statistical equilibrium wealth distributions in an exchange economy with stochastic preferences abstract we describe an exchange market consisting of many agents with stochastic preferences for two goods when individuals are indifferent between goods statistical mechanics predicts that goods and wealth will have steady state gamma distributions simulation studies show that gamma distributions arise for a broader class of preference distributions we demonstrate this mathematically in the limit of large numbers of individual agents these studies illustrate the potential power of a statistical mechanical approach to stochastic models in economics and suggest that gamma distributions will describe steady state wealths for a class of stochastic models with periodic redistribution of conserved quantities journal of economic literature classification numbers c15 c62 c73 d3 d5

on the determinants of direct foreign investment evidence from east and southeast asia abstract a model of derived demand for foreign capital by a multiple product monopolist is estimated for seven asian countries direct foreign investment dfi inflows are estimated to be less elastic with respect to the costs of capital including taxes than to wages and to be more elastic with respect to aggregate demand in export markets than domestic demand the output deterrent effect of higher wages is estimated to outweigh any substitution toward greater capital intensity the estimates also suggest that dfi rises with greater costs within the investors home countries no similar effect occurs with respect to costs in rival host countries and concerns for political stability have overlain economic determinants

alliance governance and technological performance some evidence from biotechnology alliances pursuing alliance opportunities are fraught with difficulties due to information asymmetry between the potential partners as well as technological and or market uncertainties in this article i empirically test how social ties between alliance partners alliance governance and individual firm characteristics impact alliance performance since alliances are by definition relationships between two or more independent firms defining and measuring alliance performance is difficult as the partner firms may have different objectives in entering the alliance therefore analyzing alliance performance at different stages of the alliance process using intermediate indicators of success can provide help to better understand the determinants of alliance performance as well as how these determinants may change over time

national institutional structures transaction cost economizing and competitive advantage the case of japan japan s economic success since world war ii has been striking modern japan was the first major industrial economy to emerge from outside the western tradition economically devastated in 1945 by 1990 japan had the world s second largest economy and a gdp per head 20 percent greater than that of the united states in this paper it is argued that one reason for japan s success is that the costs of achieving cooperation and specialization are lower in japan than in the west cooperation and specialization have been acknowledged to have a beneficial impact upon productivity ever since adam smith wrote about cooperative specialization in the context of the division of labor modern economic theory however suggest that in a world of self interested individuals the costs of achieving cooperation and specialization are substantial in this paper it is argued that the cultural value system that japan has inherited from its preindustrial past and particularly the tokugawa period helps facilitate cooperation b

the impacts of transport energy consumption foreign direct investment and income on co2 emissions in asean 5 economies abstract in this study we incorporate new variables and assess the impact of transportation sector s energy consumption and foreign direct investment on co2 emissions for asean 5 economies using the cointegration and granger causality methods this study also attempts to validate the environmental kuznets curve ekc hypothesis our results reveal that the co2 emissions and their determinants are co integrated only in indonesia malaysia and thailand the long run elasticity estimation suggests that income and transport energy consumption significantly influence co2 emissions whereas fdi is not significant economic growth plays a greater role in contributing to co2 emission in asean 5 nonetheless we find that the inverted u shape ekc hypothesis is not applicable to the asean 5 economies especially in indonesia malaysia and thailand in the long run the bi directional causality between economic growth and co2 emissions is detected in indonesia and thailand while we find unidirectional causality running from gdp to co2 emissions in malaysia we also observe bi directional causality between transport energy consumption fdi and co2 emissions in thailand and malaysia as an immediate policy option controlling energy consumption in transportation sector may result in a significant reduction in co2 emissions however this may slow the process of economic growth in malaysia and indonesia alternatively we suggest policymakers to place more emphasis on energy efficient transportation system and policies to minimise fossil fuel consumption thus the quality of environment can be improved with less deleterious impact on economic growth

exploiting ergodicity in forecasts of corporate profitability abstract theory suggests that competition tends to equalize profit rates through the process of capital reallocation and numerous studies have confirmed that profit rates are indeed persistent and mean reverting recent empirical evidence further shows that fluctuations in the profitability of surviving corporations are well approximated by a stationary laplace distribution here we show that a parsimonious diffusion process of corporate profitability that accounts for all three features of the data achieves better out of sample forecasting performance across different time horizons than previously suggested time series and cross sectional models as a consequence of replicating the empirical distribution of profit rates the model prescribes a particular strength or speed for the mean reversion of all returns which leads to superior forecasts of individual time series when we exploit information from the cross sectional collection of firms the new model should appeal to managers analysts investors and other groups of corporate stakeholders who are interested in accurate forecasts of profitability to the extent that mean reversion in profitability is the source of predictable variation in earnings our approach can also be used in forecasts of earnings and is thus useful for firm valuation

a statistical equilibrium model of competitive firms abstract we find that the empirical density of firm profit rates measured as returns on assets is markedly non gaussian and reasonably well described by an exponential power or subbotin distribution we start from a statistical equilibrium model that leads to a stationary subbotin density in the presence of complex interactions among competitive heterogeneous firms to investigate the dynamics of firm profitability we construct a diffusion process that has the subbotin distribution as its stationary probability density this leads to a phenomenologically inspired interpretation of variations in the shape parameter of the subbotin distribution which essentially measures the competitive pressure in and across industries our findings have profound implications both for the previous literature on the persistence of profits as well as for understanding competition as a dynamic process our main formal finding is that firms idiosyncratic efforts and the tendency for competition to equalize profit rates are two sides of the same coin and that a ratio of these two effects ultimately determines the dispersion of the equilibrium distribution

