explaining the international intensity and global diversity of early stage technology based firms abstract early stage technology based firms are confronted with the complexity of foreign markets and global competition from their earliest stages of development not only must technology entrepreneurs keep pace with ever changing technology based product offerings but they must also simultaneously stay abreast of competitors and industry trends in multiple countries we surveyed 75 small technology based firms in ontario to evaluate their international activities and try to explain both the intensity of their foreign sales the percent of total sales coming from foreign sources as well as the global diversity of the markets in which they operate the number of major regional areas from which they derive revenue our findings suggest that resources necessary to pursue international sales have an important impact on both foreign market intensity and diversity in contrast however attitudes towards foreign markets helped to explain international intensity but not global diversity additionally firm age was positively associated with global diversity but not international intensity these findings support the notion of small technology firms being instant internationals but suggest that proceeding to the next step achieving global diversity requires significantly greater time and resources in line with prior empirical research these firms tended to increase their international intensity and diversity as they became larger in contrast with what the literature suggests however firms utilizing strategic alliances were no more active internationally than those not using strategic alliances finally government assistance helped to explain the international intensity of these firms but not the global diversity these results help managers researchers and shapers of public policy better understand the international activities of early stage technology firms given the relationship between attitudes and international intensity there appears to be some opportunity associated with trying to influence the attitudes of ceos regarding initial expansion into international markets for firms to become globally diverse however there is a greater dependency on the availability of resources as well as accumulated business experience managers should recognize the pattern this suggests and perhaps be leery of becoming too globally diverse too quickly overall the relationship between size and foreign activities suggests that growth opportunities are linked to international markets although some broad relationships are suggested regarding the need for collaboration and government support further research is necessary to understand the use of strategic alliances as well as government assistance in both international market intensity and global diversity

effect sizes and the interpretation of research results in international business journal editors and academy presidents are increasingly calling on researchers to evaluate the substantive as opposed to the statistical significance of their results to measure the extent to which these calls have been heeded i aggregated the meta analytically derived effect size estimates obtained from 965 individual samples i then surveyed 204 studies published in the journal of international business studies i found that the average effect size in international business research is small and that most published studies lack the statistical power to detect such effects reliably i also found that many authors confuse statistical with substantive significance when interpreting their research results these practices have likely led to unacceptably high type ii error rates and invalid inferences regarding real world effects by emphasizing p values over their effect size estimates researchers are under selling their results and settling for contributions that are less than what they really have to offer in view of this i offer four recommendations for improving research and reporting practices

real exchange rates between the wars abstract bilateral real exchange rates are analyzed for fifteen countries over the period 1925 1937 using a benchmark invariant principal components technique for the period 1925 1931 half of real exchange rate variation originates from countries on floating exchange rates and half from price level differences between countries on the gold standard for the period 1931 1937 real exchange rate movements between the sterling bloc the european gold bloc and the us and canada appear dominant within bloc variation is secondary and mostly due to competitive devaluations our results support earlier evidence that the nominal exchange rate regime to a large extent determines real exchange rate variation

