labor market polarization the decline of routine work and technological change a quantitative analysis abstract a common hypothesis for labor market polarization is that technological progress has decreased the price of machines which are substitutable with middle skilled jobs and complementary to higher and lower skilled jobs i quantitatively evaluate this hypothesis in a dynamic general equilibrium model i find that the near constant elasticities of labor demand in the standard technology hypothesis and the observed dynamics of the price of machines are inconsistent with rapid polarization pre 2000 and its slower dynamics thereafter extending the model to allow for a separate investment sector requiring only high skilled workers generates a much closer fit to data

conceptualizing and measuring cultures and their consequences a comparative review of globe s and hofstede s approaches this paper explains why globe used a set of cultural values and practices to measure national cultures we show why there is no theoretical or empirical basis for hofstede s criticism that globe measures of values are too abstract or for his contention that national and organizational cultures are phenomena of different order we also show why hofstede has a limited understanding of the relationship between national wealth and culture furthermore we explain why hofstede s reanalysis of the globe data is inappropriate and produces incomprehensible results we also show the validity of managerial samples in studying leadership finally we explain why hofstede s claim that globe instruments reflect researchers psycho logic reveals ignorance of psychometric methodologies designed to ensure scale reliability and construct validity

supply chain integration and national collectivism abstract integration at an intra organizational and supply chain sc level has been well studied to determine its benefits and drawbacks the foundation of these studies is their assumption that managers choose integration based on economic considerations following the behavioral theory of the firm btf strategic decisions are not always based on economics but are subject to the usual phenomena associated with aspirational levels in this respect the potential influence and consequences of national culture building aspiration levels on the integration choice of decisionmakers remain unrecognized this study researches the relationship between national collectivism values and the observed internal and external sc integration sci of companies we postulate that national collectivism values generate an aspirational need that moves integration as a potential choice to satisfy this need more into decisionmakers focus we explore the influence of two dimensions of a national culture of collectivism values in group and institutional on decisionmakers choice of higher or lower degrees of plant level integration in addition we explore the operational performance efficacy of firms integration practices we combine data from two multi country datasets using mixed effect models to analyze data from seven countries the results indicate national collectivism values are positively related with plant level use of internal but not of external sci furthermore sci is positively related to operational performance the study supports and extends btf it supports the assumption of behavioral forces in modern firms decision making and adds national culture as an external force to the theory

instruments randomization and learning about development there is currently much debate about the effectiveness of foreign aid and about what kind of projects can engender economic development there is skepticism about the ability of econometric analysis to resolve these issues or of development agencies to learn from their own experience in response there is increasing use in development economics of randomized controlled trials rcts to accumulate credible knowledge of what works without overreliance on questionable theory or statistical methods when rcts are not possible the proponents of these methods advocate quasirandomization through instrumental variable iv techniques or natural experiments i argue that many of these applications are unlikely to recover quantities that are useful for policy or understanding two key issues are the misunderstanding of exogeneity and the handling of heterogeneity i illustrate from the literature on aid and growth actual randomization faces similar problems as does quasi randomization notwithstanding rhetoric to the contrary i argue that experiments have no special ability to produce more credible knowledge than other methods and that actual experiments are frequently subject to practical problems that undermine any claims to statistical or epistemic superiority i illustrate using prominent experiments in development and elsewhere as with iv methods rct based evaluation of projects without guidance from an understanding of underlying mechanisms is unlikely to lead to scientific progress in the understanding of economic development i welcome recent trends in development experimentation away from the evaluation of projects and toward the evaluation of theoretical mechanisms jel c21 f35 o19

a framework to update hofstede s cultural value indices economic dynamics and institutional stability this study offers an update of the hofstede cultural value dimensions we argue that changes in economic conditions are the source of cultural dynamics while the endurance of institutional characteristics provides the foundation for cultural stability it is found that national wealth measured by gdp per capita has a curvilinear relationship with individualism long term orientation and power distance scores relatively speaking uncertainty avoidance and masculinity mainly reflect some rather stable institutional traditions such as language religion climate ethnic homogeneity and legal origin and are less likely to change over time

the globe debate back to relevance this is a critical summary review of the debate about the global leadership and organizational behavior effectiveness globe study in jibs and other journals between november 2006 and the present issue several contributors did not realize that globe used three essential constructs taken from my publications in a sense entirely different from mine values practices and organizational culture not recognizing the ensuing confusion they had no answer for the question in my 2006 review what did globe really measure if you do not know what you are talking about you can continue arguing for ever beyond the fuzziness of what is measured the debate leaves us with an even more fundamental question what is the use of the globe dimensions