a causal model of linkages among environmental dimensions macro organizational characteristics and performance an integrative model of relationships among environmental dimensions diversification strategy firm size structural divisionalization and economic performance was developed and tested using environmental and organizational data from 110 large manufacturing firms the results suggested that among those organizations 1 higher levels of environmental instability were associated with lower levels of divisionalization and diversification 2 strategy followed structure and 3 size did not mediate the strategy structure relationship furthermore both environmental instability and diversification were positively related to market determined performance and instability was negatively related to operating performance the results provided support for portions of each of three models the external control strategic management and inertial models

energy savings in nigeria is there a way of escape from energy inefficiency abstract this study estimates the transition probabilities for different energy use states in nigeria using the markov switching regression technique according to the results both energy efficient and energy inefficient states are less persistent but comparatively the energy inefficient state is more persistent thus in nigeria it is much difficult to escape from the energy inefficient state than the energy efficient state several reasons may explain this phenomenon and they include inefficient regulatory system poor institutional structure high corruption proliferation of second hand goods undeveloped markets high incidence of poverty and inefficient pricing in the energy sector pricing policies should be combined with institutional improvement and infrastructural development if nigeria wants to achieve a sustainable energy efficient state in the long term

human capital and fdi inflow an assessment of the african case summary this study assesses the role of human capital hk on fdi inflows to sub saharan africa it uses panel data for the period 1980 2012 to asses if changing skill needs influence fdi inflows several measures of hk are used to assess whether the quality of labor explains fdi flows over the study period various versions of an fdi model were estimated and the results show that all measures of hk have a significant influence on fdi as are the traditional variables there is no evidence of the increasing importance of hk on fdi over time probably reflecting the type of fdi flowing into ssa

human capital and fdi inflows to developing countries new empirical evidence abstract despite the dramatic increase in total foreign direct investment fdi flows to developing countries in the last few years the bulk of the inflows has been directed to only a limited number of countries it has been argued that developing countries might enhance their attractiveness as locations for fdi by pursuing policies that raise the level of local skills and build up human resource capabilities nevertheless the empirical evidence in the literature in support of this recommendation for a large sample of developing countries is scant this paper evaluates this argument in the light of the evolution in the structural characteristics of fdi and empirically tests the hypothesis that the level of human capital in host countries may affect the geographical distribution of fdi the empirical findings are a human capital is a statistically significant determinant of fdi inflows b human capital is one of the most important determinants and c its importance has become increasingly greater through time

economic growth and energy consumption the energy environmental kuznets curve for latin america and the caribbean abstract this paper investigates the relationship between economic growth and energy consumption using the hypothesis postulated for the energy environmental kuznets curve which assumes an inverted u shape relationship between income and energy consumption panel data for 22 latin american and caribbean countries for the period 1990 2011 were used absolute energy consumption was chosen as an environmental pressure indicator because energy consumption is the major contributor of emissions pollutants the results obtained in the estimations show that the hypothesis postulated for the energy environmental kuznets curve is not supported for the region on the contrary the results show an exponential growth as gross value added grows also notable differences are shown between the analyzed economies

contextual influences on the corporate entrepreneurship performance relationship a longitudinal analysis abstract over the past several years corporate entrepreneurship has been widely touted by executives and researchers alike as an effective means for revitalizing companies and improving their financial performance for the most part the call for greater entrepreneurial behavior on the part of established companies has been accepted on faith as an inherently desirable objective the implicit logic behind the pervasive belief in the value of corporate entrepreneurship seems to be that risk taking innovation and aggressive competitive action the key elements of entrepreneurial corporations will help in identifying and pursuing lucrative product market opportunities and in providing new bases for achieving superior competitive positions but what do we really know about the financial consequences of corporate entrepreneurship most of the evidence that corporate entrepreneurship pays off is anecdotal in nature or based on cross sectional studies that focus on the short term implications of entrepreneurial behaviors as such in a definitive sense we know very little about the financial consequences of corporate entrepreneurship in an attempt to improve our understanding of this issue this article describes a study of corporate entrepreneurship and its impact on company financial performance data were collected from three different samples over a seven year period to assess the longitudinal impact of corporate entrepreneurship on firm performance these samples consist of 24 medium sized manufacturing firms representing 14 industry segments 39 chemical companies and 45 fortune 500 industrial firms representing five industry segments data were gathered on each sample using both primary and secondary sources regression analysis was then used to analyze the data the results suggest that corporate entrepreneurship has a positive impact on financial measures of company performance this effect on performance which tends to be modest over the first few years increases over time suggesting that corporate entrepreneurship may indeed be a generally effective means for improving long term company financial performance moreover the results indicate that corporate entrepreneurship is a particularly effective practice among companies operating in hostile environments as opposed to benign environments the study has three principal implications for practicing managers first the study documents the general financial viability of engaging in corporate entrepreneurship this is not to suggest that corporate entrepreneurship is a panacea for improving financial performance however entrepreneurial behavior when considered on the whole i e across firms and industries is associated with superior financial performance second the study suggests a need to use a long term time horizon in order to adequately judge the financial consequences of corporate entrepreneurship the use of a shorter evaluation period may not allow sufficient time for entrepreneurial actions to have their full market and corresponding financial impact finally the study identifies the context specific character of effective entrepreneurial practice specifically corporate entrepreneurship appears to be a particularly effective strategic practice among firms operating in hostile business settings