nonlinear purchasing power parity under the gold standard 1 introductionrecent theoretical analysis of purchasing power deviations see e g dumas 1992 sercu uppal and van hull 1995 and o connell and wei 1997 demonstrates how transactions costs or the sunk costs of international arbitrage induce nonlinear adjustment of the real exchange rate to purchasing power parity ppp globally mean reverting this nonlinear process has the important property of exhibiting near unit root behavior for small deviations from ppp since small deviations from ppp are left uncorrected if they are not large enough to cover the transactions costs or the sunk costs of international arbitrage a parametric nonlinear model suggested by the theoretical literature that captures the nonlinear adjustment process in aggregate data is the exponential smooth transition autoregression model estar of ozaki 1985 a smooth rather than discrete adjustment mechanism is motivated by the theoretical analysis of dumas 1992 also as postulated by terasvirta 1994 and demonstrated theoretically by berka 2002 in aggregate data regime changes may be smooth rather than discrete given that heterogeneous agents do not act simultaneously even if they make dichotomous decisions 1 recent empirical work e g michael nobay and peel 1997 taylor peel and sarno 2001 peel and venetis 2002 has reported empirical results that suggest that the estar model provides a parsimonious fit into a variety of data sets particular for monthly data for the interwar and postwar floating period as well as for annual data spanning 200 years as reported in lothian and taylor 1996 in addition nonlinear impulse response functions derived from the estar models show that although the speed of adjustment for small shocks around equilibrium will be highly persistent larger shocks mean revert much faster than the glacial rates previously reported for linear models rogoff 1996 in this respect the estar models provide some solution to the ppp puzzle outlined in rogoff 1996 2the estar model can also provide an explanation of why ppp deviations analyzed from a linear perspective appear to be described by either a nonstationary integrated i 1 process or alternatively described by fractional processes see e g diebold husted and rush 1991 taylor peel and sarno 2001 and pippenger and goering 1993 show that the dickey fuller tests have low power against data simulated from an estar model michael nobay and peel 1997 and byers and peel 2003 show that data that is generated from an estar process can appear to exhibit the fractional property that this would be the case was an early conjecture by acosta and granger 1995 given that the estar model has a theoretical rationale whereas the fractional process is a relatively nonintuitive one the fractional property might reasonably be interpreted as a misleading linear property of ppp deviations granger and terasvirta 1999 whereas the empirical work employing estar models provides some explanation of the glacially slow adjustment speeds obtained in linear models there is one aspect of the empirical work that is worthy of further attention a second way of explaining the rogoff puzzle raised by rogoff himself 3 is to relax the assumption that the equilibrium real exchange rate is a constant see e g canzoneri cumby and diba 1996 and chinn and johnston 1996 theoretical models such as that of balassa 1964 and samuelson 1964 imply a nonconstant equilibrium in the real exchange rate if real productivity growth rates differ between countries 4 nonlinear models that incorporate proxies for these effects are found to parsimoniously fit post bretton woods data for the main real exchange rates see venetis paya and peel 2002 and paya venetis and peel 2003 naturally models that ignore this effect may generate misleading speeds of ppp adjustment to shocks in this regard the empirical results of hegwood and papell 2002 for the gold standard period are particularly interesting

purchasing power parity and unit root tests using panel data abstract this paper reports the results of unit root tests for real exchange rates using a panel framework this panel approach provides greatly improved power compared to conventional univariate time series unit root tests we obtain evidence supporting ppp over the recent flexible exchange rate period for g 6 and oecd countries we show explicitly that failure to find such evidence in previous research was due to the low power of the tests

the process followed by ppp data on the properties of linearity tests recent research has reported the lack of correct size in stationarity test for ppp deviations within a linear framework however theoretically well motivated nonlinear models such as the estar appear to parsimoniously fit the ppp data and provide an explanation for the ppp puzzle employing monte carlo experiments we analyze the size and power of the nonlinear tests against a variety of nonstationary hypotheses we also fit the estar model to data from high inflation economies our results provide further support for estar specification

a note on ranking the international business journals 2000 examined the relative quality of 30 international business ib journals the article s objectives were to present an objective analysis of journal quality for tenure and promotion decisions to guide researchers considering submission options and to provide the academic community with an enhanced understanding of ib publication outlets using citation analyses and a survey questionnaire journal rankings were developed as designed the study was carefully executed and provides a comprehensive list of journals that publish ib research within the ib research acad

short run independence of monetary policy under pegged exchange rates and effects of money on exchange rates and interest rates this paper examines the effects of money supply changes on exchange rates interest rates and production in an optimizing two country model in which some sectors of the economy have predetermined nominal prices in the short run and other sectors have flexible prices money supply shocks have liquidity effects both within and across countries and induce a cross country real interest differential the model predicts that liquidity effects are highly nonlinear and are not likely to be captured well empirically by linear models particularly those involving only a single country a striking implication of the model is that countries have a significant degree of short run independence of monetary policy even under pegged exchange rates copyright 1997 by ohio state university press