selective trials a principal agent approach to randomized controlled experiments we study the design of randomized controlled experiments when outcomes are significantly affected by experimental subjects unobserved effort expenditure while standard randomized controlled trials rcts are internally consistent the unobservability of effort compromises external validity we approach trial design as a principal agent problem and show that natural extensions of rcts which we call selective trials can help improve external validity in particular selective trials can disentangle the effects of treatment effort and the interaction of treatment and effort moreover they can help identify when treatment effects are affected by erroneous beliefs and inappropriate effort expenditure

technology shocks and job flows we consider a version of the solow growth model where technological progress can be investment specific or investment neutral the labour market is subject to search frictions and the existing productive units may fail to adopt the most recent technological advances technological progress can lead to the destruction of technologically obsolete jobs and cause unemployment we calibrate the model to replicate the high persistence that characterizes the dynamics of firms neutral technology and the frequency of firms capital adjustment we find that neutral technological advances increase job destruction and job reallocation and reduce aggregate employment investment specific technological advances reduce job destruction have mild effects on job creation and are expansionary hence neutral technological progress prompts schumpeterian creative destruction while investment specific technological progress operates essentially as in the standard neoclassical growth model using structural var models we provide support to the key dynamic implications of the model copyright 2007 wiley blackwell

how does regional institutional complexity affect mne internationalization international business research is only beginning to develop theory and evidence highlighting the importance of supranational regional institutions to explain firm internationalization in this context we offer new theory and evidence regarding the effect of a region s institutional complexity on foreign direct investment decisions by multinational enterprises mnes we define a region s institutional complexity using two components regional institutional diversity and number of countries we explore the unique relationships of both components with mnes decisions to internationalize into countries within the region drawing on semiglobalization and regionalization research and institutional theory we posit an inverted u shaped relationship between a region s institutional diversity and mne internationalization extremely low or high regional institutional diversity has negative effects on internationalization but moderate diversity has a positive effect on internationalization larger numbers of countries within the region reduces mne internationalization in a linear fashion we find support for these predicted relationships in multilevel analyses of 698 japanese mnes operating in 49 countries within 9 regions regional institutional complexity is both a challenge and an opportunity for mnes seeking advantages through the aggregation and arbitrage of individual country factors

performance effects of added cultural distance in the path of international expansion the case of german multinational enterprises this paper contributes to the debate on the performance impact of added cultural distance in the multinational enterprise s mne s expansion path our research focuses on the ability of mnes to handle complexity associated with added cultural distance in international expansion and on the effect this may have on profitability we hypothesise that firms that make expansion moves involving a high level of added cultural distance per unit of time and those that expand in culturally distant countries in an irregular fashion that is with a higher variability will be less profitable we test these hypothesised relationships using detailed data on 2404 expansion moves undertaken by our panel of 91 german mnes whose expansion paths we tracked during periods ranging between 5 and 20 years

managerial metric use in marketing decisions across 16 countries a cultural perspective research on metrics is consistently designated a priority by academics and practitioners however less is known about how culture and cross national differences can potentially impact metric use which is theoretically and managerially limiting this work develops a model that examines national and organizational cultural antecedents while controlling for the decision setting testing the model on data collected from 4384 managerial decisions from 1637 firms in 16 countries reveals that both levels of culture are associated with metric use but each has varying effects our results enable multinational executives to better understand and increase managerial metric use across different cultures and settings

rational expectations and the paradox of policy relevant natural experiments abstract policy experiments using large microeconomic datasets have recently gained ground in macroeconomics imposing rational expectations we examine robustness of evidence derived from ideal natural experiments applied to atomistic agents in dynamic settings paradoxically once experimental evidence is viewed as sufficiently clean to use it then becomes contaminated by ex post endogeneity measured responses depend upon priors and the objective function into which evidence is fed moreover agents policy beliefs become endogenously correlated with their causal parameters severely clouding inference e g sign reversals and non invertibility may obtain treatment control differences are contaminated for non quadratic adjustment costs constructively we illustrate how inference can be corrected accounting for feedback and highlight factors mitigating contamination

culture and international business recent advances and their implications for future research the paper provides a state of the art review of several innovative advances in culture and international business ib to stimulate new avenues for future research we first review the issues surrounding cultural convergence and divergence and the processes underlying cultural changes we then examine novel constructs for characterizing cultures and how to enhance the precision of cultural models by pinpointing when cultural effects are important finally we examine the usefulness of experimental methods which are rarely used by ib researchers implications of these path breaking approaches for future research on culture and ib are discussed