an empirical investigation of the pollution haven effect with strategic environment and trade policy abstract using a new dataset on the stringency and enforcement of environmental policy this study is the first to find robust confirmation of a pollution haven effect in a cross country context by accounting for strategically determined environment trade and intellectual property right ipr policies a simple game theoretic approach to policy determination is described which suggests an identification strategy based on other country characteristics it is found that for the top 20th percentile of countries in terms of growth in u s multinational affiliate value added as much as 8 6 of that growth between 1999 and 2003 can be attributed to declining relative stringency and enforcement of environmental policy the results are robust to a number of identification tests weak iv tests and third country spatial effects further evidence is found that relatively footloose industries are more likely to be affected by environmental policy than more traditionally dirty industries and enforcement of environmental policies tends to be a more important deterrent than the stringency of the policy set

political governance civil liberties and human capital evaluating their effect on foreign direct investment in emerging and developing economies we study the influence of a country s political governance on its attractiveness to foreign direct investors we argue that democracy is not a unidimensional concept and that the effect of host country political governance on incoming foreign direct investment fdi differs depending on whether fdi originates from a democratic or an autocratic country we also hypothesize that the effect of civil liberties depends on the motivations of investing multinational enterprises mnes and that human capital moderates this relationship we test our hypotheses on a sample of 35 000 investments in emerging and developing countries between 2003 and 2013

determinants of patent rights a cross national study abstract this paper presents an index of patent rights for 110 countries for the period 1960 1990 the index is used to examine what factors or characteristics of economies determine how strongly patent rights will be protected the evidence does indicate that more developed economies tend to provide stronger protection but the underlying factors which influence patent protection levels are the country s level of research and development r d activity market environment and international integration which are correlated with its level of development the results qualify however that r d activity influences patent protection levels after a nation s research sector reaches a critical size an implication of this is that to raise patent protection levels in weakly protecting countries it is important to foster a significant research base in those countries and thereby create incentives for protecting patent rights

the stability of joint ventures reciprocity and competitive rivalry the focus of the following empirical analysis is the influence of reciprocity and long term relationships on the stability of joint ventures these cooperative incentives are offset by industry structural conditions which may promote competitive rivalry among the partners to separate these effects on joint venture survival the hypothesized relationships are proxied by variables drawn from industry and questionnaire data and estimated under a hazard model specification a theoretical implication of the findings is to suggest a shift of attention from the transaction to the economic relationship as the unit of analysis copyright 1989 by blackwell publishing ltd

testing for granger causality between energy use and foreign direct investment inflows in developing countries abstract foreign direct investment inflows fdi and emissions exhibit a two way relationship in particular this research studies the relationship between fdi inflows and emissions from energy use in developing countries this is done through conducting a granger causality test on the direction of the relationship between fdi inflows and energy use for that a fixed effect panel data model with heterogeneous slopes is used heterogeneous slopes specification is selected to account for individual differences within countries error correction model is the chosen estimation approach the empirical results highlight the presence of a two way relationship between fdi inflows and emissions from energy use when testing for short and long run effects jointly however this result varies when testing for no long run effect within individual countries policy implications for developing countries are also given

intellectual property rights and foreign direct investment abstract this paper develops a product cycle model with endogenous innovation imitation and foreign direct investment fdi we use this model to determine how stronger intellectual property rights ipr protection in the south affects innovation imitation and fdi we find that stronger ipr protection keeps multinationals safer from imitation but no more so than northern firms instead the increased difficulty of imitation generates resource wasting and imitation disincentive effects that reduce both fdi and innovation the greater resources absorbed in imitation crowd out fdi reduced fdi then transmits resource scarcity in the south back to the north and consequently contracts innovation

a transaction costs analysis of innovations in the organization of pharmaceutical r d abstract this paper uses transaction costs economics to analyze the increasing importance of vertical disintegration of r d by large pharmaceutical and chemical firms first it discusses three characteristics of the research based pharmaceutical industry then it shows that market failures related to long term joint venture r d contracts between firms and university laboratories are less significant than appears at first and may account for their striking increase over the past fifteen years

