opening the grey box social communities knowledge and culture in acquisitions international acquisitions are today the most important foreign direct investment vehicle and the ensuing integration processes are notoriously fraught with problems we situate discuss and develop the main results of an early study in the knowledge based view tradition the award winning bresman birkinshaw and nobel 1999 article to enhance and develop the central contributions regarding social communities knowledge and culture we use the metaphor of unpacking the grey box we argue that heavy socialization is a rational learning strategy even if the acquirer aims at appropriating the target s technology or wishes to impose its dominant logic

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

central bank design abstract starting with a blank slate how could one design the institutions of a central bank for the united states this paper explores the question of how to design a central bank drawing on the relevant economic literature and historical experiences while staying free from concerns about how the fed got to be what it is today or the short term political constraints it has faced at various times the goal is to provide an opinionated overview that puts forward the trade offs associated with different choices and identifies areas where there are clear messages about optimal central bank design

the uk regional distribution of foreign direct investment analysis and determinants hill s and munday m 1992 the uk regional distribution of foreign direct investment analysis and determinants reg studies 26 535 544 this paper analyses the regional distribution of foreign direct investment fdi within the uk following an examination of those regions that have been successful in winning new inward investment the paper goes on to consider hypotheses that can be used to explain relative regional success in attracting new fdi projects and jobs empirical testing of these hypotheses suggests that both financial incentives and access to markets are important determinants of the regional distribution of new fdi projects and jobs hill c et munday m 1992 la distribution regionale de l investissement direct etranger au royaume uni analyse et determinants reg studies 26 535 544 cet article cherche a analyser la distribution regionale de l investissement direct etranger au sein du royaume uni suite a une examination des regions qui ont reussi a attirer de nouvel investissement

national cultural distance and cross border acquisition performance previous theoretical research has argued that national cultural distance hinders cross border acquisition performance by increasing the costs of integration this article tests the alternative hypothesis that national cultural distance enhances cross border acquisition performance by providing access to the target s and or the acquirer s diverse set of routines and repertoires embedded in national culture using a multi dimensional measure of national cultural distance and controlling for other effects we examine a sample of 52 cross border acquisitions that took place between 1987 and 1992 and find a positive association between national cultural distance and cross border acquisition performance

mergers acquisitions and innovation performance in the telecommunications equipment industry the worldwide telecommunications equipment industry has experienced an enormous number of mergers and acquisitions m a this article examines the innovation determinants of m a activity a

fiscal discriminations in three wars in 1790 a u s paper dollar was widely held in disrepute something shoddy was not worth a continental by 1879 a u s paper dollar had become as good as gold these outcomes emerged from how the u s federal government financed three wars the american revolution the war of 1812 and the civil war in the beginning the u s government discriminated greatly in the returns it paid to different classes of creditors but that pattern of discrimination diminished over time in ways that eventually rehabilitated the reputation of federal paper money as a store of value

sovereign debt and its restructuring framework in the eurozone debt is a particularly serious macroeconomic problem in the eurozone public debt ratios are high by international historical standards with no immediate prospect of a significant reduction private corporate and household debt ratios are either flat or rising banks remain fragile and impose a contingent liability on the public purse the most stressed economies have not had the option of renewing economic growth through exchange rate depreciation and a boost to exports thus fiscal austerity has been their principal instrument to achieve debt reduction but since austerity also hurts growth the debt to gdp ratios have barely budged persistent low growth has also created deflationary tendencies which further raise the challenge of debt reduction

monetary policy with interest on reserves abstract i analyze monetary policy with interest on reserves and a large balance sheet i show that conventional theories do not determine inflation in this regime so i base the analysis on the fiscal theory of the price level i find that monetary policy can peg the nominal rate and determine expected inflation with sticky prices monetary policy can also affect real interest rates and output though higher interest rates raise output and then inflation the conventional sign requires a coordinated fiscal monetary policy contraction i show how conventional new keynesian models also imply strong monetary fiscal policy coordination to obtain the usual signs i address theoretical controversies a concluding section places our current regime in a broader historical context and opines on how optimal fiscal and monetary policy will evolve in the new regime

jockeying for position what it means and why it matters to regional development policy when places compete malecki e j 2004 jockeying for position what it means and why it matters to regional development policy when places compete regional studies38 1093 1112 the realization that places compete for investment has expanded in recent years to encompass competition among places for the attention of migrants tourists and media glow as well as investment the most competitive places have been multidimensional in their attractions and have made the transition to the knowledge based economy the latest priority is being placed on attracting mobile workers and mobile investment creative workers are the core of the knowledge economy and of its geographies such as intelligent places and learning regions knowledge metrics innovation indices and report cards are increasingly common each seemingly developed to sort the list of places in a different order lists or league tables of the best places for business to live retire and visit are key features of economies and societies whose factors of success

mars venus marriages culture and cross border m a using a sample of over 800 cross border acquisitions during 1991 2004 we find that contrary to general perception cross border acquisitions perform better in the long run if the acquirer and the target come from countries that are culturally more disparate we use mainly the hofstede measure of cultural dimensions to measure cultural distance but also examine alternative proxies the positive relationship of performance to cultural distance persists after controlling for several deal specific variables and country level fixed effects and is robust to alternative specifications of long term performance cash and friendly acquisitions tend to perform better in the long run there is also some evidence of synergies when acquirers are from stronger economies relative to the targets