are factor biases and substitution identifiable the canadian evidence revised productivity accounts recently released by statistics canada are used to estimate a klump mcadam willman normalized ces supply side system for the half century 1961 2012 the model permits distinct rates of factor augmenting technical change for capital and labour that distinguish between short term versus long term effects as well as a non unitary elasticity of substitution and timevarying factor shares the advantage of the canadian data for this purpose is that they provide a unified treatment of measurement issues that have had to be improvised in the us and european data used by previous researchers in contrast to previous results we find that an elasticity of substitution and distinct factor biases of technological progress are not well determined by the model for the canadian data the kmw model does not appear to provide a framework that overcomes the classic diamond mcfadden rodriguez non identification result that impossibility theorem is manifested in our findings not overcome by them jel classification c51 e23 e25 o30 o51

beyond entry mode choice explaining the conversion of joint ventures into wholly owned subsidiaries in the people s republic of china while there is a vast amount of research on firms choice of ownership form when entering a foreign market little attention has been paid to changes in ownership forms of operation abroad after initial entry using transaction cost economics and institutional theory we identify a number of factors that may help to explain the likelihood of foreign firms converting their joint venture with a local firm into a wholly owned subsidiary we formulate a number of hypotheses and test them against data collected through a questionnaire survey of managers representing foreign subsidiaries in the people s republic of china prc that are run either as international joint ventures ijvs or as wholly owned foreign subsidiaries wfoes that have recently been converted from ijvs into a wfoe the paper contributes to research by showing that transaction cost based thinking is useful for explaining not only the initial choice of ownership mode when entering a new market but also the potential subsequent changes of this ownership mode by combining transaction cost theory with arguments from institutional theory the study identifies a number of factors that contribute to explaining post entry changes of foreign firms ownership forms in the prc and provides empirical evidence of this phenomenon

workers machines and economic growth this paper models technology adoption as replacing workers by machines which perform the same job in the production process the paper shows that such modelling of technology adoption affects significantly the analysis of economic growth this model can explain large and persistent international differences in output levels and growth rates caused by small differences in underlying parameters

globe practices and values a case of diminishing marginal utility the globe study of national cultures identified nine dimensions of culture these nine dimensions were measured in the form of societal practices as things are and societal values as things should be the correlations between practices and values for societies surprisingly were found to be significantly negative for seven dimensions apparently people s values are contrary to their practices a note which appeared in a recent issue of this journal proposes that these anomalous correlations result from diminishing marginal utility the note argues that marginal utility theory applies to cultural dimensions and that the globe values measure societies marginal preferences for most of the dimensions rather than total preference weights through close analysis of the questionnaire items used by the globe team we show that this is not the case we demonstrate that the globe questions as asked do not elicit marginal preferences in fact they elicit values as claimed by globe but recognizing that values may well be shaped in part by existing practices we call for further study into the globe scores as it is likely that different explanations apply to practices values relationships across different dimensions

balanced growth despite uzawa i use an event study approach to present novel evidence on the impact of trade liberalization on firm level profits using the uncertainty surrounding the negotiation and ratification process of the canada united states free trade agreement of 1989 cusfta i estimate the impact of different types of tariff reductions on the abnormal returns of canadian manufacturing firms i find that canadian import tariff reductions lead to lower and reductions in canadian intermediate input tariffs to higher abnormal returns the impact of u s tariff reductions is less clear and depends on the size of the affected firms i also calculate the total profit increase implied by my estimates overall cusfta increased per period profits by around 1 2 this was mainly driven by intermediate input tariff reductions which more than offset the negative effect of canadian import tariff reductions

consequences of cultural practices for entrepreneurial behaviors although national culture is an important regulator of entrepreneurship there is a dearth of studies that 1 explore the effects of national cultural practices on entrepreneurial behaviors by individuals 2 use appropriate multilevel research designs 3 consider the effects of culture on different entrepreneurial behaviors such as entry and post entry growth aspirations we combined global entrepreneurship monitor gem and global leadership and organizational behavior effectiveness globe data from 42 countries for 2005 2008 to address these gaps using a multilevel design we found societal institutional collectivism practices negatively associated with entrepreneurial entry but positively associated with entrepreneurial growth aspirations uncertainty avoidance practices were negatively associated with entry but not with growth aspirations and performance orientation practices were positively associated with entry our analysis highlights the differential effects of cultural practices on entrepreneurial entry and growth aspirations and demonstrates the value of multilevel techniques in analyzing the effect of culture on entrepreneurship