the organization of relational contracts the allocation of rights in franchising abstract franchising contracts are designed to bring together two kinds of entrepreneurs the franchiser and the franchisee and to maintain their relationship in the long run in contrast to standard exchange contracts in law which are specifically designed to bring about the completion of an exchange efficiently franchise contracts are designed to make it possible for the entrepreneurs to initiate to maintain and to eventually terminate their relationship without dispute the research reported in this article is an attempt to see how the dual purpose of franchising contracts are achieved the article first describes the internal organization of franchise contracts what we called the micro contractual aspects and how different kinds of rights and obligations are allocated to accomplish these multiple ends the second part of the article provides an empirical examination of 30 franchise contracts to see if the internal organization of the contracts influence both the expansion of the franchise operations through new franchises and the amount of dispute between the two sides of franchise contracts every franchise contract includes a set of provisions that define the commencement termination and ongoing operations of franchise relations the internal organization of franchise contracts specifies what kinds of rights and obligations are distributed to the parties and the nature of this allocation within each domain of provisions we argue that the commencement and termination aspects of franchise contracts are usually written in order to make the relationship between the parties clear and the contingencies specific in these provisions the contract is written in discrete terms in which each party s rights and duties are specifically delineated the contractual provisions dealing with the ongoing operations and the conduct of the parties on the other hand cannot be made specific because it is impossible to define all the future contingencies and possible business opportunities under these conditions the contract is usually written in relational terms in which each party s rights and obligations are defined in terms of powers and liabilities towards each other rather than in terms of specific duties and rights one critical consequence of writing contracts that include powers and liabilities however is that it may lead to disputes and undesirable conflict that are detrimental to the success of the franchise in order to deal with these conflicts among the parties the contract needs to specify conflict resolution mechanisms that are an integral part of franchise contracts these general arguments are tested with the use of 30 randomly selected franchise contracts from a diverse set of businesses our results show that indeed different parts of franchise contracts allocate rights and obligations differently and the more relational a contract becomes the more likely that it would include various dispute resolution mechanisms we also found that the success of a franchise contract which is measured by the number of legal disputes it generates and the growth of franchised units is influenced by the existence of relational provisions and the explicit dispute resolution mechanisms included in the contract we recommend that franchise contracts should be written to make the commencement and termination aspect of the relationship as discrete as possible the operations and conduct provisions of the contract on the other hand should be written in relational terms to give the parties the ability to respond to changes in business conditions without renegotiating the contract it is usually the tendency on the part of franchise lawyers to write discrete contracts that attempt to specify every conceivable contingency to avoid future disputes we argue here that a better strategy is to limit the discrete aspects of the contract to the commencement and termination clauses and to concentrate more on the dispute resolution mechanisms that can become an integral part of the contract thus we also recommend that various dispute resolution mechanisms such as franchisee associations franchisee councils and third party arbitration should be set up within the contract to address the possible disputes early on rather than to wait for potentially very costly court proceedings for both parties

signaling through private equity placements and its impact on the valuation of biotechnology firms abstract this paper investigates how young publicly held technology firms contend with information asymmetry and the hazards it introduces to acquire the capital necessary for future growth we ascribe to the view that firms issuing private equity signal the marketplace that managers believe their growth opportunities are undervalued consistent with this view we find significant positive abnormal returns to announcements of private equity placements we develop theory suggesting that returns are determined by the timing of previous signals we also argue that the characteristics of the private placement signal specifically whether private equity is bundled with research partnerships influence the strength of the signal our results largely support our expectations

an integrated anti opportunism system in international exchange building on economic and social exchange theories this study develops an integrated model in which curtailing opportunism in international joint ventures ijvs requires four interrelated sets of suppressing forces 1 contractual ordering contractual inclusiveness and contractual obligatoriness 2 structural ordering managerial governance and equity captiveness 3 relational ordering interparty attachment and boundary spanner ties and 4 justice ordering procedural justice and distributive justice using a sample of 192 ijvs in an emerging market this study finds general support for our theoretical model our research validates that countering opportunism involves a system wide effort that integrates economic and social mandates unifies ex ante and ex post mechanisms controls both egoistic and non egoistic motivations and combines organizational level and individual level forces for partners from individualist cultures economic ordering forces contractual and structural are stronger than social ordering forces relational and justice in relation to opportunism resistance whereas for partners from a collectivistic culture social ordering forces are relatively stronger than economic ordering forces for this end

political regimes and economic growth arguments that relate regimes to growth focus on property rights pressures for immediate consumption and the autonomy of dictators while everyone seems to agree that secure property rights foster growth it is controversial whether democracies or dictatorships better secure these rights the main mechanism by which democracy is thought to hinder growth is pressure for immediate consumption which reduces investment only states that are institutionally insulated from such pressures can resist them and democratic states are not the main argument against dictatorships is that authoritarian rulers have no interest in maximizing total output these views are summarized in turn

top managers education and r d investment abstract this paper analyzes data spanning 17 years on r d expenditures and the educational background of top managers for 221 relatively research intensive u s corporations the fraction of companies for which at least one of the top two executive officers was educated in science or engineering peaked at 71 5 percent in 1980 and declined slightly thereafter controlling for profitability and the industrial fields in which the companies operated having a science or engineering educated leader is associated with more intensive support of r d a positive interaction between technical and legal education is detected

the location of overseas production and production for export by u s multinational firms abstract the location of overseas manufacturing production is influenced by common factors that operate in all industries notably proximity to the united states and to other markets within industries opposites attract low wage and low capital intensity parents choose high wage countries production for export is attracted by large internal markets in host countries economies of scale in production presumably make large markets economical as export bases another factor is high trade propensities of host countries u s firms tend to export from high wage countries but labor cost is not in general a major influence on the location of export production

explaining the distribution of firm growth rates empirical analyses on aggregated datasets have revealed a common exponential behavior in the shape of the probability density of corporate growth rates we present clear cut evidence on this topic using disaggregated data we explain the observed regularities proposing a model in which firms ability to take up new business opportunities increases with the number of opportunities already exploited a theoretical result is presented for the limiting case in which the number of firms and opportunities go to infinity moreover using simulations we show that even in a small industry the agreement with asymptotic results is almost complete

