sustainability of external imbalances in the oecd countries the authors wish to thank three anonymous referees for helpful comments to a previous version financial support from the spanish institute for fiscal studies the spanish ministry of economy and competitiveness projects eco2011 29314 c02 02 o bajo rubio and c diaz roldan and eco2011 30260 c03 01 v esteve and the department of education and science of the regional government of castilla la mancha project peii09 0072 7392 is also gratefully acknowledged v esteve also acknowledges support from the generalitat valenciana project gvprometeo2009 098

china s macroeconomic imbalances causes and consequences in recent years china has experienced two forms of extreme macroeconomic imbalance an expenditure imbalance in the sense of very high investment and very low consumption giving rise to rapid capital accumulation and an imbalance between expenditure and production producing external imbalance i e a huge surplus on the current account of the balance of payments both imbalances imply a low rate of time discount by both government and society consumption in the present is forgone in favour of consumption in the future the paper examines how these imbalances came about and goes on to consider whether they can be sustained and how they might be redressed there is no evidence that the rapid capital accumulation has reduced the rate of profit on capital and thus the incentive to invest however persistent external imbalance poses a threat to investment if it generates excess liquidity and asset bubbles the current account surplus rose remarkably in the years 2004 07 this was associated with exogenous increases in competiveness and in saving both attributable to the economic reform policies on current policies the surplus is likely to rise again once the world economy recovers from its recession this poses three sorts of problems each of which is examined in turn difficulties for macroeconomic stabilisation policies risk of capital loss on the foreign exchange holdings and the threat of retaliation by china s trading partners a combination of internal and external policies will be required to redress the imbalance

rebalancing the chinese economy china has run a current account surplus for two decades its current account surplus is not simply a result of the saving gap rather the current account surplus as well as the saving gap is a result of complicated interaction among various factors in a dynamic fashion while running a large current account surplus china has also run a large capital account surplus mainly in the form of fdi over decades china s twin surpluses are a re ection of market distortion which has caused large welfare losses for the country the chinese government should not only pay attention to internal balance but also to external imbalance hence it should combine expenditure switching policies and expenditure changing policies to maintain a decent non in ationary growth rate while keeping the current account balance to gdp ratio at a rational level

dynamics of niche width and resource partitioning this article examines the effects of crowding in a market center on rates of change in organizational niche width and on organizational mortality it proposes that although firms with wide niches benefit from risk spreading and economies of scale they are simultaneously exposed to intense competition an analysis of organizational dynamics in automobile manufacturing firms in france germany and great britain shows that competitive pressure not only increases the hazard of disbanding but also prompts organizational transformations that give rise to processes of resource partitioning emphasizing the content process distinction in conceptualizing organizational change the article finds that the process effect of changes in niche width and position increases mortality hazards we discuss our findings in light of the processes investigated by the ecological theories of density dependence resource partitioning and structural inertia and point to the theoretical links that help to integrate these theories

the multiple contexts of bretton woods this paper examines why so much debate about the structure of the international economy revolves around a conference held at bretton woods in july 1944 which was not immediately conspicuously successful there was a unique confluence of contemporary contexts in terms of trade policy stabilization policy and policies with regard to capital movements that meant that prevailing ideas especially the ideas of john maynard keynes and the interests of the united states coincided it was fundamentally a victory of the united states but dressed up as benign multilateralism a similarly unique combination of circumstances surrounded european efforts in the 1970s and was later to create through the european monetary system a scaled down version of bretton woods the myth of bretton woods was created by a powerful retrospective interpretation or retrospective context that lent a golden halo to the whole exercise in that sense our interpretation of a very specific historical event is inseparably intertwined with views of what happened after as well as before that event copyright 2013 oxford university press

entrepreneurial networking a blessing or a curse differential effects for low medium and high performing franchisees recent studies have called for a better understanding of the link between networking and entrepreneurial performance we provide such understanding in three ways by focusing on a specific entrepreneurial context franchise systems by developing a multi faceted theoretical framework and by highlighting a contingency that may affect the networking performance link we combine knowledge and learning perspectives with a networking perspective to develop and test a multi faceted framework on the effects of franchisee networking with peers within a franchise system peer networking on franchisee unit performance in particular we argue that the performance benefits that franchisees draw from networking with their peers vary between low medium and high performing franchisees we use ordinary least squares ols and quantile regression analyses to test our hypotheses with empirical data from a dutch franchise system our results confirm that structural resource and relational facets of franchisee peer networking affect unit performance and that they benefit and harm low medium and high performing franchisees differently

antecedents of early terminations in franchising franchisor versus franchisee cancelations franchisors capitalize on franchisee entrepreneurial capacity to grow however enabling franchisees to develop their ventures may damage system consistency this dilemma makes conflict particularly prevalent in the field of franchising nevertheless prior research has reported an incomplete picture of factors leading to serious disagreement and premature termination in franchise partnerships we address this gap first by adding the entrepreneurial autonomy of franchisees as a relevant but underexplored source of conflict and second by providing a more fine grained analysis of franchisors versus franchisees drivers of termination specifically we focus on the controversial issues of pricing and local advertising policies and analyze how expanding franchisees entrepreneurial autonomy in these decision areas is related to contract terminations depending on who ended the relationship the franchisor or a franchisee the study also highlights less controversial requirements and conditions e g upfront investments franchisor experience that may reduce early terminations our empirical objectives are met by using survey data from a sample of franchisor companies the results show how the performance outcomes of entrepreneurial autonomy differ depending on the decision area in which it is exercised results also throw light on the consequences of various critical franchise policies that may be masked if both types of termination franchisors vs franchisees are considered together

the economics of franchise contracts as an organizational arrangement the franchise contract lies between anonymous price mediated exchange and centralized intrafirm employment in contrast to conventional market exchange franchise contracts typically impose on franchisees retail quality standards common hours of business price controls and nonlinear payment schedules for example fixed initial royalty fees plus a percentage of gross retail revenues while franchisors typically provide national advertising and training programs monitor and inspect the franchisees performance with varying intensity across industries and hold the residual power to terminate the franchise agreement observations of actual terminations indicate that franchisors sometimes exclude this power franchisors sometimes face persistent queues of potential franchisees in contrast to simple employment contracts franchise agreements provide for sharing of profits through royalties on revenue or output and considerable freedom for independent decisions by local franchisees 1 why do these franchise contracts exist