r d co practice and reverse knowledge integration in multinational firms this paper contributes to the developing literature on the management of distributed innovation in multinational firms we focus on a specific organizational mechanism r d co practice which we believe is an important facilitator of knowledge integration in multinationals with global innovation strategies in our formulation r d co practice joint technical activities between units increases levels of absorptive capacity and social capital among participating units thus increasing the likelihood that they will share knowledge at future time periods we find strong support for this hypothesis through an empirical analysis of reverse subsidiary to headquarters knowledge integration in two sectors automotive and pharmaceuticals over a 21 year period

building professional discourse in emerging markets language context and the challenge of sensemaking using ethnographic evidence from the former soviet republics this paper examines a relatively new and mainly unobserved concept in international business literature the phenomenon of communication disengagement that manifests itself in many emerging markets we link it to the deficiencies of the local professional business discourse rooted in language limitations which reflects a lack of experience with the market economy this hampers cognitive coherence between foreign and local business entities adding to the liability of foreignness as certain instances of professional experience fail to find adequate linguistic expression and complicates cross cultural adjustments causing multinational companies mncs financial losses we contribute to the ib literature by examining cross border semantic sensemaking through a retrospectively constructed observational study we argue that a relative inadequacy of the national professional idiom is likely to remain a feature of the business environment in post communist economies for some time and therefore should be factored into business strategies of mncs consequently we recommend including discursive hazards in the risk evaluation of international projects

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

knowledge market failure and the multinational enterprise a reply debate is an indication that an issue warrants discussion the comments of james love and donald mcfetridge in this issue are fine statements that articulate a received wisdom their comments differ with each other and these differences remind us that there is less consensus in our understanding of internalization and transaction costs than commonly supposed if we do not address all of the commentators specific points it is not for lack of appreciation but because it is our belief that a fuller vision of the terrain already mapped and that which is yet uncharted would provide a more useful basis for exploration and discovery a listing of issues is the task of a referee while a published debate might perform a useful task by laying out the contours of the research tradition and future

fiscal consequences for mexico of adopting the dollar dollarization implies a reduction in the menu of assets available to the government and to the private sector in managing risk whatever the gains from dollarization the costs of reducing the asset menu need to be weighed against them this paper presents models one a simple generalization of a well known model of tax smoothing by ba1ao in which these costs are explicit along the way it suggests that there is likely to be no reduction in interest costs to the government from dollarization recently economists have been paying increasing attention to a dynamic general equilibrium approach to the theory of the price level that is often called the fiscal theory of the price level or ftpl this way of thinking emphasizes the role of fiscal and monetary policy in determining the risk and return properties of government liabilities it is particularly useful in analyzing proposals for large scale institutional changes that imply shifts in monetary and fiscal policies when dollarization is considered from this perspective some disadvantages are brought to light that may not be so apparent from other points of view section 1 below lays out the main ideas of ftpl section 2 displays a model that extends an earlier one of barro s to argue that optimal fiscal policy will use surprise inflation to achieve lower deadweight tax loss than would otherwise be possible section 3 considers the composition of government liabilities along the lines of the theory of corporate finance asking if dollarization will reduce the cost of funds section 4 presents annual estimates of the unanticipated returns to holders of u s government debt to show that these are substantial and are to some extent timed to match legitimate periods of fiscal stress as the optimality theory of section 2 would suggest section s discusses the lendel of last resort function and its connection to these fiscal issues section 6 briefly discusses some alternatives to pure dollarization in our concluding section 7 we sum up finding much to worry about in the prospect of dollarization

the underdetermined knowledge based theory of the mnc in this note we revisit two core propositions of the knowledge based view of the firm found in the seminal work of kogut and zander 1 that multinational corporations mncs exist because transfers and re combinations of knowledge occur more efficiently inside mncs than between mncs and third parties and 2 that the threat of opportunism is not necessary although it may be sufficient to explain the existence of the mnc their knowledge based view shifted the conceptualization of the firm from an institution arising from market failure and transaction costs economizing to a progeny of superior knowledge governance we question these conclusions arguing that firms are but one of the many types of epistemic communities possessing and nurturing procedural norms identity and the cognitive linguistic and reflexive attributes conducive to efficient exchange and re combination of knowledge among their members important insights may be gained by applying the concept of epistemic communities implicit in the knowledge based perspective beyond firm level hierarchies journal of international business studies 2011 42 427 435

joint implications of consumption and tax smoothing in this paper the joint hypotheses of consumption and tax smoothing are shown to imply that the present value of expected proportionate declines in government non interest outlays is approximately equal to a log linear function of the budget deficit and private dissaving in this exact linear relation the budget deficit signals declines in future government outlays after controlling for prospective changes in the tax base private dissaving controls for such prospective changes since under the joint hypotheses the present value of expected proportionate rises in tax revenues are approximately equal to a log linear function of private dissaving both exact linear relations are tested in a var framework on annual post world war ii u s data we find considerable empirical support for the theory

knowledge sharing and social interaction within mnes social interaction between managers from different units of a multinational enterprise mne has been shown to be an important factor stimulating intra mne knowledge sharing face to face social interactions form a communication channel particularly conducive to the transfer of tacit non codified knowledge but intensive social interaction also provides opportunities for social construction of knowledge in a learning dialogue the first explanation sender receiver makes us expect social interaction to moderate positively the effects of the factors giving rise to knowledge flows in the first place such as differences in capabilities between mne subsidiaries the second perspective social learning also grants an independent effect to social interaction as a main factor stimulating intra mne knowledge flows we formulate hypotheses based on both perspectives and test these on data from 169 mne subsidiaries our findings show a considerable main effect of social interaction on all intra mne knowledge flows confirming the expectations based on the social learning model interaction effects based on the predictions of the sender receiver model are only partly confirmed these findings suggest that future research should devote more attention to the social constitution of mne knowledge