what drives the energy saving role of fdi and industrialization in east africa abstract analysis of the unconditional impacts of foreign direct inflows fdis and industrialization on energy intensity does not show the hidden roles of some economic conditions such as income and trade openness in this study we focused on the conditional impacts of fdis and industrialization on energy productivity using a panel data consisting of thirteen 13 east african countries covering 1980 2011 the baseline result shows that higher income and a well integrated economy are pro energy productive but fdis and intense industrialization are anti energy productive in the sub region this result remains robust even when we exclude the high income group and control for income group effects income significantly promotes energy productivity more in low income group than middle income group intense industrialization and fdis significantly decreases energy productivity only in low income countries trade openness significantly promotes energy productivity only in middle income group we have shown that fdis and income intense industrialization and fdis and intense industrialization and globalization are complementary forces that promote energy productivity in east africa but this is more evident for the middle income group than the low income group in the sub region based on the result we recommend a quadruplet programme called the growth industrial foreign investment and trade programme giftp last our result suggests that unconditional analysis of energy productivity should not be seen as an end in itself but a basis for further analysis

the effect of national culture on the choice of entry mode characteristics of national cultures have frequently been claimed to influence the selection of entry modes this article investigates this claim by developing a theoretical argument for why culture should influence the choice of entry two hypotheses are derived which relate culture to entry mode choice one focusing on the cultural distance between countries the other on attitudes towards uncertainty avoidance using a multinomial logit model and controlling for other effects the hypotheses are tested by analysing data on 228 entries into the united states market by acquisition wholly owned greenfield and joint venture empirical support for the effect of national culture on entry choice is found

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

r d cooperation between firms a perceived transaction cost perspective transaction cost is considered as an explanatory variable for the choice between markets and various organizational arrangements for performing some predefined tasks such as engaging in private r d with respect to r d cooperation between firms we show that the perception of high transaction cost is related to certain characteristics of the firm and to the type of r d task we also show a relationship between the perception of transaction cost and the perceived success of the cooperation the analysis sheds light on various determinants of transaction costs

foreign direct investment pollution and economic growth evidence from malaysia the bounds test developed by pesaran et al 2001 is applied to examine the existence of a long run relationship between foreign direct investment fdi inflows pollution and output of malaysia granger causality tests are also utilized to test for the presence of the short run and long run causal relationship between these variables both fdi inflows and pollution have short run causal relationship on output output only has long run causal relationship on fdi inflows

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

host country reforms and fdi inflows how much difference do they make summary this study examines the effects of various policies on foreign direct investment fdi flows from the perspective of the eclectic theory of international investment and hence the advantages of foreign ownership host country location and internationalization host country policies can influence fdi flows primarily through their influence on the advantages of location in the host country pooled cross section and time series data for 49 less developed countries ldcs over 1970 95 are used to examine the effects of several different types of policy institutional variables including corporate tax rates tariff rates the degree of openness to international capital flows exchange rate distortions contract enforcement nationalization risk bureaucratic delay and corruption a multivariate analysis of the effects on fdi flows of each type of policy with and without controls for other relevant determinants is conducted two different sources of fdi data are employed as well as two different measures of capital controls although there are methodological problems in estimation and especially collinearity problems and relatively severe availability constraints for some of the relevant measures the results demonstrate the relevance and importance for fdi flows of many of the policy institutional variables under study they also indicate that the results from panel methods yield results that differ rather significantly from those obtained from pure cross section analysis because of complementarity between the various elements of a healthy investment climate the effects of some policy reforms estimated from models which do not control for changes in other policies may overstate the effectiveness of individual policy reforms

the energy intensity in lithuania during 1995 2009 a lmdi approach abstract the measurement assessment and effective mitigation of energy intensity compose a foremost objective of contemporary energy policy although the european union eu member states have been experiencing the convergence in energy efficiency indicators lithuania acceded to the eu in 2004 still remains peculiar with relatively high energy intensity our study therefore is aimed at analyzing the energy intensity trends in lithuanian economy as a whole as well as in separate economic sectors the investigation covers the period of 1995 2009 the logarithmic mean divisia index was applied for decomposition analysis our analysis has shown that energy efficiency falls during economic downturn in order to facilitate these challenges the lithuanian government as well as business should opt for increasing energy efficiency in the most problematic sectors of transport and services in addition the analysis of legal acts namely national energy efficiency programme for 2006 2010 and energy efficiency action plan for 2010 2016 was taken into consideration some suggestions thus were offered for successful implementation of strategic goals outlined in the aforementioned strategic documents

fiscal incentives and direct foreign investment in less developed countries this study found no support for the belief by the governments of most less developed countries ldcs that the provision of fiscal incentives is necessary to attract direct foreign investment and that the greater the generosity of these incentive programmes the greater would be the level of such investment what mattered were the presence of natural resources and a proven record of economic performance the provision of incentives could not compensate for the absence of either of these two factors the study is a cross sectional one of 27 ldcs for the period 1965 73

are weak patent rights a barrier to u s exports abstract this paper assesses whether how and to what extent u s exports are sensitive to national differences in patent rights i estimate bilateral trade equations that account for trade distortions related to patent rights using data on state to country manufacturing exports in 1992 i find that weak patent rights are a barrier to u s exports but only to countries that pose a strong threat of imitation e g china the stronger patent rights required under the wto agreement increase u s exports to these high threat markets alternatively strengthening patent rights in countries that pose a weak threat of imitation reinforces monopoly power and reduces u s exports to these markets