the purchasing power parity persistence paradigm abstract rogoff journal of economic literature 1996 34 647 668 describes the remarkable consensus of 3 5 year half lives of purchasing power parity deviations among studies using long horizon data these studies however focus on rejections of unit roots in real exchange rates and do not use appropriate techniques to measure persistence our half life estimates explicitly account for serial correlation sampling uncertainty and most importantly small sample bias calculating confidence intervals as well as point estimates for long horizon and post 1973 data we find that even though most of the point estimates lie within the 3 5 year range univariate methods provide virtually no information regarding the size of the half lives

purchasing power parity in less developed and transition economies a review paper abstract the concept of purchasing power parity ppp has been the subject of numerous studies many of which have been unable to prove conclusively this core principle of international finance although industrialized countries have received most of the attention studies that focus on less developed and transition economies have also attained mixed results this study surveys trends in this branch of the literature highlighting the econometric advances that have sought to solve this puzzle while pointing out that more needs to be done to address the reasons that might cause ppp not to hold

instant winners legal change in transition and the diffusion of state lotteries this paper investigates the determinants of legal change in a public choice framework an empirical model explaining the timing and probability of decisions to adopt state operated lotteries is developed employing a tobit estimator and explicitly considering the effects of state specific constitutional and political structures spending and tax policies and federal revenue importation evidence is presented showing that legal change is much like economic change lotteries are more likely to be adopted and to be adopted earlier where the costs are lowest relative to expected benefits state legislatures appear to be the main beneficiaries of this public choice process

was it real the exchange rate interest differential relation over the modern floating rate period in this paper we explore the relationship between real exchange rates and real interest rate differentials in the united states germany japan and the united kingdom contrary to theories based on the joint hypothesis that domestic prices are sticky and monetary disturbances are predominant we find little evidence of a stable relationship between real interest rates and real exchange rates we consider both in sample and out of sample tests one hypothesis that is consistent with our findings is that real disturbances such as productivity shocks may be a major source of exchange rate volatility this paper investigates the empirical relationship between major currency real exchange rates and real interest rates over the modern post march 1973 flexible rate experience the exchange rates examined here include the dollar mark dollar yen and dollar pound rates our two major findings are as follows first the data do not indicate a strong correspondence between real interest rate differentials short term or long term and real exchange rates this finding appears to conflict with the predictions of most monetary and portfolio balance models of exchange rate determination though the conflict can be substantially reconciled if aggregate disturbances are primarily real in nature i e changes in productivity tastes etc it is true that in many cases the sign of the estimated exchange rate interest rate differential relationship is consistent with the possible predominance of financial market disturbances but the relationship is not stable enough to be statistically significant second although one does find some evidence of a unit root in both real exchange rates and long term but not shortterm real interest differentials these two series do not appear to be linearly cointegrated hence the nonstationarity or near nonstationarity in the two series cannot be attributed to the same factor in section i we briefly describe a class of small scale monetary models of exchange rate determination the importance of this class of models for empirical work derives from its strong predictions about how the exchange rate will move

the diffusion of judicially provided employment protection the employment at will doctrine labour economists in the private sector of the united states have historically expressed concerns that private sector employers too often terminate employees employment without just cause because the usa lakes statutory restrictions against such actions many state judicial branches seem to have taken a leading role in providing some degree of employment security the present note tests the intensity of the occurrence across states of judicially provided employment protection as a function of several demographic labour and political variables across states the maximum likelihood tobit results point out that education attainment of the voting population the current rate of unemployment and population density of the state are important factors that lead judicial branches of government across states to provide such protection at different points in time the note supports several findings of a previous study by kesselring and pittman 1993 which models the dependent variable as a zero one dummy