money as a unit of account we develop a theory that rationalizes the use of a dominant unit of account in an economy agents enter into non contingent contracts with a variety of business partners trade unfolds sequentially in credit chains and is subject to random matching by using a dominant unit of account agents can lower their exposure to relative price risk avoid costly default and create more total surplus we discuss conditions under which it is optimal to adopt circulating government paper as the dominant unit of account and the optimal choice of currency areas when there is variation in the intensity of trade within and across regions

optimal fiscal policy in a business cycle model this paper develops the quantitative implications of optimal fiscal policy in a business cycle model in a stationary equilibrium the ex ante tax rate on capital income is approximately zero there is an equivalence class of ex post capital income tax rates and bond policies that support a given allocation within this class the optimal ex post capital tax rates can range from close to independently and identically distributed to close to a random walk the tax rate on labor income fluctuates very little and inherits the persistence properties of the exogenous shocks thus there is no presumption that optimal labor tax rates follow a random walk most of the welfare gains realized by switching from a tax system like that of the united states to the ramsey system come from an initial period of high taxation on capital income

measuring innovative performance is there an advantage in using multiple indicators abstract the innovative performance of companies has been studied quite extensively and for a long period of time however the results of many studies have not yet led to a generally accepted indicator of innovative performance or a common set of indicators so far the variety in terms of constructs measurements samples industries and countries has been substantial this paper studies the innovative performance of a large international sample of nearly 1200 companies in four high tech industries using a variety of indicators these indicators range from r d inputs patent counts and patent citations to new product announcements the study establishes that a composite construct based on these four indicators clearly catches a latent variable innovative performance however our findings also suggest that the statistical overlap between these indicators is that strong that future research might also consider using any of these indicators to measure the innovative performance of companies in high tech industries

the revealed preferences of high technology acquirers an analysis of the innovation characteristics of their targets this paper investigates whether acquisitions involving public high technology firms are best understood in terms of acquirers taking over firms with superior innovation performance to access their assets or acquiring firms with inferior innovation performance to turn them around innovation performance is proxied by r d intensity r d expenditure over assets patent intensity patents per us million of assets i e the r d productivity of a firm s assets and the patent stock i e the accumulated r d output we find substantial overlaps between target and non acquired firm characteristics nevertheless targets have a relatively high r d intensity and a large patent stock which is consistent with acquirers targeting firms with a superior innovation performance however these targets have significantly lower pre acquisition patent intensity and hence a lower r d productivity the targets are also experiencing weak financial performance our results are consistent with a selection process in which acquirers seek out firms that have a superior past innovation performance but that are failing in terms of recent r d productivity and financial performance a comparison of the performance of the targets with their acquirers reinforces this conclusion

improving monetary policy models abstract if macroeconomic models are to be useful in policy making where uncertainty is pervasive the models must be treated as probability models whether formally or informally use of explicit probability models allows us to learn systematically from past mistakes to integrate model based uncertainty with uncertain subjective judgment and to bind data based forecasting together with theory based projection of policy effects yet in the last few decades policy models at central banks have steadily shed any claims to being believable probability models of the data to which they are fit here we describe the current state of policy modeling suggest some reasons why we have reached this state and assess some promising directions for future progress

learning across geographic space pro market reforms multinationalization strategy and profitability building on economic geography and knowledge based theory i argue that pro market reforms augment the profitability of firms by increasing their competitiveness and market knowledge however i propose that this effect is greater for firms that operate internationally firms that operate in more advanced markets and firms that become multinationals before reforms are implemented this is because such firms acquire market knowledge abroad that they can use when responding to reforms at home giving them a head start advantage over other local firms the analyses of a panel of the largest 500 latin american companies from 1989 to 2008 provide support for these arguments

organizational entrainment and international new ventures from emerging markets organizational entrainment captures the temporal fit in the activity cycles between exchange partners we argue that organizational entrainment between international new ventures invs and their most important international customers positively moderates the relationship between the degree scope and speed of internationalization and performance of invs we test our hypotheses on invs from china india and south africa the results support the contingent role of entrainment for degree and scope of internationalization but not for speed findings suggest that when invs attain temporal fit with their most important international customers they can implement their strategic goals in international markets more effectively

inward investment in the uk and the single european market the impact of completing the single european market sem on the economies ofthe member states is predicted as a combination of economies of scale and greater competition cecchini1 988 in spatial terms this implies a reallocation of resources to exploit the comparative advantage of different regions and countries for the problem regions especially those on the periphery of europe the integration process could lead to a variety of adverse sectoral and regional consequences the effect of greater competition for example may reduce indigenous sectoral strengths and diversity and increase external control the emergence or strengthening of agglomeration tendencies in core regions may lead to a growing centralization of investment and decision making

are the extent and effect of psychic distance perceptions symmetrical in cross border m as evidence from a two country study the concept of psychic distance has several entrenched assumptions that have not been put to sufficient systematic scrutiny we address this gap by investigating the assumptions of symmetry i e whether psychic distance from country a to country b is the same as that from country b to country a and discordance i e whether differences in psychic distance between two countries always lead to lack of fit of psychic distance in cross border mergers and acquisitions we propose a new framework which differentiates between the extent i e the degree to which two countries are perceived to be similar different and effects i e the degree to which distance perceptions create favorable or unfavorable attitudes and responses of psychic distance perceptions we argue that relative status positions affect extent and effects of psychic distance to test our predictions we collected data through policy capturing studies in sweden and china our findings reveal that both the extent and the effects of psychic distance perceptions are asymmetric we also found that psychic distance perceptions create unfavorable favorable attitudes among swedish chinese respondents toward chinese swedish acquirers our follow up examination confirms that relative status positions are a key driver of these results