information theoretic approaches in economics economics has seen a recent rise in interest in information theory as an alternative framework to the conventional notion of equilibrium as a fixed state such as walrasian market clearing general equilibrium the information theoretic approach is predicated on the notion of statistical equilibrium se that takes a distribution over all possible states as an equilibrium and therefore predicts the endogenous fluctuations of the system along with its central tendency simultaneously for this reason se approaches can explain the observed data without relying on arbitrary assumptions about random noise and provide useful insights for many interesting economic problems that conventional methods have not been able to satisfactorily deal with in this paper we review the key elements of information theory focusing on the notions and applications of entropy and se in economics particularly paying attention to how entropy concepts open up a new frontline of economic research

asymmetric competition risk and return distribution abstract we propose a parsimonious statistical model of firm competition where structural differences in the strength of competitive pressure and the magnitude of return fluctuations above and below the system wide benchmark translate into a skewed subbotin or asymmetric exponential power aep distribution of returns to capital empirical evidence from us data illustrates that the aep distribution compares favorably to popular alternative models such as the symmetric or asymmetric laplace density in terms of goodness of fit when entry and exit dynamics of markets are taken into account

the catalytic effect of lending by the international financial institutions for many less developed countries ldcs and countries in transition cits external financing is frequently an effective constraint on economic growth and development capital inflows may be used to overcome shortages of domestic saving thereby permitting higher levels of investment as well as shortages of foreign exchange thereby permitting larger quantities of imports

trade openness foreign direct investment and child labor summary the skeptics of globalization argue that increased trade openness and foreign direct investment induce developing countries to keep labor costs low for example by letting children work this article argues that there are good theoretical reasons why globalization might actually have the opposite effect we test this with various measures of child labor and provide the first analysis of foreign investment in addition to trade we present evidence that countries that are more open to trade and or have a higher stock of foreign direct investment also have a lower incidence of child labor this holds for the labor force participation rate of 10 14 year old children the secondary school nonattendance rate and a count measure of economic sectors with child labor incidence as the dependent variables globalization is associated with less not more child labor

gibrat s law redux think profitability instead of growth we argue that firm profitability can be conveniently characterized by one and the same diffusion process for all firms akin to gibrat s seminal idea of a common stochastic description for the dynamics of firm growth here we show that the diffusion of profit rates applies across all surviving corporations irrespective of their size or industry which is not true for growth rates the diffusion process is empirically consistent with both the cross sectional distribution of profit rates and the individual time series of corporate profit rates leading to the notion of a statistical equilibrium this has stark and unexpected implications for our understanding of individual destinies since the model and data suggest that idiosyncratic efforts have no impact on the aggregate distributional outcome instead idiosyncratic efforts merely affect the individual persistence of abnormal profits from the system wide norm put differently corporations have to participate in the same game and can merely choose the speed at which they play it but they cannot bend the rules

a new database on human capital stock in developing and industrial countries sources methodology and results abstract the paper describes the techniques and data adopted for the construction of a new series of estimates of the stock of education in 85 countries over 28 years 1960 1987 the series are built from enrollment data using the perpetual inventory method adjusted for mortality estimates are corrected for grade repetition among school goers and country specific drop out rates for primary and secondary students enrollment data series used start as far back as 1930 for most countries and even earlier for others this reduces the need for backward extrapolation of enrollments to provide the initial estimates of the investment inventory

network embeddedness and new product development in the biopharmaceutical industry the moderating role of open innovation flow this paper explores the role of centrality and structural holes positions on the likelihood to develop new products and the moderating role of the open innovation flow a measure of the net knowledge flow crossing the firm s boundaries on the aforementioned relation we argue that network positions provide the information content to the firm whilst open innovation flow describes how the firm uses such content thus the combination of these two concepts has a significant impact on new product development we test the theoretical framework on a large sample of 544 public companies and data from 1758 agreements among 1890 bio pharmaceutical firms through the period 2006 2010 our results show that being centrally located in the network positively affects the new product development process while having a structural holes position has no effect on the aforementioned performance however the interaction of the two network positions with the open innovation flow has a positive impact on the likelihood to develop new products

is energy consumption sensitive to foreign capital inflows and currency devaluation in pakistan this study investigates the relationship between foreign capital inflows and energy consumption by incorporating economic growth exports and currency devaluation in energy demand function for the

investigating the multivariate granger causality between energy consumption economic growth and co2 emissions in ghana abstract the economy of ghana continues to witness a rising demand for energy coupled with growth in gross domestic product that follows a wavy trajectory in the midst of this economic phenomenon there is a trend of increasing greenhouse gas emissions with attendant economic health and environmental consequences this paper examines the causal interdependence between energy consumption economic growth and co 2 emissions in ghana from 1960 to 2015 by using the toda yamamoto and granger causality tests the johansen and johansen juselius cointegration approach and the autoregressive distributed lag bounds test approach are employed to test for cointegration relationship the results show that the variables are cointegrated the causality tests reveal that there is feedback granger causality between energy consumption and co 2 emissions since there is a causal link between energy consumption and economic growth with its concomitant effect on co 2 emissions any energy conservation oriented policy not derived from energy efficiency and technological progress may hurt the ghanaian economy in effect more effort should be aimed at improving energy efficiency through technological progress and investment should be made in renewable energy to reduce over reliance on fossil fuels

