the replacement problem abstract a prototypical vintage capital model of economic growth is developed where the decision to replace old technologies with new ones is modeled explicitly technological change is investment specific depreciation in this environment is an economic not a physical concept the vintage capital economy s balanced growth paths and transitional dynamics are analyzed the transitional dynamics are markedly different from the standard neoclassical growth model

what do we know about macroeconomics that fisher and wicksell did not the answer to the question in the title is a lot in this essay i argue that the history of macroeconomics during the 20th century can be divided into three epochs

does culture affect behavior and performance of firms the case of joint ventures in china this study applies a resource based view of the firm to analyze data from a sample of 898 joint venture firms in china including both joint ventures established by overseas chinese and by firms from western cultures it is hypothesized that culture could influence the timing of entry of joint ventures their investment preferences and performance anovas and regressions were conducted and the results suggest the impact of cultural as well as technological resources this paper concludes with a discussion on the implications of the findings

why does the cyclical behavior of real wages change over time the cyclical behavior of real wages has evolved from mildly countercyclical during the interwar period to modestly procyclical in the postwar era this paper presents a general equilibrium business cycle model that helps explain the evolution in the model changes in the real wage cyclicality arise from interactions between nominal wage and price rigidities and an evolving input output structure

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

how does political connection affect firm financial distress and resolution in china we examine the impact of political connections on firm performance financial distress and its resolution in china a country where government influence over stock markets has been demonstrated to

an empirical analysis of self employment in the u k the paper formulates a self employment paid employment choice problem that draws upon knight s notion that the individual responds to the risk adjusted relative earnings opportunities in each sector based on a development of such choice theoretic considerations an econometric model is developed with the purpose of empirically examining the determinants of self employment the model features simultaneous determination of employment status and earnings which allows for self selectivity the model is estimated using a sample of 4762 individuals from the general household survey for 1978 the estimation of the earnings equation enables a calculation of the self employment paid employment earnings differential and the estimated probit equation for self employment paid employment status facilitates the prediction of the probability of self employment the paper finds that there is positive selection bias in the observed earnings of employees that the probability of self employment depends positively on the earnings difference between the two sectors and that education and age are significant determinants of self employment

financial distress outside directors and corporate tax aggressiveness spanning the global financial crisis an empirical analysis abstract we examine financial distress and tax aggressiveness spanning the global financial crisis gfc of 2008 and the impact of the interaction between board independence and firm specific financial distress on tax aggressiveness our regression results show that both financial distress and the gfc are positively associated with tax aggressiveness more importantly we find that the positive association between financial distress and tax aggressiveness is magnified by the gfc we also observe that the interaction between board independence and financial distress is positively associated with tax aggressiveness our results are robust to multiple measures of financial distress and tax aggressiveness

privatization deregulation and capital accumulation author affiliation gerhard glomm department of economics indiana university wylie hall room 105 bloomington in 47405 usa gglomm indiana edufabio mendez department of economics walton college of business room 402 university of arkansas fayetteville ar 72701 usa fmendez uark edu corresponding author acknowledgment we are grateful to b ravikumar rowena pecchenino jeffrey wooldridge felix rioja stefan krause and seminar participants from the economics department at emory university for useful observations we are also grateful to cristian opazo and javier reyes for their assistance and to the editor and two anonymous referees for helpful comments 1 introductionsince the early 1980s many countries have privatized and deregulated intermediate goods industries such as gas electricity or telecommunications that had traditionally been run by public monopolies the european union eu for example has adopted aggressive policies toward the elimination of monopolies in the telecommunication market and conducted a general privatization program whose sales receipts amounted to more than 3 of gdp between 1985 and 1995 constantinou and lagoudakis 1996 parker 1998 in other regions of the world countries like australia chile brazil argentina and the united states have implemented similar policies vickers and yarrow 1991 winston 1993 van der vlies 1996 while there is a large literature studying the microeconomic effects of privatization and deregulation the long run macroeconomic effects of such types of reforms have been subject to relatively less scrutiny in this paper we use a model of capital accumulation in order to investigate the long run effects of privatization and deregulation this paper complements a small literature that includes parente and prescott 1999 2000 schmitz 2001 and herrendorf and teixeira 2004 parente and prescott 1999 2000 and herrendorf and teixeira 2004 study the impact of monopoly rights on long run levels of income and find that the effect is large the latter authors find for example that monopoly rights can reduce aggregate income in the long run by a factor of seven schmitz 2001 uses a two sector model to calculate the impact of government production of investment goods on long run levels of labor productivity he finds that government production can lower labor productivity levels in the long run by about 30 our approach differs from herrendorf and teixeira 2004 who infer the extent of monopoly power from differentials in the relative prices of nontradeables instead we take the approach that monopoly power is likely to arise and exist in the public production of intermediate goods such as public utilities or telecommunication and that the size of these sectors relative to the rest of the economy can be directly estimated see world bank 1995 our approach also differs from schmitz 2001 in a fundamental way because he abstracts completely from the issue of monopoly rights in his model the only difference between the public and private production is that the government is endowed with a less productive technology than the private sector the long run income gains from privatization and deregulation in our paper are similar in magnitude to those found in schmitz 2001 in our base case calculation the long run income gain of changing from a public sector monopoly to a competitive market with private firms is 18 these welfare gains can be larger when there has been relatively low governmental investment in the public sector capital and when the elasticity of substitution between the intermediate input and physical capital is small like schmitz 2001 we view our results as less pertinent for rich economies like the united states where public sector involvement in intermediate good production is relatively small rather we view the results of our model as being applicable mostly to least developed countries ldcs such as egypt where governments typically play a large role in intermediate goods production