mean reversion of real exchange rates in high inflation countries we test for mean reversion in real exchange rates using data from five countries four of which have experienced episodes of high inflation using monthly data for argentina brazil chile colombia and israel we find that a stochastic unit root model is typically appropriate brazil is the exception kalman filter estimates of the stochastic unit roots show sharp deviations from unity associated with high inflation episodes this suggests that stochastic unit root models are a more appropriate way to model mean reversion in real exchange rates for high inflation countries than models with fixed rates of mean reversion

nonlinear mean reversion to purchasing power parity exponential smooth transition autoregressive models and stochastic unit root processes nonlinear exponential smooth transition autoregressive estar models are recently very popular in modelling the deviation from purchasing power parity this article shows that there is a close relation between the estar models estimated in taylor et al 2001 and stochastic unit root stur processes of granger and swanson 1997 and mccabe and tremayne 1995 also for a post bretton woods sample period the real exchange rates from four major countries are tested if they are better described as i 1 estar or stur processes

size distortions of tests of the null hypothesis of stationarity evidence and implications for the ppp debate abstract tests of the null hypothesis of stationarity against the unit root alternative play an increasingly important role in empirical work in macroeconomics and in international finance we show that the use of conventional asymptotic critical values for stationarity tests may cause extreme size distortions if the model under the null hypothesis is highly persistent this fact calls into question the use of these tests in empirical work we illustrate the practical importance of this point for tests of long run purchasing power parity ppp under the recent float we show that the common practice of viewing tests of stationarity as complementary to tests of the unit root null will tend to result in contradictions and in spurious rejections of long run ppp while the size distortions may be overcome by the use of finite sample critical values the resulting tests tend to have low power under economically plausible assumptions about the half life of deviations from ppp thus the fact that stationarity is not rejected cannot be interpreted as convincing evidence in favor of mean reversion only in the rare case that stationarity is rejected do size corrected tests shed light on the question of long run ppp

real exchange rates under the gold standard purchasing power parity is one of the most important equilibrium conditions in international macroeconomics empirically it is also one of the most hotly contested numerous recent studies for example have sought to determine the validity of purchasing power parity using data from the post bretton woods float and have reached different conclusions we assert that most such studies are flawed for two reasons first the post 1973 data contain by definition only a very limited amount of the low frequency information relevant for examination of long run parity second the dynamic econometric techniques used to model deviations from parity are typically quite crude with respect to admissible low frequency dynamics both deficiencies are rectified in the present paper with dramatic results we construct a new data set of 16 real exchange rates covering more than a century of the classic gold standard period and we study deviations from parity using long memory models that allow for subtle forms of mean

the evolution of unjust dismissal legislation in the united states in the past decade many state courts have ruled in favor of employees alleging they were improperly dismissed the author of this paper advances an evolutionary theory of unjust dismissal legislation in which employer groups responding to the threat of large and variable damage awards imposed by the judicial system eventually support unjust dismissal legislation in order to clearly define property rights reduce uncertainty and limit employer liability based on evidence from a case study of legislation enacted in montana and an empirical analysis of the determinants of proposed unjust dismissal legislation in a panel of states the author concludes that proposals of unjust dismissal legislation are a response to court rulings that weaken and obfuscate the employer s right to dismiss employees at will

explaining the national cultural distance paradox past studies of the relationship between national cultural distance and entry mode choice have produced conflicting results some scholars find cultural distance associated with choosing wholly owned modes others find cultural distance linked to a preference for joint ventures in this paper we provide both theoretical and empirical evidence to explain the discrepant findings and thus help to resolve the national cultural distance paradox

ranking the international business journals this study seeks to assess and rank the relative quality of 30 international business journals using both a citation analysis and a survey approach journal rankings are presented using both approaches in addition to a composite ranking the rankings provide an objective analysis of journal quality for tenure and promotion committees for ib researchers considering journal submission options and provide the academic community with a better understanding of which international business publication outlets are the most influential in guiding research in this discipline