the tortuous evolution of the role of culture in ib research what we know what we don t know and where we are headed this paper takes stock of the literature on culture in international business by looking back in terms of evaluating what we know and what we do not know and looking forward by identifying emerging trends and outlining avenues for future research unresolved issues gaps and limitations include 1 narrow conceptualization of culture and fragmented approach to the study of culture 2 failure to adopt a multilevel approach and insufficient attention to level of analysis 3 insufficient attention to context and process 4 failure to adopt a more dynamic view of culture 5 tendency to equate country with culture and failure to explore other national differentiators and 6 western centric approach to the study of culture suggestions on redressing the unresolved issues include 1 broadening the definition of culture and transcending the values based approach to include schemas norms and memes 2 paying more attention to process context by exploring the situation dependent and dynamic nature of culture and 3 entertaining alternative research designs methods such as emic approaches qualitative methods experimental designs neuroscience based methods and replication studies while these may represent a major departure from methodologies popular in our field their use can hopefully help us overcome the fragmented discipline based approach which has contributed to the persistent problems that have plagued the study of culture in ib in the past

avoiding uncertainty in hofstede and globe this paper compares the uncertainty avoidance ua dimension of national culture across the hofstede and globe models looking at relationships in both data and analysis rather than mutual support we detail major differences and anomalies across the studies we show how these anomalies are resulting in contradictory explanations in research on national differences across a range of individual firm and country level phenomena we clarify the ua measurement in both hofstede and globe and find that the two models are measuring different components of the ua construct we propose a two component model of ua namely ua stress and ua rule orientation and confirm its validity with national culture data from the hofstede and globe studies and economic data from the world bank we also explain the negative globe ua practices values relationship using motivational theories a way forward in future ua related research is suggested the hofstede ua index the globe ua practices scores and the globe ua values scores should be used within the specific domains that they represent that is stress rule orientation practices and rule orientation aspirations respectively resolving the contradictions in ua between and within hofstede and globe will help cross cultural researchers develop more robust theories and more practical recommendations for international business management

a retrospective on culture s consequences the 35 year journey abstract our 2006 journal of international business studies article a quarter century of culture s consequences a review of the empirical research incorporating hofstede s cultural values framework provided a comprehensive review of 180 empirical journal articles and edited volume chapters published between 1980 and june 2002 that incorporated hofstede s cross cultural values framework we examined empirical research that positioned culture as either a main or moderating effect the review attempted to make sense of the almost quarter century of research examining the impact of culture at the individual group organization and country levels in the present commentary we provide a a summary of the progress that has been made in the intervening decade and most importantly b a new set of recommendations for the next decade to guide those wishing to study the role of national culture in organizations

distance without direction restoring credibility to a much loved construct in this commentary we build on shenkar s 2001 award winning critique of cultural distance arguing that most distance constructs in fact suffer the same flaws because they oversimplify the relationship between countries overlook their subjective and context specific nature and pay insufficient attention to the mechanisms through which distance operates the idea of distance however has intrinsic value moreover its considerable appeal and undeniable effectiveness have made it a well entrenched construct therefore we see merit in redressing its weaknesses and offer several suggestions for doing so these include allowing for the influence of firm level characteristics that either moderate the effects of distance or render distance at least in part subjective with varying consequences for different mnes maintaining directionality by distinguishing between distance and the tendency toward a particular characteristic and acknowledging asymmetry and conceptualizing the effects of distance and the mechanisms through which it operates more carefully by drawing on concepts and measures from a variety of disciplines by offering ways to strengthen both its theoretical foundations and measurement we hope to enhance the usefulness of one of international business theory s most central constructs

values and marginal preferences in international business in a recent paper in this journal maseland and van hoorn argued that values surveys tend to conflate values and marginal preferences this assertion has been challenged by brewer and venaik who claim that the wording of most survey items does not suggest that these elicit marginal preferences this commentary responds to their claim and restates our original argument we stress that the distinction between values and marginal preferences is a conceptual rather than a semantic issue conflation of the two is a problem of stated preferences methods in general regardless of question formats what is more we argue that support for the marginal preferences interpretation of values survey data does not come from the specific wording of questions used in surveys but from a growing number of paradoxical relations between values ratings and outcomes in values research implications are twofold first we argue that in order to measure values we need to look at alternatives to the stated preferences approach such as revealed preferences and experienced preferences of which the latter seems most promising second we find that values surveys eliciting marginal preferences are useful for understanding and predicting differences in behavior in a given context