the role of key stakeholders in the international joint venture negotiations case studies from eastern europe recent literature has suggested that a key stakeholder may be able to shift the balance of bargaining power during a joint venture negotiation and thus change the outcome of the process this paper explores the role of central and eastern european transitional governments as key stakeholders and how they influence international joint venture negotiations this role is described and analyzed by examining eight dyads of western european and central eastern european enterprises that have recently negotiated agreements the findings suggest that transitional governments as key stakeholders intervene at different stages of the negotiation process have both direct and indirect influences on the process and that they can change the balance of power in the negotiations sometimes to the detriment of their own state owned enterprise

international macroeconomic policy coordination an overview this article which serves as an introduction to the oxford review of economic policy s issue on macroeconomic policy coordination global imbalances and global growth charts the evolution of international macroeconomic policy coordination from the end of the second world war until the present day the arrangements laid out at the bretton woods conference in 1944 provide an intellectual framework with which to assess the evolving need for and feasibility of international coordination across three historical periods the fixed but adjustable exchange rate arrangements of the bretton woods system the subsequent flexible exchanges period of the non system which led into the great moderation and finally the period since the global financial crisis of 2008 increased economic integration particularly through the capital account combined with asymmetries in exchange rate regimes between china and the us have shown that reliance on the automatic adjustment mechanisms of the non system are no longer feasible so that a return to policy cooperation is necessary in order to rebalance the world economy and reduce the adverse spill over impacts that uncoordinated rebalancing would entail the article explores the nature of this coordination and provides a context for other contributions to the issue analysing positive and normative aspects of macroeconomic policy coordination from a global perspective and from the prospective of key global players including china and the european union copyright 2013 oxford university press

stickiness and the adaptation of organizational practices in cross border knowledge transfers the reuse of organizational practices in multiple locations is a fundamental way in which mncs leverage knowledge to seek competitive advantage scholars approaching the issue of adaptation from both a market and an institutional perspective argue that in order to achieve fit with the local environment some degree of adaptation is advisable and the need for adaptation increases as the institutional distance between source and recipient locations increases however arguments to date have examined the effect of adaptation primarily on a subsidiary s long term performance a necessary precursor is to understand the effect of adaptation on the transfer process itself as transfer difficulty or stickiness may preclude the reuse of an organizational practice in the first place in this paper we explore how the adaptation of organizational practices affects the stickiness of cross border transfers we use structural equation modeling to analyze data from 122 internal transfers of best practice contrary to expectation we find that adaptation significantly increases rather than decreases the stickiness of cross border knowledge transfer

asset stocks and sustained competitive advantage a comment in their paper dierickx and cool suggest that the strategic factor markets model developed in barney barney j b 1986a strategic factor markets expectations luck and business strategy management sci october 1231 1241 cannot be applied in the analysis of sustained competitive advantages due to asset stocks accumulated over time in this comment it is shown that the discussion of asset stocks extends and complements rather than limits the strategic factor markets model this is done by analyzing how the strategic factor markets model can be used to examine the cost of accumulating asset stocks over long periods of time and how these costs will compare to the value of strategies that are implemented exploiting these asset stocks

business costs and business policy for export controls the objectives of this study are to assess the costs to american companies of u s export controls and to suggest business policies to minimize their adverse effects the 1982 soviet gas pipeline case is used as a concrete example original field research among business people and government officials in europe and the u s is the main data source the main findings of the study are that the costs of export controls to american business that can be measured are very high and much above government estimates the optimum strategy for business to follow is to influence the executive branch of government rather than to press for compensation schemes or legislative changes

does corporate strategy matter a revisionist view that corporate strategy does not matter has gained considerable influence in recent years this view largely stems from empirical results of early variance decomposition studies that found negligible corporate effects associated with profitability differences between businesses our analysis of the variance decomposition literature shows this view to be incorrect not only do the studies as a group show that factors at the corporate level of organizations contribute to profitability differences but also evidence suggests that factors specifically associated with corporate strategy contribute to corporate effects corporate strategy in fact does matter copyright 2001 john wiley sons ltd

total protection a new measure of the impact of government interventions on investment profitability host country interventions in goods markets e g tariffs and quotas and factor markets e g tax holidays and training grants for workers are recognized as having substantial effects on the profitability of foreign direct investments this study proposes two new comprehensive measures total protection and an internationalized version of the marginal effective rate of taxation that incorporate all government interventions in a single easily understood common denominator readily applicable to empirical research empirical estimates of the total protection measure for europe suggest that for new investments government interventions in factor market increase profitability more than trade interventions

brexit negotiations from negotiation space to agreement zones brexit is decidedly a big question we agree with international business scholars who say that such questions need to be addressed using an inter disciplinary approach we use bargaining theory models of rational behavior and the negotiation literature to explain various brexit options and predict their consequences considering the lack of relevant experiential knowledge and the multidimensional high stakes negotiations underway it is little wonder that anxiety is growing across all 28 european union member states our analysis supports a coherent approach from rational bargaining model to real life international negotiation we position outcome scenarios in different agreement zones and explore their ramifications

intra european imbalances adjustment and growth in the eurozone this paper considers the increase in the euro intra area imbalances since the late 1990s and their role in the current european debt crisis by focusing on the case study of italy and germany we argue that both macroeconomic the functioning of the euro area and microeconomic internationalization of production factors contributed to the creation of such imbalances when sovereign risk and currency risk emerged in the periphery coupled with austerity as a response to these risks both factors made the euro crisis worse the present zero sum game approach is very risky for the stability of the euro area policy coordination of some kind is needed this requires agreeing on well identified economic policy priorities taking full account of the different positions of the members in terms of growth external imbalances and competitiveness new policy priorities are thus required in the euro zone that put more emphasis on cooperative positive sum games in convergence and competitiveness