a knowledge based theory of the firm the problem solving perspective in this paper we develop a knowledge based theory of the firm while existing knowledge based theory focuses on the efficiency of hierarchy in economizing on knowledge exchange we develop a theory of the firm that focuses on the efficiency of alternative organizational forms ingenerating knowledge or capability our theory begins with the problem as the basic unit of analysis arguing that a problem s complexity influences the optimal method of solution search and the optimal means of organizing that search the distinguishing feature that differentiates among organizational alternatives is the different way each resolves conflict over the selection of solution trials that is the way it chooses the path of search our theory predicts that efficiency demands that these governance alternatives be matched in a discriminating way to problems based on their associated benefits and costs in governing solution search thus our theory is among the first to simultaneously treat both the boundary choice i e internal versus external and the choice among alternative internal approaches to organizing

knowledge transfer in international acquisitions this paper reports on a multimethod study of knowledge transfer in international acquisitions using questionnaire data we show that the transfer of technological know how is facilitated by communication visits meetings and by time elapsed since acquisition while the transfer of patents is associated with the articulability of the knowledge the size of the acquired unit and the recency of the acquisition using case study data we show that the immediate post acquisition period is characterized by imposed one way transfers of knowledge from the acquirer to the acquired but over time this gives way to high quality reciprocal knowledge transfer

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

international acquisition success social community and dominant logic dimensions international acquisitions intended to achieve knowledge transfers and improvements of innovation capacity can only be successful if the acquirer devotes balanced attention to a building a unified social community and b achieving requisite commonality in dominant logic the balance between these two dimensions of success depends on the activity class considered in some activity classes imposing the acquiring firm s dominant logic will be dysfunctional and therefore the post acquisition managerial focus may need to shift towards social community building bresman birkinshaw and nobel s 1999 acclaimed jibs paper should be commended for identifying the social community dimension as a critical driver of international acquisition success

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

determinants of cross national knowledge transfer and its effect on firm innovation this study examines the determinants of international knowledge flow from a resource based perspective it evaluates the impact of cross national knowledge transfer on firm innovative performance based on 56 027 us patents owned by 53 selected firms in the us based pharmaceutical industry the results suggest that innovative performance is a curvilinear function of the international knowledge content used by a firm to innovate as hypothesized it was found that at 1 low and moderate levels of international knowledge content a firm s strategy to transfer international knowledge improves its innovative performance and at 2 higher levels of international knowledge content there are diminishing marginal returns to transferring knowledge from overseas

money as stock abstract the fiscal theory determines the price level from the value of nominal government debt as a claim to government primary surpluses just as private stock is valued as a claim to corporate profits valuation equations are not constraints so this theory does not mistreat the government s intertemporal budget constraint i anchor the analysis in a simple cash in advance model when money demand falls to zero i show that the price level can still be determined by the government debt valuation equation

joint r d in low carbon technology development in china a case study of the wind turbine manufacturing industry abstract china faces the dual challenges of climate change and increased energy demand these challenges in turn increase the demand for wind energy development along with rapid growth in manufacturing capacity chinese companies have aspired to increase their innovation capacity in order to enhance their competitiveness in the market joint research and development r d is an attractive path for chinese companies striving to advance their r d capacity this paper examines joint r d between chinese wind turbine manufacturing companies and foreign design firms assessing the performance of joint r d activities in china using the structure conduct performance scp framework the study found that joint r d has improved chinese companies technical capacity human resources and financial growth however the effect on chinese companies innovation capacity is still limited because of unequal technical capacities of the two sides in collaboration as well as their preference for augmenting profits rather than technical capacity current joint r d mode is only the extension of licensing mode in wind turbine manufacturing industry

knowledge transfer in international acquisitions a retrospective in this retrospective we summarise and discuss the findings of our 1999 jibs paper knowledge transfer in international acquisitions and we consider how research in this area has evolved over the last decade the paper s key contribution was to show how the post acquisition integration process in a sample of three international acquisitions led to the creation of a social community characterised by two way knowledge sharing between the acquirer and acquired companies we discuss how the timing of this publication as an early contribution to the knowledge based perspective on the firm helped its visibility and we consider the boundary conditions around our findings

the double edged sword of cultural distance in international acquisitions this study aims to bring together seemingly contradicting arguments in the literature about the role of cultural distance in international acquisitions we offer a model that postulates that cultural distance relates negatively to international acquisition performance because it taxes integration capabilities during international acquisitions but that cultural distance also elevates the positive association of integration capabilities and international acquisition performance because it provides more learning opportunities that can only be exploited with strong integration capabilities empirical tests with a sample of international acquisitions by 118 us multinational companies provide support for the proposed model on one hand we find that cultural distance impedes understandability of key capabilities that need to be transferred and constrains communication between acquirers and their acquired units bringing about a negative indirect effect on acquisition performance on the other hand we find that cultural distance enriches acquisitions by enhancing the positive effects of understandability and communication on acquisition performance acquirers that can overcome the impeding effects of cultural distance on understanding key capabilities and effective communication appear to reap significant performance gains our study provides initial support for a double edged sword effect of cultural differences on acquisition performance and illustrates the importance of integration capabilities