the decline in capital efficiency and labour share we calibrate and simulate a neoclassical growth model with a variable elasticity of substitution production function and three types of technological change labour augmenting capital augmenting and investment specific in this framework we find that the decline in us labour share was caused by a large decline in capital efficiency which led to a decrease in the ratio of effective capital to effective labour in a context in which capital and labour are gross complements moreover the decline in the relative price of investment contributed to reducing the fall in us labour share while the increase in the economic depreciation rate of us fixed assets accounted for a small reduction in us labour share

capital skill complementarity and balanced growth we construct a general equilibrium version of the krusell et al econometrica 68 1029 2000 model with capital skill complementarity we assume several sources of growth simultaneously exogenous growth of skilled and unskilled labour equipment specific technological progress skilled and unskilled labouraugmenting technological progress and hicks neutral technological progress we derive restrictions that make our model consistent with balanced growth a calibrated version of our model can account for the key growth patterns in the us data including those for capital equipment and structures skilled and unskilled labour and output but it fails to explain the long run behaviour of skilled labour wages and consequently the skill premium

sticky wages and sectoral labor comovement abstract a defining feature of business cycles is the comovement of inputs at the sectoral level with aggregate activity standard models cannot account for this phenomenon this paper develops and estimates a two sector dynamic general equilibrium model that can account for this key regularity my model incorporates three shocks to the economy monetary policy shocks neutral technology shocks and embodied technology shocks in the capital producing sector the estimated model is able to account for the response of the u s economy to all three shocks using this model i argue that the key friction underlying sectoral comovement is rigidity in nominal wages

national culture and expatriate deployment we hypothesize that expatriate deployment is a control function predicted by home country culture dimensions with transaction cost and agency repercussions rather than culture in the aggregate this departure from the traditional conceptualization and measurement of cultural impact also yields a hypothesized asymmetrical effect which is tested for a multi country sample of 236 multinational subsidiaries using multiple measures of national culture hypotheses are supported with assertiveness and power distance confirmed as prime predictors of expatriate deployment

testing for the lucas critique a quantitative investigation this thesis contains four essays which studies the macroeconomic effects of fiscal and monetary policy quantitatively the first essay investigates whether swedish postwar business cycles have been generated by domestic or foreign shocks and finds that they are about equally important in the second essay the effects of government budget deficits on interest rates in sweden are studied in a small open economy framework the empirical results which have high power due to very large swings in deficits and interest rates provide support that larger deficits produce higher interest rates and thus give support against the ricardian view the third essay seeks to identify optimal social insurance and redistribution levels in sweden and the u s with respect to temporary and permanent idiosyncratic productivity risks the results indicate that sweden should reduce the social security level while the u s should approximately maintain the current level in the last essay the small sample properties of a well known statistical test for the lucas critique the super exogeneity test is studied in a general equilibrium environment the results indicate that the super exogeneity test do not have sufficient power in small samples

the thick description and comparison of societal systems of capitalism critiques of international business theory have recently pointed to weaknesses in the handling of context of culture and of policy implications it is contended that the origins of such failings lie in the discipline s commonly accepted methodologies and in turn that they have epistemological roots as a route out of the dilemmas faced a proposal is made to adopt more complete ways of handling determinacy including the influences of history culture and the societal emergence of institutions business systems theory is drawn upon and a model proposed developed from the work of whitley in this culture is seen as underpinning formal institutions which in turn underpin societal business systems the use of the model relies on the ideas of geertz on thick description and of ragin on holistic analysis it is illustrated with a comparison of the american and french socio economic systems seen historically findings in strategy research about the geographically defined nature of firm supremacy in many industries are brought into the account using the business systems literature consistent patterns of determinacy as well as distinct and contrasting trajectories of business system evolution are noted a more complete and multidisciplinary form of explanation grounded in socio economics is advocated as a means of meeting the challenges both of understanding and of policymaking at several levels

when elephants fight the grass gets trampled the globe and hofstede projects four aspects of the debate between hofstede and javidan et al are highlighted first it is shown that characterizing cultures either on the basis of aggregated self perceptions or on the basis of aggregated perceptions of others in one s society are not equivalent procedures each has inherent errors and neither can be considered as providing the one best way to denote national cultures furthermore the number of dimensions of national culture that can be usefully studied must be proportional to the limited number of nations available for comparative analyses third although hofstede and javidan et al appear to differ on optimal ways of aggregating individual level data to the nation level both appear to have done so in a way that does not prevent detection of differing relations between items at different levels of analysis finally we need greater clarity as to the ways in which national wealth relates to other aspects of culture it is a major component of contemporary national cultures and must be retained as an element within nation level analyses