balancing search and stability interdependencies among elements of organizational design we examine how and why elements of organizational design depend on one another an agent based simulation allows us to model three design elements and two contextual variables that have rarely been analyzed jointly a vertical hierarchy that reviews proposals from subordinates an incentive system that rewards subordinates for departmental or firm wide performance the decomposition of an organization s many decisions into departments the underlying pattern of interactions among decisions and limits on the ability of managers to process information interdependencies arise among these features because of a basic general tension to be successful an organization must broadly search for good sets of decisions but it must also stabilize around good decisions once discovered an effective organization balances search and stability we identify sets of design elements that encourage broad search and others that promote stability the adoption of elements that encourage broad search typically raises the marginal benefit of other elements that provide offsetting stability hence the need to balance search and stability generates interdependencies among the design elements we pay special attention to interdependencies that involve the vertical hierarchy our findings confirm many aspects of conventional wisdom about vertical hierarchies but challenge or put boundary conditions on others we place limits for instance on the received wisdom that firm wide incentives and capable subordinates make top level oversight less valuable we also identify circumstances in which vertical hierarchies can lead to inferior long term performance

the dynamic value of hierarchy this study develops a dual routines view of the dynamic value of hierarchy and tests it against the implicit null hypothesis that hierarchy merely provides static advantages over markets the view holds that hierarchical managers perform two roles that create value for firms in perpetuity an administrative role of enforcing operational routine and an entrepreneurial role of executing a metaroutine that continually revises operational routine to keep pace with changes in the environment the test consists of a natural experiment comparing the behavior and performance of establishments that leave a franchise lose their hierarchical managers with those that remain i find support for the view in the absence of the franchisor establishment behavior drifts from the operational routine and establishments fail to adopt innovation both responses lead to significant decay in performance thus hierarchical managers are necessary to actively enforce routine even after the routine been assimilated and to introduce innovation even in this unique setting of perfect incentives

buyer seller negotiations around the pacific rim differences in fundamental exchange processes the determinants of buyer seller negotiations in four cultures are investigated in a laboratory simulation one hundred thirty eight american 54 chinese 42 japanese and 38 korean business people participated in a two person buyer seller intracultural negotiation simulation in negotiations between americans the use of more problem solving bargaining strategies positively influenced negotiation outcomes in negotiations between chinese more competitive strategies led to better results in japanese and korean negotiations buyers achieved higher economic rewards than sellers in all four cultures bargainers were more satisfied with negotiation outcomes when partners were rated more attractive

applying organizational routines in analyzing the behavior of organizations abstract the concept of organizational routine can foster our understanding of the behavior of organizations and of organizational change nelson r r winter s g 1982 an evolutionary theory of economic change belknap press harvard university press cambridge march j g simon h a 1958 organizations blackwell oxford 1993 cyert r m march j g 1963 a behavioral theory of the firm blackwell oxford 1992 but since empirical studies employing organizational routines as analytical perspective are still relatively rare how to conduct such an analysis and what are its benefits is not yet fully evident we wish to shed light on how employing routines contributes to understanding the behavior of organizations and to demonstrate the potential of such analysis the empirical analysis of the product development process at an engineering centre shows that using organizational routines presents advantages over alternative analytical approaches the paper also contributes to shed light on how to fruitfully employ an organizational routines perspective in analyzing the behavior of organizations providing the foundation for further empirical work

reproducing knowledge inaccurate replication and failure in franchise organizations the recognition that better use of existing knowledge can enhance performance has spawned substantial interest in the replication of productive knowledge within organizations an enduring belief is that when expanding by replication organizations can and should strive to adapt to fit the salient characteristics of new environments yet some have argued that the exploitation of an established template for doing business by replication can be more successful when the template is copied precisely using unique longitudinal data we report a large sample empirical investigation of the survival consequences of accurate replication versus local adaptation by examining the effect that deviation from the template has on the survival chances of franchise units within a large franchise organization

fiscal stimulus agricultural growth and poverty in asia recent debates on a sustainable recovery of the global economy have tended to overemphasise the savings glut hypothesis and the unavoidable imperative of higher consumption in china and other emerging asian countries that oversaving and not underinvestment is coming in the way of a quicker and more durable recovery is not just simplistic but misleading from a medium term growth perspective for emerging asian countries and other developing countries in this region drawing upon country panel data for developing countries and a subsample of asian countries during the period 1991 2007 this study makes a case for a bold and coordinated fiscal stimulus directed to stimulating agricultural and overall growth and mitigation of poverty and hunger our simulations further suggest that poverty reduction is likely to be larger if the fiscal stimulus is directed to social spending in health and education sectors indeed if our simulations of fiscal impacts have any validity the dire predictions of millions getting trapped in poverty and hunger may turn out to be exaggerated the prospects of a strong recovery led by fiscal stimulus are thus real and achievable

shirking and the choice of technology a theory of production inefficiency with an empirical application abstract we develop a model of shirking and technology choice and show that organizations exercising less effective direct control over shirking adopt technologies that underutilize the workforce to a greater degree relative to neoclassical counterparts in order to control shirking indirectly thus technical inefficiency arises endogenously as a rational response to allocative inefficiency caused by shirking an empirical analysis of data from a sample of collective and private farms operating in jewish palestine reveals the presence of shirking and supports the prediction that farms with less effective direct control over shirking exhibit greater labor hoarding as a manifestation of technical inefficiency

agency theory and franchising some empirical results this article provides an empirical assessment of various agency theoretic explanations for franchising including risk sharing one sided moral hazard and two sided moral hazard the empirical models use proxies for factors such as risk moral hazard and franchisors need for capital to explain both franchisors decisions about the terms of their contracts royalty rates and up front franchise fees and the extent to which they use franchising in this article i exploit several new sources of data on franchising to construct a cross section of 548 franchisors involved in various business activities in the united states in 1986 the data are most consistent with a model based on two sided moral hazard the empirical models are also more successful at explaining the extent to which franchisors choose to franchise stores than at explaining the terms of franchise contracts finally contrary to the predictions of several theoretical models i find that royalty rates and franchise fees are not negatively related