optimal fiscal and monetary policy in an economy without capital abstract this paper is concerned with the structure and time consistency of optimal fiscal and monetary policy in an economy without capital in a dynamic context optimal taxation means distributing tax distortions over time in a welfare maximizing way for a barter economy our main finding is that with debt commitments of sufficiently rich maturity structure an optimal policy if one exists is time consistent in a monetary economy the idea of optimal taxation must be broadened to include an inflation tax and we find that time consistency does not carry over an optimal inflation tax requires commitment by rules in a sense that has no counterpart in the dynamic theory of ordinary excise taxes the reason time consistency fails in a monetary economy is that nominal assets should from a welfare maximizing point of view always be taxed away via an immediate inflation in a kind of capital levy this emerges as a new possibility when money is introduced into an economy without capital

an analysis of the factors determining the geographical distribution of japanese manufacturing investment in the uk 1984 91 the purpose of this paper is to discover which factors have been important in determining the geographical distribution of japanese manufacturing establishments in the uk during 1984 91 a multivariate statistical analysis is undertaken based on the poisson model to investigate the inter county variation in the number of establishments locating in each uk county during two separate time periods 1984 88 and 1989 91 in addition to examining the influence of variables such as labour costs labour availability and industry mix on the locational choice of japanese firms the statistical analysis attempts to capture the influence of regional policy multivariate regression analysis reveals that the geographical distribution of japanese owned investment in the uk is only statistically associated with a small number of variables the main explanatory variable in the model is whether an area had assisted area status other key explanatory variables are those reflecting an area s industry mix

technological effects of m as in spanish manufacturing this article explores whether mergers and acquisitions m as generate differentiated impacts on the acquiring firms r d expenditures patents granted and product innovations considering m as as a way of foreign expansion we examine whether the technological effects differ between domestic and foreign owned acquirers assuming that the effects on the technological efforts and performance may differ across industries the availability of statistical information for a stable sample of manufacturing companies in spain during the 1990s allows us to follow a dynamic approach to the issue our findings confirm the existence of differentiated effects on technological inputs and outputs across industries as well as diversity between domestic and foreign owned firms involved in m as copyright 2009 the author 2009 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

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

welfare analysis of currency regimes with defaultable debts abstract we modify the cole and kehoe model by including domestic debt according to the original model a speculative attack on a high debt level issued abroad triggers external debt default here it is possible to inflate away the domestic debt to avoid the external debt default we consider two possibilities for domestic debt denomination i local currency and ii common currency in the second case inflation depends on a monetary union decision our numerical results show that to have a debt share denominated in a common currency is optimal when the refinancing risks are highly correlated across union members otherwise the best is to keep the domestic debt denominated in local currency finally the extreme case of having all debt issued abroad and denominated in a foreign currency is suitable when under alternative regimes suboptimal inflation motivated by political factors is likely although the paper was originally developed for emerging market economies it sheds some light on the recent eurozone crisis

merging without alienating interventions promoting cross cultural organizational integration and their limitations foreign direct investment particularly cross border mergers and acquisitions can spawn a range of individual level outcomes from cross cultural adjustment and synergistic learning on the positive side to work alienation on the negative unsuccessful navigation of these individual level outcomes leads to failed integration that can seriously affect the realization of desired organizational outcomes such as successful technology transfer knowledge sharing and the general realization of global growth by means of an iterative between methods triangulation the study surfaces cross cultural work alienation as a phenomenon that can limit the overall success of such ventures and identifies interventions that help to promote successful post merger integration

regions in competition inward investment and regional variation in the use of incentives 2000 regions in competition inward investment and regional variation in the use of incentives regional studies vol 34 no 3 pp 291 296

speed of the internationalization process the role of diversity and depth in experiential learning by analyzing internationalization as a dynamic process we attempt to explain the speed of international operations in terms of learning acquired in the course of past international activities we consider that the speed of the internationalization process depends on the type of experiential learning that results from decisions implicit in the internationalization process choice of location and modes of operation firms develop two types of learning activities with respect to the selection of foreign markets and modes of operation diversity and depth of accumulated international activities we propose that depth of international activities has an inverted u shaped impact on the speed of the internationalization process while diversity of international activities has a u shaped influence on the speed of internationalization process the results of our longitudinal study of 889 firms over 23 years 1986 2008 suggest that diversity of international activities promotes long term learning by exposing the firm to richer experiences although such learning only takes place over time depth of international activities may accelerate the internationalization process in the short term but it eventually restrains its potential for development in the long term our research highlights the short term vs long term consequences of different types of decisions related to the internationalization process

are valuation effects desirable from a global perspective abstract recent studies have emphasized the role of valuation effects due to exchange rate movements in easing the process of adjustment of the external balance of a country this paper asks to what extent valuation effects are desirable from a global perspective as a mean to achieve an efficient allocation of resources in a frictionless world it is desirable to have large movements in prices and exchange rates but once a small degree of price rigidity is introduced not only should prices be stabilized but also the response of the exchange rate should be muted there is a minor role for valuation effects that depends both on the size and composition of assets and liabilities

from the editors explaining theoretical relationships in international business research focusing on the arrows not the boxes distinctive features of articles accepted by the journal of international business studies are that they are multidisciplinary in scope and interdisciplinary in content and methodology and they make a substantial theoretical contribution to international business studies failure to meet this last requirement is an often cited reason given by reviewers for article rejection sometimes reviewers mean that a manuscript does not conform to the dominant paradigm in that it is not the next logical step in the study of a phenomenon or they mean that there is little if any integration of several theories used to explain a phenomenon however perhaps the most common underlying meaning when reviewers cite lack of a theoretical contribution for rejection is that the nature of the relationships proposed is not well explained while the first two meanings may be influenced by the specific discipline or methodology involved this final one is not in this editorial we provide a set of guidelines that authors can use to ensure that their paper meets the standard of explaining the logic of the relationships they propose