cross border acquisition abandonment and completion the effect of institutional differences and organizational learning in the international business service industry 1981 2001 based on the concepts of north s 1990 political economy of national institutions and economic behavior we investigate how formal and informal institutional features influence the likelihood that a cross border acquisition deal will be completed as well as the time taken for its completion after announcement additionally we study how past experience with completed acquisition deals moderates the effects of institutional differences we focus on a relatively new context the pre completion stage of acquisition processes we test our hypotheses using data from 2389 announced cross border acquisition deals in the international business service industry 1981 2001 we find that differences in national formal and informal institutions explain part of the variation in the likelihood that an announced cross border acquisition deal will be completed as well as the duration of the deal making in addition organizational learning moderates the effects of institutional distance past experience with completed cross border acquisition deals increases the likelihood of a subsequent deal completion in institutionally closer environments but shortens the deal duration in institutionally distant environments

investment and technical progress models in which the growth rate is exogenous provide no role for government in determining growth in our model growth is associated with investment through externalities from learning by watching rather than with the level of the capital stock presumption of a technical progress function with first increasing and then decreasing returns leads to multiple steady state growth equilibria there is also an explicit role of government policy in setting tax rates on output it follows that two economies with identical structures and stochastic tax policies may exhibit very different growth paths over sustained periods although the stationary distribution of growth rates is the same given the desirability in principle of subsidizing investment various practical methods are considered copyright 1992 by oxford university press

theory general equilibrium and political economy in development economics i discuss the role of economic theory in empirical work in development economics with special emphasis on general equilibrium and political economy considerations i argue that economic theory plays should play a central role in formulating models estimates of which can be used for counterfactual and policy analysis i discuss why counterfactual analysis based on microdata that ignores general equilibrium and political economy issues may lead to misleading conclusions i illustrate the main arguments using examples from recent work in development economics and political economy

taxation and the cost of capital the uk experience since the 1960s the uk has witnessed a series of reforms to its corporation tax system these include the creation of corporation tax as an independent tax in 1965 the gradual introduction of generous capital allowances in the early 1970s the introduction of the partial imputation system in 1973 and stock relief in 1975 and the 1984 reforms which reduced the tax rate and capital allowances and abolished stock relief a number of these reforms were designed with the specific intention of influencing company decisions regarding investment and finance through the real cost of capital

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

when in rome look like caesar investigating the link between demand side cultural power distance and ceo power agency theory grounded research on boards of directors and firm legitimacy has historically viewed ceo power as de legitimating often taking this fact for granted in theorizing about external assessors evaluations of a firm with few exceptions this literature has focused exclusively on capital market participants e g investors securities analysts as the arbiters of a firm s legitimacy and has accordingly assumed that legitimate governance arrangements are those derived from the shareholder oriented prescriptions of agency theory we extend this line of research in new ways by arguing that customers also externally assess firm legitimacy and that firms potentially adjust their governance characteristics to meet customers norms and expectations we argue that the cultural cognitive institutions prevalent in customers home countries influence their judgments regarding a firm s legitimacy such that firms competing heavily in highpower distance cultures are more likely to have powerful ceos with ceo power a source of legitimacy rather than illegitimacy among customers we also argue that the more dependent a firm is on its customers and the more salient cultural power distance is as a demand side institutional norm the greater this relationship will be data from 151 u s semiconductor and pharmaceutical firms over a 10 year period generally support our predictions

what did globe really measure researchers minds versus respondents minds the globe research program expanded the hofstede model of five dimensions of national cultures to 18 a re analysis based on globe s 2004 summary book produced five meta factors one was significantly correlated with gnp capita and from the hofstede dimensions primarily with power distance three more correlated significantly with hofstede s individualism uncertainty avoidance and long term orientation the fifth included the few globe questions that related to hofstede s dimension of masculinity versus femininity globe s respondents minds classified the questions in a way that the researchers minds did not account for and which closely resembles the original hofstede model

an exact solution for the investment and value of a firm facing uncertainty adjustment costs and irreversibility this paper derives closed form solutions for the investment and value of a competitive firm with a constant returns to scale production function and convex costs of adjustment solutions are derived for the case of irreversible investment as well as for reversible investment optimal investment is a non decreasing function of q the shadow value of capital relative to the case of reversible investment the

performance based vs socially supportive culture a cross national study of descriptive norms and entrepreneurship this paper is a cross national study testing a framework relating cultural descriptive norms to entrepreneurship in a sample of 40 nations based on data from the global leadership and organizational behavior effectiveness project we identify two higher order dimensions of culture socially supportive culture ssc and performance based culture pbc and relate them to entrepreneurship rates and associated supply side and demand side variables available from the global entrepreneurship monitor findings provide strong support for a social capital ssc and supply side variable explanation of entrepreneurship rate pbc predicts demand side variables such as opportunity existence and the quality of formal institutions to support entrepreneurship