markets vs management what drives profitability this study addresses the issue of the relative degree of variance in roa accounted for by industry corporate and sbu effects while controlling for the business cycle and the interaction between the business cycle and industry two key articles schmalensee 1985 and rumelt 1991 are discussed in detail research results on a recent data base compustat using variance components analysis varcomp are presented that not only confirm most of the rumelt 1991 findings but also suggest the existence of a corporate effect heretofore undetected

what does a small corporate effect mean a variance components simulation of corporate and business effects in a widely cited paper rumelt 1991 presents estimates of the relative influence of corporate business unit and other influences on business unit profitability and finds the corporation explains almost none of the variability in business unit profitability using a monte carlo simulation we examine the relation of variance component magnitudes to other indicators of the importance of a particular effect our results demonstrate that variance components can be an extremely nonlinear indicator of importance we also question whether rumelt s corporate effect represents the possible contributions of corporate strategy to business unit performance this addresses a puzzle raised by rumelt 1991 concerning the small effect of corporations in explaining performance and suggests that rumelt s findings should not be seen as demonstrating the insignificance of corporate strategy 1997 john wiley sons ltd

government policies market imperfections and foreign direct investment the internalization eclectic theory of foreign direct investment includes the important insight that government policies create market imperfections which make foreign direct investment an economically rational strategic alternative for firms this paper reexamines the effects of government policies on market imperfections and foreign direct investment fdi it broadens and refines the analysis of the impact of government policies by developing the following arguments 1 there is a wide range of government policies that affect firms fdi decisions via their effects on market imperfections 2 there are numerous dimensions of variability in government policies that need to be identified in order to understand fully the effects of government policies on market imperfections and hence fdi flows 3 some of the effects of government policies on market imperfections and fdi are the opposite of those previously noted in the fdi literature 4 the effects of government policies vary across the several individual components of fdi flows the paper thus examines the following variables and relationships more extensively and precisely than has the previous literature government policy variables as causal factors affecting fdi market imperfection variables as intervening factors in the causal connections between government policies and fdi and the multiple indicators of the various dimensions of fdi as dependent variables

nirvana efficiency a comparative test of residual claims and routines two widely adopted views of firm efficiency are agency theorists residual claims and organization theorists routines the agency view holds that ownership structures and their proxies are the primary source of efficiency differences between firms the organization theory view holds that organizational routines are the primary source of efficiency differences between firms we conduct an empirical test that compares the relative value of residual claims and routines in generating firm efficiency while controlling other factors we find support for both views but more importantly find that the average value of routines is roughly an order of magnitude higher than residual claims 1999 elsevier science b v all rights reserved jel classification l 2

international business and trade in the next decade report from a delphi study the globalization of business causes major changes in the business environment and in business practices forecasting such changes is crucial for the preparation of responses to them this article reports on a delphi study conducted with a global set of experts drawn from the policy business and academic communities over three rounds of mailings these experts analyzed and debated the likelihood of changes in the international business environment over the next decade and the impact of these changes on corporate practices the findings identify key geographic areas of business growth major sectoral transformations shifts in the trade framework and its institution and strategies for corporate adjustment

exogeneity tests for the chinese and u s external balance empirical evidence of the connection and the subprime crisis abstract this paper studies the global imbalances that occurred in the first years of the twenty first century the analysis encompasses the two biggest countries in the world the u s a and china many authors defend the assertion that the relationship between the current accounts of these two countries was one important cause of the subprime crisis while the u s a has increased its deficit in the last decade china has improved its surplus to investigate this relationship this study performed exogeneity tests moreover it conducted granger causality tests following the approach of toda yamamoto 1995 the results showed that there is a real causal relationship between the american and the chinese external balance furthermore the global imbalance between these two countries contributed to the subprime crisis because the tests detected structural breaks for the external balances of america and china in 2008 the dynamics of the chinese external balance changed after the subprime crisis

china coming to grips with the new global player this paper analyses china s economic performance in the last 25 years and discusses its prospect for growth in the future exports and investment have been the two driving forces for the high annual gdp growth rates fdi plays an important role however structural issues such as the loss making state owned firms and the fragile banking industry have to be solved monetary policy is complicated by the accumulation of reserves which however provide an insurance for the fragile banking system property rights a crucial element in transforming a communist society are far from being clearly developed major policy issues in the future include the correction of the distorted growth process and of the institutional deficits especially with respect to the rule of law and the lack of democracy

state government promotion of manufacturing exports a gap analysis this study empirically examines the level of the export related expertise of manufacturing firms in a midwestern state of the united states various problems they face in export business and types of government assistance desired by their stage of export involvement it also investigates the appropriateness of government export assistance and the gap between governmental export promotion efforts and private sector needs it is shown that the identification of expertise problems and government assistance needs by export stage can help government agencies develop a systematic approach to export promotion

the g 20 framework for strong sustainable and balanced growth glass half empty or half full the g 20 framework for strong sustainable and balanced growth was launched by the g 20 leaders in 2009 to strengthen coordination of national economic policies as the world emerged from the 2008 9 financial crisis building on earlier attempts at international economic policy coordination the framework has made significant advances in the detailed institutional procedures for policy coordination including information sharing analytical tasking and the development of structured policy discussions to address medium term issues some politically difficult challenges have been overcome using varied techniques including enabling the system of collaboration to evolve incrementally over time however further progress is needed if the framework is to deliver on the remit set by leaders copyright 2013 oxford university press

franchising and risk management franchising is an important and controversial form of vertical integration allegations of opportunistic behavior by franchisors have led to calls for public regulation and in some states fairness in franchising laws the advisability of such regulation depends on the long run incentives to franchise if franchising is a temporary step on the path to complete ownership integration regulation may be called for alternatively if complete or partial franchising is a permanen t market solution regulation is at least contestable this paper offer s new evidence on the incentives to franchise copyright 1988 by american economic association

why should trade negotiators negotiate about in recent years there have been growing demands to make trade liberalization contingent on adoption of common labor and environmental standards the straightforward economic answer is that this makes little sense neither the gains from trade nor the gains from appropriate regulation are compromised if other countries impose standards that are weaker than your own it is possible to offer second bet economic rationales for harmonization but these are empirically unconvincing the only serious argument in favor or regulation is political that regulation which is in the national interest may not be politically feasible unless other countries do the same