cultural influences on national rates of innovation abstract the purpose of this research was to examine the effect of the cultural values of individualism power distance uncertainty avoidance and masculinity on national rates of innovation in 33 countries in 1975 and 1980 the study found that rates of innovation are most closely associated with the cultural value of uncertainty acceptance but that lack of power distance and individualism also are related to high rates of innovation this research suggests that nations may differ in their rates of innovation because of the cultural values of their citizens these findings have important implications for managers and policy makers first culture matters countries may not be able to increase their rates of innovation simply by increasing the amount of money spent on research and development or industrial infrastructure they also may need to change the values of their citizens to those that encourage innovative activity this concept in turn suggests that national rates of innovation are driven by more fundamental forces than economic conditions and that societal change may be necessary to make less innovative societies more innovative second the values associated with high national rates of innovation are those that many scholars have long argued are important at the firm level an acceptance of uncertainty appears to be necessary probably because innovation requires a tolerance for risk and change individualism seems to be important perhaps because of its association with autonomy independence and freedom lack of power distance appears important perhaps reflecting the role that tolerance of change in the social order and distribution of power play in the innovation process third the study indicates that the strength of the relationship between innovation and two cultural values individualism and lack of power distance were stronger in 1975 than in 1980 suggesting perhaps that these values are becoming less important in spurring the innovation process this finding supports the anecdotal evidence that many collectivist and hierarchical asian nations are becoming more innovative fourth this study shows that per capita income is a more important economic variable than industrial structure in determining national rates of innovation this finding confirms previous work that has shown that as nations become wealthier they become more innovative the reason may be that wealthier countries have more demand for innovations both because innovations are often laborsaving and because wealthier nations have greater demand for new and differentiated consumer goods

a retrospective on mnc knowledge transfer subsidiary absorptive capacity and hrm in this retrospective we revisit the goals of the original paper and we review the studies that have used our paper to discuss the concept and the development of absorptive capacity we also propose directions for future research stressing the need to develop thorough theoretical and empirical models of absorptive capacity as a multi level and dynamic construct that is contingent on the context in which it is embedded

knowledge acquisition from foreign parents in international joint ventures an empirical examination in the hungarian context in this paper we examine organizational characteristics structural mechanisms and contextual factors that influence knowledge acquisition from the foreign parent in international joint ventures ijvs we in turn relate assessments of knowledge acquisition to ijv performance the data come from a survey of ijvs in the hungarian context where learning and knowledge acquisition from the foreign parent is thought to be particularly critical adaptation mechanisms such as capacity to learn articulated goals and structural mechanisms such as the provision of training technology and managerial assistance by foreign parents all were positively associated with the degree to which ijvs reported acquiring knowledge from their foreign parents we also found limited support for the belief that cultural conflicts can impede knowledge acquisition but only for two party joint ventures with 50 50 equity arrangements we also looked at the relationship between knowledge acquisition and different dimensions for evaluating ijv performance the relationship between knowledge acquisition and performance was significant for all indicators of performance through knowledge acquisition from the foreign parent and the organizational characteristics hypothesized to enhance ijv knowledge acquisition affected assessments of some dimensions of performance more than others our findings contribute to advancing knowledge about the relationship between organizational characteristics and organizational knowledge acquisition in ijvs as well as the relationships between knowledge acquisition and different dimensions of ijv performance

the cooperative venture formation process a latent variable structural modeling approach this article addresses management process issues for forming cooperative ventures with an increased likelihood of subsequent success based on roos 1989 the cooperative venture formation process is conceptualized in terms of three theoretical constructs the extent of sufficient internal push for the project the breadth and depth of analytical scope and the strength of key stakeholder support these constructs are related to subsequent perceived performance data from sixty seven firms were collected and analyzed via latent variable structural modeling a partial least square pls one key contribution of this article is the modeling approach to strategic formation process it contributes to an existing but not very well developed theory regarding strategy formation processes the pls method used in this study is quite unique within strategy research as such it contributes to methodology development in the strategy research field the main managerial implication is that the process by which a cooperative venture is formed should largely be seen as a step by step approach not a discrete decision if the three fundamentals discussed in the article are thoroughly addressed we can up the ante for success during implementation and therefore subsequent performance

multiculturalism from a cognitive perspective patterns and implications multiculturalism the internal representation of multiple cultural meaning systems has critical implications for global managers and multinational corporations mncs understanding multiculturalism is becoming increasingly important given that the locations within which mnc activity resides and the composition of the workforce even within a given location are more diverse building on the connectionism perspective we offer a novel cognitive conceptualization of multiculturalism that incorporates the individual s multicultural cognitive content and structure based on that we explain how specific sociocultural experiences interact with existing individual cognitions to form different patterns of multiculturalism specifically we propose five stylized patterns compartmentalization integration inclusion convergence and generalization and explain how they are developed through specific sociocultural experiences we discuss how different patterns of multiculturalism influence specific capabilities of multicultural mnc managers and their effectiveness in a variety of critical mnc tasks we believe the cognitive connectionist perspective which has not been brought before into international business discussions of culture and cultural capabilities holds great promise for better understanding global managers capabilities and development