mapping world cultures cluster formation sources and implications this paper extends and builds on ronen and shenkar s synthesized cultural clustering of countries based on similarity and dissimilarity in work related attitudes the new map uses an updated dataset and expands coverage to world areas that were non accessible at the time cluster boundaries are drawn empirically rather than intuitively and the plot obtained is triple nested indicating three levels of similarity across given country pairs also delineated are cluster adjacency and cluster cohesiveness which vary from the highly cohesive arab and anglo clusters to the least cohesive confucian and far eastern clusters exploring predictors of cluster formation we draw on the ecocultural perspective and other inputs and examine the combined role of language religion and geography in generating cluster formation we find that these forces play a prominent yet complex role for instance the religion and language brought by the spanish fail to create a singular cohesive latin american cluster akin to the anglo cluster the role of economic variables is similarly considered finally comparing the current map with that of 1985 we find strong support for the divergence vs convergence argument implications for international business are delineated

improving generalizations from multi country comparisons in international business research in this paper we address the problem of questionable generalizations from comparing small numbers of countries in international business ib research we illustrate the misleading results that can arise from sparse samples whether the relationship between national level variables is strong economic development and corruption or weak population density and trust we show that 35 of recent international comparisons in leading ib journals examined just two or three countries and present an exploratory analysis of 123 variables that reveals typical correlations across countries to be rather moderate average r 0 24 to help interpret extant study findings we provide formulas and graphs based on bayesian analysis and introduce a method of combining results from multiple international comparisons we also describe methods for designing studies to give stronger evidence of relationships between variables our results suggest that a minimum of 7 10 countries may support credible international generalizations but only when overall trends are very strong a key strategy for improving ib generalizations is to use larger samples of countries because research based on common sample and effect sizes may lead to generalizations that the findings do not justify

individualism collectivism in hofstede and globe this paper examines the individualism collectivism i c dimension of national culture in the hofstede and globe models we identify major contradictions between the two culture models which result in contradictory relationships with external variables such as economic prosperity we critically evaluate the content validity of the items used to measure this construct in both models based on our analysis we suggest that hofstede s individualism collectivism index be relabelled as self orientation vs work orientation and globe s in group collectivism as family collectivism we demonstrate how the proposed alternative conceptualizations of the individualism collectivism dimensions in both the hofstede and globe models can help reconcile the anomalous relationships between these two models of national culture and between their dimension scores and other external variables of interest to researchers we recommend a way forward for future research incorporating the collectivism dimensions that identifies which of the hofstede globe scores is appropriate for differing purposes this will help to make future research findings clearer and to reduce contradictions and anomalies implications drawn from such research should also be clearer as a result

explaining the negative correlation between values and practices a note on the hofstede globe debate this note provides an explanation for the presumably counterintuitive negative correlations between values and practices reported by the global leadership and organizational behavior effectiveness project we argue that such results are compatible with basic microeconomic insights concerning diminishing marginal utility this explanation implies that values surveys as they are generally elicit marginal preferences rather than underlying values therefore they are a problematic instrument for the measurement of cultures and need to be improved so as to discriminate between the importance attached to an objective in general and that attached to it given current levels of satiation

measuring the cost of capital when taxes are changing with foresight abstract the familiar hall jorgenson 1967 cost of capital perturbation is not a uniquely feasible one because of institutional features of actual tax systems the optimal holding time for an incremental unit of capital will generally be infinite the impossibility of an optimal rule for recapturing excess depreciation allowances on disposal is demonstrated when tax changes are foreseen the error in the traditional measure of cost of capital can become highly significant ignorance of this effect led to underestimates of the extent to which the radical changes to the u k corporation tax in 1984 would affect cost of capital and incentives to forestall planned investment

factor substitution and factor augmenting technical progress in the united states a normalized supply side system approach abstract using a normalized ces function with factor augmenting technical progress we estimate a supply side system of the u s economy from 1953 to 1998 avoiding potential estimation biases that

conceptualizing and measuring culture in international business and management from challenges to potential solutions understanding the influence of culture on business operations has been one of the most enduring components of international business ib and international management im theorizing and empirical investigation while several critiques and debates questioned the significant progress made in this domain the special issue we introduce here is meant to demonstrate that further advancement on how we conceptualize and measure culture is not only needed but also possible we provide an overview of past and current approaches in the measurement of culture in ib im and the challenges associated with these approaches and emphasize the important yet insufficiently acknowledged link between the theoretical conceptualization of culture and its measurement we then introduce the four articles included in the special issue and highlight how they break away from the addiction to approaches that have been very useful in getting where we are today but that might not always be useful in advancing knowledge beyond what we already know last but not the least we offer our own perspective on promising directions in conceptually and methodologically rethinking the study of culture in ib and im