international multilateral negotiations and social networks compared to their bilateral counterparts multilateral negotiations in an international setting present an extremely complex set of negotiation phenomena this paper proposes a model of negotiations that examines how national culture organization specific factors and individual characteristics of the negotiators impact the multilateral negotiation process in a cross national context specifically social network theory and tools are utilized to examine how coalitions form and roles emerge among participants the model also posits the effect of social network activity on negotiation outcomes research propositions are forwarded in hopes of setting an agenda for the research stream implied by the model methods for testing the model and implications for academics and managers are also discussed

tobin s q and the importance of focus in firm performance using tobin s q as a measure of performance we seek to estimate the relative importance of industry focus and share effects in determining firm performance our methods are analogous to those of richard schmalensee and like him we find that industry effects account for the majority of the explained variance however we also find that firm effects exist in the form of focus effects that is narrowly diversified firms do better than widely diversified firms we interpret this finding as consistent with profit maximization by firms with different factor endowments

the rise of china and east asian export performance is the crowding out fear warranted this paper examines how china s emergence as a major trading nation is affecting export performance of its east asian neighbours following a stage setting overview of trends and patterns of china s export performance it probes china competition in third country markets and emerging patterns of imports the east asian export experience is examined in a wider global context against the backdrop of the ongoing process of global production sharing the findings indicate that the china threat has been vastly exaggerated in the contemporary policy debate china s rapid market penetration in traditional labour intensive manufactured goods has occurred mostly at the expense of the high wage east asian countries without crowding out the export opportunities of low wage countries in the region more importantly china s rapid integration into global production networks as a major assembly centre has created new opportunities for the other east asian countries to engage in various segments of the value chain in line with their comparative advantage

does the quality of institutions enhance savings the case of sub saharan africa over the last three decades there has been increasing disparity in savings across regions and income groupings globally in this paper we investigate whether the quality of institutions explains

transpacific trade imbalances causes and cures this paper explores the causes of the transpacific trade imbalances using an empirical global model it also evaluates the impact of various policies to reduce these imbalances we find the fundamental cause of trade imbalance since 1997 is changes in saving investment gaps attributed to the surge of the us fiscal deficits and the decline of east asia s private investment after the 1997 financial crisis our simulation results show that a revaluation of east asia s exchange rates by 10 per cent effectively a shift in monetary policy cannot resolve the imbalances we find east asia s concerted efforts to stimulate aggregate demand can have significant impacts on trade balances globally but the impact on the us trade balance is not large us fiscal contraction is estimated to have large impacts on the us trade position overall and on the bilateral trade balances with east asian economies these results suggest that in order to improve the transpacific imbalance macroeconomic adjustment will need to be made on both sides of the pacific

building a process model of local adaptation of practices a study of six sigma implementation in korean and us firms the strategic transformation of asian firms into global players has involved the adoption and adaptation of many organizational practices developed in the west we build a process model of adaptation by observing how an organizational practice is adapted to a local setting different from its locus of origin through inductive methods and case studies of six sigma implementation in korean and us firms based on these cases we propose a cascading sequential pattern to the local adaptation of the conceptual social and technical dimensions of organizational practices reconciling conflicting views in the literature on whether or not to adapt our theoretical model highlights the importance of considering the different degrees of contextual influence on different underlying dimensions of a practice and of configuring each dimension accordingly further we suggest that the sequence and configuration of adaptation across different practice dimensions matter to the successful implementation of a practice across borders

network location and learning the influence of network resources and firm capabilities on alliance formation this paper presents a dynamic firm level study of the role of network resources in determining alliance formation such resources inhere not so much within the firm but reside in the interfirm networks in which firms are placed data from extensive fieldwork show that by influencing the extent to which firms have access to information about potential partners such resources are an important catalyst for new alliances especially because alliances entail considerable hazards this study also assesses the importance of firms capabilities with alliance formation and material resources as determinants of their alliance decisions i test this dynamic framework and its hypotheses about the role of time varying network resources and firm capabilities with comprehensive longitudinal multi industry data on the formation of strategic alliances by a panel of firms between 1970 and 1989 the results confirm field observations that accumulated network resources arising from firm participation in the network of accumulated prior alliances are influential in firms decisions to enter into new alliances this study highlights the importance of network resources that firms derive from their embeddedness in networks for explaining their strategic behavior copyright 1999 john wiley sons ltd

institutions and savings in developing and emerging economies domestic savings are an important prerequisite for capital formation and growth in this paper we analyze a new channel through which institutions influence aggregate savings and economic development whereas research in the field of savings decisions concentrates largely on the level of the individual the literature on institutions and growth as well as on aggregate savings formation focuses on the aggregate national level first we develop a framework that brings together both lines of reasoning arguing that institutions may influence the individual savings decision as well as national savings in aggregate this potential for institutional quality to influence economic performance has been neglected so far second we build upon the empirical literature on aggregate savings formation and provide results supporting our hypothesis that better economic institutions drive aggregate savings formation upwards by contrast we do not find such effects in the case of the political environment our findings are robust when checked against a number of changes in explanatory variables estimation methods and the treatment of instruments

an empirical look at franchising as an organizational form franchise contracts are identified as a hybrid form of economic organization motives for the dominance of franchise arrangements are identified by examining the theoretical literature on franchising and related literatures on the theory of the firm firm growth managerial and employee selection a nd brand name capital empirical tests are performed on the incidence of franchise contracts across states for three industries in which f ranchising is prominent and data are readily available the results s uggest that both principal agent incentives and informational incenti ves favor the use of franchise arrangements copyright 1988 by the university of chicago

the g 20 mutual assessment process a perspective from imf staff in the wake of the financial crisis g 20 leaders launched a framework to mutually assess their policies to help strengthen the global economy this article reflects on the experience so far with the mutual assessment process map it looks at the coordination problem facing g 20 economies with respect to the need for global rebalancing of demand while a classic coordination failure has some appeal a more compelling case for policy cooperation is based on the role of spillovers and interdependence in this context the g 20 map as a coordination vehicle has the potential to build shared understanding enhance mutual trust and galvanize action among members simulated gains from collective action are potentially sizeable however key conditions that engendered remarkable global cooperation at the height of the crisis are now more diffuse posing challenges to what the map might achieve going forward and providing some initial lessons for international policy coordination copyright 2013 oxford university press