an examination of opportunistic action within research alliances evidence from the biotechnology industry abstract like a photographer trying to take a perfect picture an entrepreneur trying to increase the odds of survival must learn very quickly that focus is everything and what demands an entrepreneur s immediate focus is the development of new products entrepreneurial ventures depend on the rapid creation of new products to gain access to early cash flows create legitimacy grab early market share and increase their odds of survival schoonhoven eisenhardt and lymman 1990 however the increasing costs and complexity of new product development are making it difficult for entrepreneurial ventures to contain the assets needed for successful r d within their boundaries forcing them to reach beyond their borders to access resources barley et al 1992 document the use of more than 900 contractual research agreements within the biotechnology industry alone recent research has also found a positive relationship between the use of alliances in the r d process and the rate of new product development deeds and hill 1996 shan walker and kogut 1994 this particular study focuses on the use of relational contracts in the r d process and extends the prior work on relational contracts to create an explanatory model of the deterrents to opportunism within a relational contract the article begins with a discussion of the traditional modes of deterring opportunism and of modes of deterring opportunism based on the development of a strong cross boundary relationship from this discussion hypotheses are derived that relate certain characteristics of the alliance frequency of communication strength of contractual deterrents hostage investments age of the relationship etc to the level of opportunism within the relationship these hypotheses are then tested on a sample of 109 research alliances in the biotechnology industry we found significant evidence that a strong relationship between the partners serves as a much more effective deterrent to opportunistic action than the creation of hostage investments or contingent claims contracts in particular the results for frequency of communication and the background of the firm highlight the importance of the top management team s understanding and involvement in the management of research alliances the strong results for background congruence indicates the importance of shared expectations and understandings between the partners the strong empirical results for the hypothesized u shaped relationship between age and opportunism provide support for the existence of both a honeymoon period in the relationship and a liability of adolescence among research alliances the data also suggest that the honeymoon period for an alliance will last about 4 6 years we also find that the honeymoon period for alliances that are of little importance to the future of the firm is only 4 1 years and in our sample of alliances that were important to the future of the firm the honeymoon period extended from 4 6 years to 6 1 years

how trade related are intellectual property rights abstract there is little empirical evidence about whether differing international levels of patent protection influence trade flows if a nation strengthens its patent laws it could experience higher or lower imports we specify an empirical model in which deviations of bilateral sectoral imports from anticipated levels are related to income trade barriers and patent laws patent regulations in the importing country are corrected for endogeneity through the use of instrumental variables the results of the final equations indicate that increasing patent protection has a positive impact on bilateral manufacturing imports into both small and large developing economies

reconciling the conflict between the pollution haven hypothesis and an emerging trajectory of international technology transfer abstract many developing countries have relied on technology transfer through foreign direct investment fdi from developed countries as a primary means of technology acquisition however recent increased global eco consciousness and linking of trade and investment with environmental issues has the potential of disrupting these investment flows this paper investigates the validity of the pollution haven hypothesis which claims that an open market regime will encourage the flow of generally low technology polluting industries to developing countries from a neo technology trade perspective in the process an emerging trajectory of international technology transfer favoring high technology industries is established this paper concludes that positive measures enhancing fdi is not only crucial for technology upgrading but at the same time brings about enhanced environmental welfare through transfer of eco friendly products and production processes

the relationship amongst energy consumption foreign direct investment and output in developed and developing countries abstract the current study inspects the nexus amongst energy consumption fdi inflows and output in 75 countries meantime the period 1990 2010 we further examine this relationship with regard to developed as well as developing countries assembled from diverse geographic regions from the world the present results display that there is proof of bidirectional linkage concerning fdi and output per capita concerning renewable energy consumption and gross domestic product per capita and concerning non renewable energy and gross domestic product per capita in the three groups of countries developed all and developing in addition the judgments detect a bidirectional linkage concerning renewable energy consumption and fdi in developed countries an increase of 1 rate in renewable energy participates to improving fdi by 0 185 and at the same time an increase of fdi contributes to enhancing renewable energy by 0 292 nevertheless in the case of all and developing countries the results discover unidirectional link moving from foreign inflows to both sorts of energy in conclusion the policy recommendations of our empirical results are taken into consideration

intellectual property rights environmental regulations and foreign direct investment sustainable development has been a popular buzzword among policymakers and economists for over a decade although a key tenet of maintaining a sustainable development path for many economies rests on attracting mobile capital theoretical and empirical evidence into the institutional policies that attract factors remains largely unresolved this paper takes a positive look at the determinants of attracting capital with particular attention paid to intellectual property rights and environmental regulations

the volatility of offshore investment abstract offshore investment often bears the image of footloose industry with little to hinder movement to the most favorable environment an effort to describe this particular segment of u s direct investment supports some elements of the colorful anecdotal portrait painted by critics in the third world semiconductor assemblers are moderately sensitive to wage rates and adjust quite rapidly in maintaining what they perceive as a diversified portfolio of risky ldc production locations on the other hand this reaction is small enough to guarantee that modest increases in wages will not send all investment fleeing from an export platform new methods of modelling direct foreign investment when risk diversification is important in explaining industrial location decisions are introduced in this paper

are asean countries havens for japanese pollution intensive industry in an era of closer worldwide economic integration the role that environmental regulations play in shaping a country s comparative advantage is greater than ever this has led to fears that dirty firms will relocate from developed to developing countries where environmental regulations may be less stringent the so called pollution haven hypothesis to date however there is little support for the existence of pollution havens despite anecdotal evidence and the theoretical predictions in this paper we employ a unique industry level dataset for japan and examine whether japanese industries have relocated production to their asean neighbours in response to the relative stringency of japanese environmental regulations not only do we find no evidence for pollution haven consistent behaviour but also some indication that the complex relationship between the characteristics of japanese dirty industries and environmental regulations may actually have reduced japanese outward fdi to the philippines

