evidence from firm level data whether the use of flexible workers is damaging to innovation or not depends on the dominant innovation regime in a sector in sectors with a routinised innovation regime high shares of low paid temporary workers have a negative impact on the probability that firms invest in r d in sectors that tend towards a garage business regime however flexibility has no impact the two innovation regimes differ in the nature of their knowledge base reliance on generally available knowledge or dependence on a firm s historically accumulated knowledge base innovation in the latter regime benefits from longer job durations our results are consistent with findings in macro level studies that coordinated market economies with rigid labour markets have higher labour productivity gains than liberalised market economies

land use compatibility change and policy at the rural urban fringe insights from social capital cerning the level and quality of services to be provided in the community pendall and martin lacayo nonfarm development also impacts agriculture with the loss of farmland and the difficulties of farming amidst a large nonfarm population receiving considerable attention by citizens policy makers and academics american farmland trust successfully managing changes at the ruralurban interface requires improved data technical expertise and political leadership at all levels of government success also depends we believe on the existence of social capital in this article we focus on the importance of social capital in managing change at the rural urban interface our starting assumption is that individuals or communities with access

market institutions trust and norms exploring moral economies in nigerian food systems informal market institutions and small scale traders are responsible for feeding nigerian cities this study analyses a range of economic relationships and institutions that have evolved in the context of inadequate formal institutions such as banks and legal contracts through examining both personal relationships and institutional based trust the paper explores the role of moral norms trust is shown to be related to sanctions information on other parties and a range of norms that are drawn on both calculatively and habitually the perceived moralities of different forms of institution such as credit systems trader associations and commission agents are also examined

the role of responsibility in strategic risk taking we explore play between groups where one member of each 2 person group dictates the play of that group and is therefore responsible for the payoff of the other group member we compare this to play when the game is the same but each person is playing only for herself consistent with the principle of responsibility alleviation described by charness charness g 2000 responsibility and effort in an experimental labor market journal of economic behavior and organization 42 375 384 we find that a sense of responsibility for the welfare of others has an effect while the issue of responsibility does not appear to influence the decisions of 2 3 of the population almost 90 percent of the remaining 1 3 of the population plays a less risky strategy when choosing for a group than when playing only for herself

an institution based view of executive compensation a multilevel meta analytic test we offer a multilevel meta analytic study of the firm performance executive compensation relationship comprising prior tests derived from 332 primary studies nested in 29 countries although our work modestly supports the optimal contracting theory based expectation that compensation is positively associated with performance it also reveals considerable cross country variability in this relationship we trace this variance to differences in the level of development of the formal and informal institutions protecting investors against managerial overcompensation and underperformance in terms of intentionally devised and enforced formal institutions we find significant positive moderating effects on the focal relationship of the rule of law and strength of investor protection variables for self enforcing informal institutions we find similar effects for concentrated ownership and compensation related entries in codes of good corporate governance we also find that formal and informal institutions function in a complementary manner in shaping the performance sensitivity of executive compensation the focal relationship becomes stronger when concentrated owners have access to well functioning courts and when informal norms of good governance are supported by shareholder protection laws our study thus suggests that optimal contracting theory must be supplemented with an institution based view to account for the conditioning effects of institutions on national contracting environments