microfoundations in international management research the case of knowledge sharing in multinational corporations microfoundations have become an important theme in recent macro management research however the international management im field is an exception to this we document the lack of attention on microfoundations in im research by focusing on knowledge sharing a key im research field which we investigate by means of a keyword based literature study of the leading im and general management journals we discuss possible reasons why microfoundations have so far met with less resonance in im research we point to the training and background of im scholars as possible reasons we also highlight the significance that im scholars place on context and structure in explanation these may be seen as contrary to a microfoundations perspective a view that we show is incorrect we end by identifying several microfoundational issues in im research calling for a sustained effort with respect to theory heuristics and empirics

the fiscal myth of the price level i examine the fiscal theory of the price level according to which non ricardian policy and predetermined nominal government debt fiscally determine prices i argue that the non ricardian policy

the impact of m a on the r d process an empirical analysis of the role of technological and market relatedness abstract using information on 31 in depth cases of individual m a deals we show that technological and market relatedness between m a partners distinctly affects the inputs outputs performance and organisational structure of the r d process while the findings in the literature on the effect of m a on r d are quite mixed we can sharpen results by analysing data at the level of the r d process this comes at the price of a smaller sample and more qualitative data for which caution in the interpretation is necessary m a between partners with ex ante complementary technologies result in more active r d performers after the m a in sharp contrast when merged entities are technologically substitutive they significantly decrease their r d level after the m a moreover r d efficiency increases more prominently when merged entities are technologically complementary than when they are substitutive these two findings on the r d level and the performance support the scope economy effect of m a on the one hand and reject the scale economy effect of m a on the other next for cases in which partners were active in the same technological fields before the m a the reduction of r d is more prominent while the r d efficiency gain is smaller if merged entities were rivals in the product market prior to their merger than if they were non rival this suggests that rival firms reap little technology gains from mergers

innovation in multinational corporations control and communication patterns in international r d operations this paper addresses issues of global innovation in multinational corporations by examining the patterns of communication and control in international rd 2 local and international adaptors both focus their communication on their internal corporate network and 3 international creators have strong internally and externally oriented networks of relationships the implications for the management of global innovation are discussed 1998 john wiley sons ltd

new developments in monetary economics two ghosts two eccentricities a fallacy a mirage and a mythos monetary theory and policy are part of intertemporal public finance the two ghosts are the liquidity trap and the real balance effect the eccentricities are negative nominal interest rates and the helicopter drop of money the fallacy is the fiscal theory of the price level a logically inconsistent theory of the link between the government s intertemporal budget constraint and the general price level the mirage is the prediction that financial deregulation and technical change in the payments and settlements technology will cause monetary policy to lose its capacity to influence even nominal economic variables mythos refers to the independent central bank

optimal fiscal and monetary policy under sticky prices this paper studies optimal fiscal and monetary policy under sticky product prices the theoretical framework is a stochastic production economy without capital the government finances an exogenous stream of purchases by levying distortionary income taxes printing money and issuing one period nominally risk free bonds the main findings of the paper are first for a miniscule degree of price stickiness i e many times below available empirical estimates the optimal volatility of inflation is near zero this result stands in stark contrast with the high volatility of inflation implied by the ramsey allocation when prices are flexible the finding is in line with a recent body of work on optimal monetary policy under nominal rigidities that ignores the role of optimal fiscal policy second even small deviations from full price flexibility induce near random walk behavior in government debt and tax rates third sluggish price adjustment raises the average nominal interest rate above the one called for by the friedman rule finally an interest rate feedback rule whereby the nominal interest rate depends on inflation and output fits well the data emanating from the ramsey economy however the fitted rule is not of the taylor type for the implied inflation coefficient is less than one and close to zero and the output coefficient is negative jel classification e52 e61 e63

the role of headquarters subsidiary geographic distance in strategic decisions by spatially disaggregated headquarters various studies have explored how headquarters hq subsidiary geographic distance affects hq decisions about subsidiaries arguing that such distance causes some strategic options to be selected over others to limit ex post communication costs these studies have implicitly assumed that a multinational s hq is spatially concentrated even though multinationals have increasingly disaggregated their hq internationally we examine how such hq disaggregation changes the role that hq subsidiary geographic distance plays in hq decisions about subsidiaries we argue that hq disaggregation yields multiple hq subsidiary geographic distances all of which are a likely source of ex post communication costs and hence are likely to co determine hq decisions about subsidiaries we discuss several approaches for dealing with these multiple distances and recommend that the first best approach be adopted by future studies to avoid the biased geographic distance effects possibly present in prior studies

presidential address debt and money financial constraints and sovereign finance economic analyses of corporate finance money and sovereign debt are largely considered separately i introduce a novel corporate finance framing of sovereign finance based on the analogy between fiat liabilities for sovereigns and equity for corporations the analysis focuses on financial constraints at the country level making explicit the trade offs involved in relying on domestic versus foreign currency debt to finance investments or government expenditures this framing provides new insights into issues ranging from the costs and benefits of inflation optimal foreign exchange reserves and sovereign debt restructuring

cultural differences convergence and crossvergence as explanations of knowledge transfer in international acquisitions in spite of the proliferation of research on cultural differences in international mergers and acquisitions we lack systematic analyses of the impact of cultural factors on knowledge transfer in this paper we argue that both national and organizational cultural differences and cultural integration in the form of cultural convergence and crossvergence affect knowledge transfer in acquisitions we develop specific hypotheses concerning the nature of these effects and test our hypotheses with data on international acquisitions carried out by finnish corporations the analyses performed show that national cultural differences provide great potential for knowledge transfer in international acquisitions furthermore organizational cultural convergence and crossvergence have a significant positive impact on knowledge transfer in particular convergence and crossvergence moderate the impact of national cultural differences on knowledge transfer