what makes and what does not make a real option a study of equity shares in international joint ventures this paper examines the boundaries of real options logic with an application to joint ventures jvs we distinguish between forms of uncertainty that are resolved endogenously and those that are resolved exogenously and theorize that only exogenous uncertainty will have the impact predicted by real options theory on a foreign investor s choice of how large an equity share to take in a jv we theorize that macroeconomic and institutional variables generate exogenous uncertainty whereas by contrast cultural distance and choices pertaining to corporate scope and product or process development activities involve endogenous sources of uncertainty that investors can both assess and act upon without having to wait and see using a sample of 6472 sino foreign jvs we find support for our predictions we discuss and implement proper methods to test for the existence of null effects as is relevant to establish the boundaries of a theory such as real options theory we draw implications for research and practice on jvs specifically equity share decisions which deserve more attention and real options including suitable uses and desirable extensions of the concept

market frictions and real exchange rates abstract one explanation for the failure of purchasing power parity ppp is that market frictions impede trade allowing departures from ppp to grow quite large without precipitating goods arbitrage if this explanation is correct then other things equal large deviations from ppp should be less persistent than small differences this paper examines this prediction over the modern floating rate era the outcome is surprising between most countries large deviations from ppp appear to be at least as persistent as small deviations and perhaps even more so the exceptions are for some intra ec real exchange rates the implication is that market frictions alone do not explain the chimerical nature of ppp

searching for nonlinearities in real exchange rates a recent innovation in modeling exchange rates has been the use of nonlinear techniques such as threshold autoregressive models and its smooth transition variants this paper investigates the smooth transition autoregressive star modeling strategy in an application to real exchange rates the key findings are as follows first using the methodology advocated by terasvirta 1994 we find evidence of nonlinear dynamics for several of the spot dollar real exchange rates using monthly data on five of the g7 countries however once estimated we find that the star specification is appropriate for only one of the three exchange rate series indicated to be an estar process moreover using simulations we show that the underlying methodology used to detect nonlinearities in the data exhibit substantial size biases which we attribute to influential observations we also investigate an alternative nonlinear specification and find that we can model the dollar sterling and the dollar lira real exchange rates better as an open loop tar process instead of a setar process

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

quantile unit root test and ppp evidence from 23 oecd countries abstractapplication of six different univariate unit root tests to real effective exchange rates of 23 oecd countries supports their stationarity or purchasing power parity theory ppp only in five countries a result consistent with previous research that is known as ppp puzzle however descriptive statistics of each effective rate reveals a clear sign of non normal distribution to account for this we use quantile unit root test which allows impact of different shocks to be realized at different quantiles when we applied this new test to the same rates number of countries in which ppp is supported increased to 16 apparently incorporating effects of shocks improves testing efficiency and provides more support for the ppp and reduces the severity of the puzzle

a general equilibrium model of international portfolio choice we investigate in a two country general equilibrium model whether a bias in consumption towards domestic goods will necessarily lead to a preference for domestic securities we develop a model where investors are constrained to consume only from their domestic capital stock and where it is costly to transfer capital across countries in this model investors less risk averse than an investor with log utility bias their portfolios towards domestic assets investors more risk averse than log however prefer foreign assets thus this model suggests that it is unlikely that the portfolios observed empirically can be explained by the high proportion of domestic goods in total consumption we investigate in a two country general equilbrium model whether a bias in consumption toward domestic goods will necessarily lead to a preference for domestic assets in an investor s optimal portfolio we constrain investors to consume only from their domestic capital stock and introduce a proportional cost for transferring goods from one country this cost gives rise to endogenous deviations from the law of one price lop thus the home and foreign investors do not hold identical portfolios we show that an investor s optimal portfolio is biased towards domestic equity only if she is less risk averse than an investor with log utility investors with relative risk aversion greater than one exhibit a preference for the foreign asset this is because the exchange rate derived endogenously is negatively correlated with the return on the foreign asset and therefore the translated return on the foreign stock is less risky than that on the domestic stock thus the results of this model suggest that it is unlikely that the preference for domestic assets that is observed empirically can be explained by the high proportion of domestic goods in total consumption there exists a considerable body of literature documenting the gains from international diversification grubel 1968 was the first to propose that international diversification allows investors to attain lower return variances than those achievable by diversifying domestically this proposition relies on the correlation between stock indices across countries being significantly less