should chinese renminbi be blamed for its trade surplus a structural var approach during the recent years the renminbi rmb exchange rate issue has been at the centre of ongoing debate over the source of global current account imbalance especially with the united states the objective of this study is to contribute to the current discussion by providing some new evidence on china s exchange rate policy and the impacts of rmb devaluation revaluation on china s trade balance using a structural vector autoregression var approach the results indicate that the dynamic effect of exchange rate on china s trade balance is still very limited and china s balance of trade is mainly determined by the world demand and its trade performance with the latter being a result of its successfully maintained comparative advantage

china s exchange rate policy its current account surplus and the global imbalances this article is stimulated by current criticisms of chinese exchange rate policy the concern is really about china s current account surplus the article discusses the factors that determine the surplus and the reasons why the surplus increased sharply from 2005 the international implications of china s surplus and growth are discussed and how it has affected the world real interest rate and through that the us current account deficit the surplus has had various international relative price effects which have produced both gainers and losers finally the surplus played only a small part in determining the world credit crisis

rebalancing and structural policies an indian perspective the global economic crisis of 2008 9 followed by the euro area sovereign debt crisis of 2011 12 has revealed the need for global rebalancing economies with current account surpluses need to increase domestic demand while deficit countries need to reduce their deficits by boosting exports through productivity gains india falls within the deficit category having suffered both current account and fiscal deficits that have persisted over recent years a dearth of adequate structural reform underlies india s macroeconomic imbalances analysis reveals that current account surplus economies tend to experience comparative advantage in their goods sector while deficit countries have comparative advantage in the services sector the question posed is whether liberalizing the services sector would reap dynamic benefits by enhancing services exports and containing india s deficit opening up the services sector could however have opposing effects on the one hand it would support greater export of services thereby reducing the current account deficit on the other the probable rise in foreign participation would translate to an increase in imports the paper argues that the former effect is likely to prevail since structural reform in the services sector has the potential to reduce inefficiencies created by trade and capital flow restrictions reform would improve resource allocation increase investment opportunities and enhance economic growth further while the initial phase of foreign entrants would imply increased imports in the medium term successful joint ventures are likely to spread out internationally with positive ramifications for exports solutions in india are to be found in liberalizing among others the financial including banking and insurance sector as well as retail trade though its achievement will not be easy copyright 2013 oxford university press

dynamic capabilities what are they this paper focuses on dynamic capabilities and more generally the resource based view of the firm we argue that dynamic capabilities are a set of specific and identifiable processes such as product development strategic decision making and alliancing they are neither vague nor tautological although dynamic capabilities are idiosyncratic in their details and path dependent in their emergence they have significant commonalities across firms popularly termed best practice this suggests that they are more homogeneous fungible equifinal and substitutable than is usually assumed in moderately dynamic markets dynamic capabilities resemble the traditional conception of routines they are detailed analytic stable processes with predictable outcomes in contrast in high velocity markets they are simple highly experiential and fragile processes with unpredictable outcomes finally well known learning mechanisms guide the evolution of dynamic capabilities in moderately dynamic markets the evolutionary emphasis is on variation in high velocity markets it is on selection at the level of rbv we conclude that traditional rbv misidentifies the locus of long term competitive advantage in dynamic markets overemphasizes the strategic logic of leverage and reaches a boundary condition in high velocity markets copyright 2000 john wiley sons ltd

those current account imbalances a sceptical view1 the international current account imbalances where the united states has a vast deficit and several countries notably japan china germany and the oil exporters have corresponding surpluses are usually seen as problems the argument here is that current account imbalances simply indicate intertemporal trade the exchange of goods and services for claims there are likely to be gains from trade of that kind as from ordinary trade what then are the problems this paper considers five scenarios notably one where net savings of the surplus countries decline so that the world real interest rate rises and another where the us fiscal deficit is reduced so that the world real interest rate falls and there could be a worldwide aggregate demand problem essentially caused by the high net savings of the surplus countries the paper reviews the reasons for the large surpluses in terms of savings and investment ratios especially china and also discusses the long term problem for the united states while four of the scenarios involve a decline in the dollar they do not necessarily imply a sudden and even disruptive dollar crisis

a capability based view of competitive heterogeneity the question of how firms differ is paramount to strategy scholars this question has motivated empirical research on the factors influencing performance differences among close competitors it also has motivated work on factors that increase or decrease the mean performance of firms in an industry theories about resources and capabilities tend to dominate discussions of heterogeneity in performance and superior performance yet the strategy field lacks a cumulative body of empirical work showing how firms differ this article derives conclusions and questions from empirical work on capabilities we then discuss work that complements but lies beyond the boundaries of traditional capabilities research we conclude by suggesting approaches to and areas of future work

the choice of organizational form the case of franchising abstract we examine companies that franchise some units and centrally operate own others the agency problems confronting these two organizational forms are analyzed testable hypotheses are developed the empirical results support the notion that owning versus franchising reflects a trade off among agency related problems the cost of monitoring store managers appears to be especially important in the own franchise decision the level of repeat business and initial investment requirements per unit also appear to be important

evolutionary analysis of innovation and entrepreneurship sidney g winter recipient of the 2015 global award for entrepreneurship research this article reviews the intellectual contributions of professor sidney g winter who is the recipient of the 2015 global award for entrepreneurship research professor winter has contributed through his theoretical as well as empirical understanding of schumpeterian processes of dynamic competition the generation of differential technological opportunities through appropriability conditions and the mechanisms driving dynamic capabilities in firms his work especially the joint work on evolutionary economics with richard r nelson has led to a revival of interest in theories based upon schumpeterian economics within the study of both entrepreneurship and innovation his work on dynamic capabilities has been highly influential in management professor sidney g winter is deloitte and touche professor emeritus of management the wharton school university of pennsylvania