letter from the editor in chief the jibs decade award integrating international acquisitions the 2009 jibs decade awardthe first issue of jibs each year begins with a reprint of the articlethat won the previous year s jibs decade award followed bya retrospective written by the author or authors and one ormore invited commentaries the 2009 award winning article is knowledge transfer in international acquisitions by henrikbresman julian birkinshaw and robert nobel published in 1999 jibs 30 3 the jibs decade award recognizes the most influential articlepublished in the volume 10 years ago the 2009 selectioncommittee members were stephen tallman chair torbenpedersen 2009 aib program chair john cantwell 2008 aibprogram chair and the jibs editor in chiefasanexofficiomember the award is presented by palgrave macmillan duringa special session honoring the authors at the annual meetingof the academy of international business aib the 2009 aibsession in san diego was chaired by thejibs editor in chief julianbirkinshawspokeonbehalfoftheauthors andalainverbeke and udo zander provided commentaries after the conference the presentations were revised sent out forsingle blind review to selected jibs area and consulting editors and also circulated among the authors to encourage cross fertilizing of ideas the end product i believe is a wonderful setof papers that should and will be read together and i suspectoften assigned as a set for phd seminars i thank all the area andconsulting editors who read these manuscripts and provided suchthoughtful comments for the authors the first paper in this issue of jibs is a reprint of the decadeaward winning article by bresman birkinshaw and nobel thearticle is a qualitative study of the post acquisition integrationprocess in three international acquisitions by swedish multi nationals the authors argue that successful acquisitions createa social community where two way knowledge sharing occursbetween the acquirer and acquired firms the reprinted article is followed by knowledge transfer ininternational acquisitions a retrospective by birkinshaw bresmanand nobel the retrospective explores the origins of their award winning article situating it in the knowledge based view of themultinational enterprise mne kogut zander 1993 they arguethat their paper makes three contributions to the internationalbusiness ib literature mapping out the territory comparing the

theory of tax smoothing in the small open economy abstract we derive necessary and sufficient conditions for the martingale like behavior of tax rates the world real interest rate is exogenous to the small domestic economy consumers are risk averse and markets are incomplete the government s loss function is not ad hoc

optimal fiscal and monetary policy with sticky prices in this paper i consider the role of state contingent inflation as a fiscal shock absorber in an economy with nominal rigidities i study the ramsey equilibrium in a monetary model with distortionary taxation nominal non state contingent debt and sticky prices with sticky prices the ramsey planner must balance the shock absorbing benefits of state contingent inflation against the associated resource misallocation costs for government spending processes resembling post war experience introducing sticky prices generates striking departures in optimal policy from the case with flexible prices for even small degrees of price rigidity optimal policy displays very little volatility in inflation tax rates display greater volatility compared to the model with flexible prices with sticky prices tax rates and real government debt exhibit behavior similar to a random walk for government spending processes resembling periods of intermittent war and peace optimal policy displays extreme inflation volatility even when the degree of price rigidity is large as the variability in government spending increases smoothing tax distortions across states of nature becomes increasingly important and the shock absorber role of inflation is accentuated

taxation and uncertainty while taxes may be certain u s tax policy has certainly not been furthermore intrinsic economic risk makes investment decisions risky therefore a serious examination of the effects of tax policy on dynamic economic behavior should consider both sources of uncertainty this paper presents a simple theoretical and computational model that can analyze both intrinsic risk and uncertain taxation furthermore it will be clear that these techniques will be useful for examining general problems of taxation and risk when studying the impact of past and or proposed tax changes one of two extreme assumptions are usually made either agents are perfectly aware of future tax policy a perfect foresight assumption or they always believe that no change will ever occur a myopic foresight assumption these two assumptions yield substantially different views of recent tax experience as alan auerbach and james hines 1987 demonstrate in a partial equilibrium context both are clearly wrong the myopic specification assumes that individuals believe at each point in time that the current tax law will surely continue forever even after they have been hit repeatedly with tax changes on the other hand it is absurd to think that in say 1977 a significant number of individuals perfectly knew the various tax changes that would occur during the following decade this paper analyzes a dynamic general equilibrium model wherein taxpayers understand the uncertainty in tax policy when making their deci

cultural differences and capability transfer in cross border acquisitions the mediating roles of capability complementarity absorptive capacity and social integration this paper presents an integrative model of the impact of cultural differences on capability transfer in cross border acquisitions we propose that cultural differences affect the post acquisition capability transfer through their impact on social integration potential absorptive capacity and capability complementarity two dynamic variables the use of social integration mechanisms and the degree of operational integration of the acquired unit are proposed to moderate the effects of cultural differences on social integration and potential absorptive capacity the implications for acquisition research and practice are discussed

the effects of corporate restructuring on aggregate industry specialization it has been widely argued that the purpose of corporate restructuring during the 1980s was to produce a population of more industry specialized competitive firms in response to intensifying global competition a number of studies show that corporate restructuring resulted in increased corporate focus during the 1980s however no study has yet examined whether corporate restructuring resulted in increased specialization at the industry level during the 1980s this study examines this issue first we examine whether or not aggregate industry specialization increased during the 1980s that is we ask did the average firm in any given u s industry become more or less specialized to that industry during the 1980s second we examine whether corporate restructuring was a significant determinant of change in aggregate industry specialization during the 1980s using a sample of 686 four digit sic industries and 64 two digit industry groups this study finds that aggregate industry specialization declined very slightly at both the four digit and two digit level between 1981 and 1989 this study also finds that sell offs of establishments through corporate control transactions or interfirm asset sales had no significant effect on aggregate industry specialization