the structure of jibs s social network and the relevance of intra country variation a typology for future research we examine articles published in the journal of international business studies jibs and introduce a typology to support the relevance of intra country variation in international business ib based on social network theory our analysis uses multidimensional scaling to study 53 203 citations from 1158 qualifying jibs articles to determine the journal s social structure the results indicate that three current research clusters multinational enterprise knowledge development foreign entry and cultural effects and the internationalization process and national culture are based on established ib theory then we respond to calls in the literature to improve research concerning intra country variation and propose a typology of three dimensions social demographic and geographic to study the diversity of individual firm and economic activity in a country the social dimension evaluates the importance of modernist and traditionalist values the demographic dimension proposes differences between urban and rural settings and the geographic dimension discusses the relevance of border and interior locations we suggest a nested typology that unifies these three dimensions for continued use in ib future research opportunities related to jibs s social structure and the intra country variation typology are recommended

explaining diversity in the worldwide diffusion of codes of good governance extending earlier literature on diffusion of codes of good governance cggs by integrating the effect of national culture this study offers a novel perspective on cross national diversity in the worldwide diffusion of corporate governance best practices we argue that particular cultural dimensions affect the indicators i e total number of codes per country and identity of issuing organizations of such diffusion for a sample of 67 countries our analysis reveals that individualist cultures have a stronger tendency to develop cggs in cultures with a high receptivity to power differences there is a higher probability that the first issuers are the government directors or professional associations whereas with low receptivity the stock exchange and investors groups of issuers are more likely to initiate the first code the effects of culture remain significant even after accounting for differences in legal systems and economic institutions indicating that national culture may serve as a comprehensive indicator of the regulatory stance with respect to good governance indeed the effect size is large enough to give pause e g to a location choice and possibly has relevance for strategic decision making by international companies

national culture and financial literacy international evidence we examine to what extent aspects of national culture can explain cross country variations in financial literacy our results for a sample of 92 countries show that hofstede s dimensions of pow

negative practice value correlations in the globe data unexpected findings questionnaire limitations and research directions the study of culture and cultural values continues to be hotly debated among cross cultural researchers worldwide starting with the seminal work of kluckhohn and strodtbeck and hofstede and continuing with more recent efforts researchers have continued to develop and empirically examine cultural value frameworks in an attempt to understand how cultural differences affect work related behaviors and attitudes the purpose of this commentary is to briefly describe the interesting and counterintuitive findings from the global leadership and organizational behavior effectiveness globe project summarize the different interpretations of these findings offered by maseland and van hoorn and by brewer and venaik provide a critique of their arguments and finally offer a list of possible alternative interpretations and explanations for the conflicting findings in the globe study

how sensitive is investment to cash flow when financing is frictionless i analyze the sensitivity of a rm s investment to its own cash ow in the benchmarkcase where nancing is frictionless this sensitivity has been proposed as a measure of nancing constraints in earlier studies i nd that the investment cash ow sensitivities that obtain in the frictionless benchmarkare very similar both in magnitude and in patterns they exhibit to those observed in the data in particular the sensitivity is higher for rms with high growth rates and low dividend payout ratios tobin s q is shown to be a more noisy measure of near term investment plans for these rms does a high sensitivityof a rm s investment to its own cash ow indicate that the rm is nancially constrained a large body of research starting with fazzari hubbard and petersen 1988 hereafter fhp suggests that rms facing nancing constraints should exhibit high investment cash ow sensitivities re ecting the wedge between the costs of external and internal funds empirical ndings seem to give support to this hypothesis since rms classi ed as constrained on a priori criteria such as size dividend payout or leverage do have higher cash ow sensitivities even after controlling for their investment opportunities by conditioning on tobin s q however the reliability of these results critically depends on whether q is a proper control for the investment opportunity set if q performs worse for certain classes of rms higher sensitivities may obtain for these rms simply because cash ow re ects information about investment opportunities this critique is not new in his discussion of fhp poterba 1988 was the rst to point out that measurement error in q may cloud the empirical results similar concerns have been raised in subsequent studies as well while the qualitative point is well known its quantitative impact on the investment cash ow sensitivity has not been analyzed can the linkbetween cash ow and the investment opportunity set account for the observed magnitudes of the sensitivity or are these magnitudes too large to be explained without nancing frictions