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

strategic alliances and the rate of new product development an empirical study of entrepreneurial biotechnology firms abstract a key to success in industries populated by entrepreneurial high technology firms is the rate at which the firm develops new products rapid product development creates significant advantages for entrepreneurial firms including access to early cash flows external visibility legitimacy and early market share the higher a firm s rate of new product development the more likely the firm is to achieve and maintain these first mover advantages this is particularly true in industries such as pharmaceuticals where the effectiveness of patent protections leads to patent races in which a winner take all scenario exists but even in industries where patent protection is weak the advantages of being first in terms of market preemption reputation effects experience curve effects etc can still be of major importance we argue that one way an entrepreneurial firm can increase its rate of new product development is by entering into strategic alliances with firms that possess complementary assets the basic proposition advanced is that a firm s rate of new product development is a positive function of the number of strategic alliances that it has entered however the relationship between strategic alliances and the rate of new product development may be nonlinear specifically although strategic alliances may initially have positive effects on the rate of new product development this relationship may exhibit diminishing returns moreover past some point it is possible that negative returns may set in thus the relationship between the number of alliances and the rate of new product development may be an inverted u shape two reasons can be given to support such a relationship first not all alliances will make an equal contribution to increasing the rate of new product development the economic law of diminishing returns suggests that the more alliances a firm engages in the more likely it is to enter some alliances whose marginal contribution is relatively minor such a phenomenon on its own is enough to suggest diminishing returns second gaining access to complementary assets through strategic alliances is not without risks malperformance may occur when the firm discovers that the complementary assets provided by the partner are a poor match fail to live up to the promises made by the partner or a partner may opportunistically exploit an alliance expropriating the firm s know how while providing little in return these problems arise because the effectiveness with which the firm can select and manage alliance partners is likely to be negatively related to the number of alliances the firm is managing due to information processing requirements the quality of partner search and the ability to monitor the partners actions will decline as the firm increases the number of alliances in which it is involved this reasoning leads to a prediction that past some point alliances will be increasingly vulnerable to malperformance this raises not only the possibility of diminishing returns to the number of alliances but also negative returns as the number of alliances increases past some critical point this proposed relationship between alliances and new product development was tested on a sample of 132 biotechnology firms the results provide strong evidence to support the inverted u shaped relationship between the number of strategic alliances and the rate of new product development therefore at low levels strategic alliances are positively related to new product development but as the number of alliances increases the benefits begin to decrease and at high levels the costs of an additional alliance actually outweigh the benefits

the energy growth nexus in thailand does trade openness boost up energy consumption the nexus between trade openness and energy demand is hot topic of discussion among academicians and researchers and numerous studies are available in existing literature while investigating the nexus between trade openness and energy demand this paper explores the relationship between energy consumption trade openness and economic growth in case of thailand in doing so we have applied bayer and hanck cointegration approach to test whether the long run relationship exists between the variables our results confirm the presence of cointegration between the variables energy consumption stimulates economic growth trade openness adds in economic growth the causality analysis reveals that energy consumption granger causes economic growth and in resulting economic growth granger causes energy consumption trade openness and energy consumption are interdependent i e trade openness granger causes energy consumption and in return energy consumption granger causes trade openness this paper openness up new directions for policy making authorities in thailand to design a comprehensive energy and trade policies to sustain economic growth for long run

implications of rational inattention abstract a constraint that actions can depend on observations only through a communication channel with finite shannon capacity is shown to be able to play a role very similar to that of a signal extraction problem or an adjustment cost in standard control problems the resulting theory looks enough like familiar dynamic rational expectations theories to suggest that it might be useful and practical while the implications for policy are different enough to be interesting

financing clean energy projects through domestic and foreign capital the role of political cooperation among the eu the g20 and oecd countries abstract there is a growing concern among both individuals and policy makers in relevance to increasing co 2 emissions across the world as a result international organizations have started to pressurize economies to minimize their carbon emissions by increasing the share of clean energy consumption in total energy use hence the goal of this paper is to empirically explore to what extent both domestic stock market and foreign fdi inflows capital affect clean energy uses across the eu the g20 and oecd spanning the period 1993 2012 the results of long run elasticities document that both fdi and stock market developments play a significant role in promoting clean energy uses across all three country groups the results also suggest that clean energy consumption has a considerable positive and negative effect on economic output and co 2 emissions respectively while the political globalization has a substantial negative impact on carbon emissions across the eu the g20 and oecd economies

vertical multinationals and host country characteristics abstract we inquire into the question of what country characteristics particularly market size and labor force composition attract inward investment this approach is motivated by the empirical observation that the poorest countries attract a far smaller share of world direct investment than their share of income small markets receive less investment per capita than larger ones we develop a model that generates both stylized facts in equilibrium suggesting the existence of a development trap for small skilled labor scarce countries