an empirical analysis of a firm s decision to franchise abstract hypotheses from monitoring and search cost explanations for the existence of franchising are discussed and tested the evidence offers strong support for the search theory somewhat weaker support for the monitoring shirking theory and no support for the monitoring cheating hypothesis

aggregate savings and external imbalances in china over the last decade the internal and external macroeconomic imbalances in china have risen to unprecedented levels in 2008 china s national savings rate soared to over 53 percent of its gdp whereas its current account surplus exceeded 9 percent of gdp this paper presents a unified framework for understanding the structural causes of these imbalances i argue that the imbalances are attributable to a set of policies and institutions embedded in the economy i propose a unified framework for understanding the joint causes of the high savings rate and external imbalances in china my explanations first focus on an array of factors that encouraged saving across the corporate government and household sectors such as policies that affected sectoral income distribution along with factors like incomplete social welfare reforms and population control policies i then turn to policies that limited investment in china thus preventing the high savings from being used domestically finally i will examine how trade policies such as export tax rebates special economic zones and exchange rate policies strongly promote exports moreover the accession of china to the world trade organization has dramatically amplified the effects of these structural distortions in conclusion i recommend some policy reforms for rebalancing the chinese economy

internationalization of the renminbi what it means for the stability and flexibility of the international monetary system the central question this paper addresses is whether internationalization of the rmb would be sufficient for the international monetary system ims to provide greater stability and flexibility than today s ims whether chinese efforts to internationalize the rmb culminate in the currency achieving reserve status will be for china to realize the path to reserve currency status however is not one that the chinese can pursue unilaterally internationalization entails an interaction between private and public decision making and is a function of private sector confidence as much as public policy the outcome will be the result of strategic interplay involving public policies across systemically important countries and confidence building among global savers and investors the paper argues that international cooperation especially among reserve currency countries on policy frameworks to achieve the common objectives of economic growth full employment price stability and sustainable fiscal positions will define a coherent and well functioning ims copyright 2013 oxford university press

grappling with global imbalances when does international cooperation pay this article assesses the circumstances under which countries agree to engage in policy cooperation assuming that each country aims to maximize its own welfare we argue that cooperation needs to be necessary feasible and to produce a clearly superior outcome than unilateral action not every situation requires policy coordination there are cases where unilateral and conventional policy measures achieve the necessary readjustment in a welfare optimizing way when rebalancing does not automatically happen and the resulting situation is a source of macroeconomic instability and of welfare losses in the aggregate internationally coordinated policy action could lead to solutions that generate a better outcome in terms of relative welfare these solutions however are not necessarily stable and players should pre commit to binding arrangements with sanctions for defection to ensure stability we conclude that these pre arrangements can only work if countries trust each other or they trust a supranational body that monitors the implementation of the arrangements and sanctions defection copyright 2013 oxford university press

when in rome the effects of cultural adaptation on intercultural business negotiations drawing on social identity and similarity attraction theories as well as empirical studies in intercultural communication hypotheses were developed to test the effects of three degrees of adaptive behaviors during intercultural buyer seller negotiations hypotheses covered both the positive and negative effects of adaptation on the adjudged interpersonal attractiveness of the adaptor these hypotheses were tested in two experimental studies using scenario based manipulations the first study looked at american subjects responses to adaptive behaviors of japanese business people to test the generalizability of these findings to a less familiar culture a replication looking at american subjects responses to adaptive behaviors of korean business people was also conducted the findings partially support the notion that moderate adaptation may be the optimal strategy in intercultural negotiations moderate adaptation was found to improve the adjudged attraction of the japanese business people relative to no adaptation and substantial adaptation however this finding was not replicated with korean business people

the capabilities of new firms and the evolution of the us automobile industry firms that diversify into new and existing industries typically outperform de novo entrants but in some new industries diversifying firms are displaced by later entering de novo firms little is known about when and how new firms can overcome the advantages of diversifying firms this is investigated for one industry automobiles where new firms had considerable success all the entrants into the industry from its inception in 1895 through 1966 are identified the heritage of every entrant into the industry is traced including the founders of de novo entrants to explore how time of entry and pre entry experience affected firm survival while diversifying firms on average outperformed de novo entrants de novo entrants founded by individuals that worked for the leading automobile firms outperformed all firms and dominated the industry this is attributed to the novel organizational challenges faced by automobile firms which made the leading firms ideal training grounds for new entrants the implications of these findings for firm capabilities industry competition and regional economic development are discussed copyright 2002 oxford university press

global imbalances globalization demography and sustainability if you sum up the current account deficits of all nations that are running deficits in the world economy the u s deficit accounts for about 70 percent of the total in any country s national accounts it will hold true as an identity that the current account deficit the excess of payments m to the rest of the world for goods services investment income and unilateral transfers over receipts x from the rest of the world for similar items exactly equals apart from measurement errors which may be substantial the excess of aggregate expenditure e for goods and services over national output y which in turn equals the excess of investment i over savings both public t g and private s in symbols

unraveling the process of creative destruction complementary assets and incumbent survival in the typesetter industry when radical technological change transforms an industry established firms sometimes fail drastically and are displaced by new entrants yet other times survive and prosper drawing upon an unusually rich data set that covers the technological and competitive history of the typesetter industry from 1886 to 1990 this paper uses a combination of quantitative and qualitative analysis to unravel this process of creative destruction it argues that the ultimate commercial performance of incumbents vs new entrants is driven by the balance and interaction of three factors investment technical capabilities and appropriability through specialized complementary assets in this industry specialized complementary assets played a crucial role in buffering incumbents from the effects of competence destruction and an analysis that examined investment or technical capabilities in isolation would have led to misleading results this work thus highlights the importance of considering multiple perspectives when examining the competitive implications of technological change 1997 by john wiley sons ltd