transactions costs and nonlinear adjustment in real exchange rates an empirical investigation eolquilibrium models of real exchange rate determination in the presence of transactions costs imply a nonlinear adjustment process toward purchasing power parity ppp conventional cointegration tests which ignore the effect of transactions costs may be biased against the long run ppp hypothesis our results using both monthly data for the interwar period and annual data spanning two centuries clearly reject the linear framework in favor of an exponential smooth transition autoregressive process the systematic pattern in the estimates of the nonlinear models provides strong evidence of mean reverting behavior for ppp deviations and helps explain the mixed results of previous studies

the stature of the journal of international business studies this article examines the standing of the journal of international business studies jibs among scholarly journals and changes in its influence over a 11 year period 1981 to 1991 using a variety of citation indices we suggested that two new measures a prestige index and a trajectory index are helpful in assessing a journal s influence and reputation we estimate these as well as several standard citation measures to gauge jibs progress in the recent past we find that jibs does well on all measures but room for improvement remains this article discusses options available to the editorial board to raise jibs prestige

an analysis of twenty five years of research in the journal of international business studies the article analyzes the twenty five years of research published in the journal of international business studies jibs since its inception in 1970 the article reviews the authors their institutional affiliations and the discipline content of the published articles

the power of international business research statistical power is the probability of accepting the null hypothesis when it is false type ii error this research note reports the results of a statistical power analysis of international business research published in the journal of international business studies management international review the academy of management journal and the strategic management journal from 1990 to 1999 the results show that although average statistical power is high compared with other disciplines it is sufficient only for large effect sizes ess only studies published in the journal of international business studies and the academy of management journal achieve average statistical power levels that are sufficient for both medium and large ess still the observed likelihood of committing type ii errors in international business research is very high for small ess 92 and high for medium ess 45 in addition statistical power is not explicitly mentioned or used by international business researchers a weakness that this note is designed to change

state lotteries as duopoly transfer mechanisms government sponsored lotteries can be traced back at least as far as caesar augustus who instituted legalized gambling for the purpose of rebuilding rome mote 1984 we are also told that queen elizabeth introduced a lottery in 1549 and that lotteries were used to provide financial support for the virginia company s founding of jamestown johnson 1960 no less authority on the topic than captain john smith reported that lotteries were the reall and substantial food by which virginia has been nourished johnson 1960 161 later lotteries were used by the continental congress and several colonies to fund the revolutionary war and such venerable institutions as harvard yale princeton and dartmouth benefited from their use kaplan 1984 in more recent times lotteries provided an important source of revenues for the depressed post civil war southern states but criticism regarding their moral implications and corruption in their operation is given as the explanation for congressional action that foreclosed state lotteries in 1895 by prohibiting the use of the mail for distributing lottery tickets and information tillett 1983 in that same year congress passed a national income tax which was struck down by the court some might argue that the demise of state lotteries was related to the federal government s attempt to extend its ability to collect

towards solving the ppp puzzle evidence from 113 countries several different approaches have been followed by researchers to test the validity of purchasing power parity ppp since the introduction of the unit root tests researchers have applied a battery of these tests to determine whether the real exchange rates are stationary if the answer is in the affirmative ppp is validated while application of the standard augmented dickey fuller test has not provided much support for ppp a test that incorporates nonlinearity in the rates has under both tests however the null of nonstationary is tested against the alternative of stationarity in this article when we switch the null with the alternative and apply kwiatkowski et al 1992 test we provide relatively more support for the theory getting closer and closer towards solving the ppp puzzle