do markets differ much this essay reports the results of a crosssection study of differences in accounting profitability that sheds light on some basic controversies in industrial economics most previous cross section studies in this field have been concerned with testing hypotheses about structural coefficients in models meant to apply to essentially all markets as we have learned more about the difficulties of constructing such general models and of performing tests on their structural parameters properly structural cross section analysis has fallen out of fashion in contrast to most of the cross section literature the analysis reported here is fundamentally descriptive it does not attempt directly to estimate or to test hypotheses about structural parameters i hope to show by example that one can perform illuminating analysis of cross section data without a host of controversial maintained hypotheses cross section data can yield interesting stylized facts to guide both general theorizing and empirical analysis of specific industries even if they cannot easily support full blown structural estimation one can view the sort of search for stylized facts conducted here as either a replacement for or an input to interindustry structural estimation depending on one s feeling about the long run potential of that research approach this study also departs from much of the cross section literature by being fundamentally concerned with the importance of various effects not just with coefficient signs and t statistics in particular this essay provides estimates of the relative importance of firm market and market share differences in the determination of business unit divisional profitability in u s manufacturing using 1975 data from the line of business program of the u s federal trade commission ftc i find support neither for the existence of firm effects nor for the importance of market share effects moreover while industry effects apparently exist and are important they appear to be negatively correlated with seller concentration in these data section i relates firm market and share effects to current issues and controversies in industrial economics and thus supplies the motivation for our empirical analysis the remainder of the essay treats the data and

monetary and fiscal policy in the great moderation and the great recession in this paper we argue for a new approach to monetary and fiscal policy during the great moderation the inflation targeting regime worked well central banks used the interest rate to stabilize inflation and subject to inflation being controlled stabilized the level of demand fiscal policy exerted discipline over the public sector deficits thereby indirectly managing the level of public debt such fiscal housekeeping worked well because the monetary authorities were stabilizing the economy but once private sector deleveraging led to the great recession and interest rates hit their zero bound the outcome could no longer be managed by monetary policy recovery depended on the automatic stabilizers output and tax revenues have fallen public debt has been created and assets have been created which a deleveraging private sector wishes to hold but the effect has been very gradual recovery would have been faster if fiscal policy had been responsible for the restoration of full employment in an environment which tolerated the necessary rises in public debt conversely policies of austerity designed to reduce public debt have slowed the recovery growth will not be resumed until the private sector begins to invest strongly again creating the financial assets which the private sector wishes to hold thereby enabling public debt to be retired this has not yet happened because the private sector correctly does not believe that macroeconomic policy is capable of sustaining a strong recovery

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

diversification ricardian rents and tobin s q according to prevailing theory firms diversify in response to excess capacity of factors that are subject to market failure by probing into the heterogeneity of these factors we develop the corollary that firms that elect to diversify most widely should expect the lowest average rents an empirical test with tobin s q as the measure of rents is consistent with this theory

death of the lethargic effects of expansion into new technical subfields on performance in a firm s base business this paper finds that industry incumbents that do not expand into new technical subfields tend to fare poorly in their established businesses even if the market for the established products continues to exist firms that expand from their established businesses survive longer and achieve greater subsequent market share than competitors that do not expand by some measures however a failed attempt to expand into a new subfield may be even more harmful to a base business than nonexpansion the study employs conventional and accelerated event time regression models to analyze market share and survival the sample which includes 371 incumbents in four base subfields of the medical diagnostic imaging industry between 1953 and 1989 examines performance following the emergence of five new technical subfields of the industry

global imbalances and the paradox of thrift this paper analyses the relationship between the global imbalances and the financial crisis the imbalances were connected with the increase in world savings emanating from the savings glut countries notably china this increase in savings led to a decline in world interest rates and thus to greater borrowing especially in the united states this borrowing was for financing consumption wars and unwise rather than fruitful investment especially in housing the failure to invest in fruitful investments led to the financial crisis and thus the decline in us and world wide aggregate demand this was the indirect paradox of thrift it is to be contrasted with keynes s paradox of thrift where the decline in aggregate demand and output would have resulted directly from the rise in world savings the paper also discusses why there was not more borrowing for fruitful investment especially in developing countries hence avoiding the financial crisis copyright 2013 oxford university press

the relative influence of industry and corporation on business segment performance an alternative estimate rumelt s 1991 widely cited paper presents estimates of the relative influence of industry corporate business unit and other influences on business unit profitability he finds corporations explain almost none of the variability in business unit profitability using a simultaneous equation model we provide alternative estimates of the influence of industry and corporation on business unit performance we find that both corporations and industries influence business unit profitability but corporations have the larger influence copyright 1999 john wiley sons ltd

does the current account still matter do global current account imbalances still matter in a world of deep international financial markets where gross two way financial flows often dwarf the net flows measured in the current account contrary to a complete markets or consenting adults view of the world large current account imbalances while very possibly warranted by fundamentals and welcome can also signal elevated macroeconomic and financial stresses as was arguably the case in the mid 2000s furthermore the increasingly big valuation changes in countries net international investment positions while potentially important in risk allocation cannot be relied upon systematically to offset the changes in national wealth implied by the current account the same factors that dictate careful attention to global imbalances also imply however that data on gross international financial flows and positions are central to any assessment of financial stability risks the balance sheet mismatches of leveraged entities provide the most direct indicators of potential instability much more so than do global imbalances though the imbalances may well be a symptom that deeper financial threats are gathering

an empirical analysis of territorial encroachment within franchised and company owned branded chains franchisees within large branded chains loudly complain of a form of channel conflict known as encroachment or impact encroachment occurs when franchisors add new units of their brand proximately to their franchisees existing units franchisees claim that their revenues have substantially decreased as a result of encroaching same brand entry the topic of encroachment has not only dominated franchisee association agendas and trade journal headlines but has also become a hot topic for politicians and policymakers yet until now evidence of encroachment has been strictly anecdotal this paper provides the first systematic evidence of encroachment using revenue data from the texas lodging industry in the 1990s i find that when franchisors approve new same brand units in the vicinity of incumbent units these new units cannibalize the incumbents revenues in contrast to the result for franchisors the addition of a new unit by company owned brands in the vicinity of same brand units is associated with an increase in the incumbents revenues this contrast suggests that encroaching behavior is caused by incentives that result from the governance form of franchising and is not simply an outcome that accompanies all expansion this finding informs theory on governance forms and exclusive territories implications for practitioners and policy are also discussed