industry dynamics with stochastic demand we study the dynamics of an industry subject to aggregate demand shocks where the productivity of a firm s technology evolves stochastically over time to characterize the intertemporal evolution of the distribution of firms we discuss in particular how exit decisions aggregate output profits and distributions of firm productivities vary a across different demand realization paths b along a demand history path detailing the effects of continued good or bad market conditions and c for different anticipated future market conditions we show how poor demand conditions can lead to increased exit of low productivity firms at all future dates and states and raise welfare due to the impact on exit decisions

creative destruction and uncertainty uncertainty rises in recessions but does uncertainty cause downturns or vice versa this paper argues that counter cyclical uncertainty fluctuations are a by product of technology growth in a firm dynamics model with endogenous technology adoption faster technology growth widens the dispersion of firm level productivity shocks a benchmark uncertainty measure moreover faster technology growth spurs a creative destruction process generates a temporary downturn and renders uncertainty counter cyclical estimates from structural vector autoregressions vars on u s data confirm the model s predictions on average 1 4 of the cyclical variation in uncertainty is driven by technology shocks this fraction rises to 2 3 around the dot com bubble

the brevity and violence of contractions and expansions abstract early studies of business cycles argued that contractions in economic activity were briefer shorter and more violent rapid than expansions this paper systematically investigates this claim and in the process discovers a robust new business cycle fact contractions in employment are briefer and more violent than expansions but we cannot reject the null of equal brevity and violence for expansions and contractions in output the difference arises because employment typically lags output around peaks but they coincide in their troughs we discuss the performance of existing business cycle models in accounting for this fact and conclude that none can fully account for it we then show that a business cycle model with asymmetric adjustment costs on employment and a choice of when to scrap old technologies can account for the business cycle fact both qualitatively and quantitatively

innovation and growth supply and demand factors in the recent us expansion it is widely held that the social economic context of the us characterised by labour market flexibility and deregulation of product and capital markets lies at the basis of the innovative capacity displayed by the country s productive system in the 1990s thus accounting for the growth differential with europe starting from a different interpre tative model of innovation and growth the paper focuses on both supply institutional and technological and demand factors it is argued that when their interaction is taken into account there is no strong evidence that more deregulated labour and product markets are among the factors allowing for us growth in accordance with the view that there is no single road to innovation and growth this leaves room for the exploration and implementation of policies that might reconcile innovation and growth with safeguards such as those provided by europe s social institutions

empirical implications of alternative models of firm dynamics abstract this paper considers two models of firm behavior that allow for heterogeneity among firms idiosyncratic or firm specific sources of uncertainty and discrete outcomes exit and or entry both the characteristics of firm level panel data sets and the nature of the questions we characteristically ask of them imply that models with these features are likely to underlie most detailed empirical work on microdata sets the models we consider are a bayesian learning model due to jovanovic 20 and a model of research and exploration due to ericson and pakes 11 the paper provides a simple set of empirical procedures to help determine which if either of these two models might be appropriate for alternative data sets we conclude by checking for the implications of the two models on an eight year panel of wisconsin firms the results indicate that one model is consistent with the data on manufacturing firms while the other is consistent with the data on retail trade journal of economic literature classification numbers c52 l60 l80

relative prices and investment rates abstract we construct a panel for the price of aggregate investment over consumption and report the following observations 1 relative price differences across countries are large over the entire sample period and this conclusion is not affected by excluding non tradable consumption goods 2 relative price dispersion has decreased during the sample period 3 relative price changes are not persistent across periods while average price levels are moreover the persistence in relative price levels is higher for countries at low relative prices we show that the relative price of investment is negatively correlated with investment rates in a cross section of countries the standard one sector growth model is a natural framework to study quantitatively the effects of barriers to capital accumulation since there is a very simple mapping between barriers to investment and relative prices in this environment we simulate a calibrated version of the model in which barriers follow a stochastic process common to all countries and estimated using relative price data and obtain statistics for investment rates that closely resemble what we observe in the data in particular the model accounts for 90 of the 1985 gini index of relative investment rates and the decline in investment rate dispersion over time the model has two limitations as a theory of development first it cannot account for the income disparity in the data unless we assume unmeasured capital with barriers affecting the broad measure of capital second even under these extreme assumptions the model cannot account for the evolution of income disparity over time

creacion y destruccion de empleos en el sector manufacturero del peru 2002 2007 creation and destruction of jobs in peru s manufacturing sector 2002 2007 by way of a set of productive factors from a sample of manufacturing firms that created and destroyed jobs in peru s formal manufacturing sector for the period 2002 2007 this paper estimates the conditional labor demand equation under three interpretations the results of these assessments suggest that job creation and destruction were statistically related to positive and negative changes of real output respectively however the rates of change of these job flows were lower than those of the real output value on the other hand job flows were positively associated with firms degrees of processing other minor factors associated with job flows were the size of firms and the capital labor ratio

the effect of business cycles on growth keynes vs schumpeter i introduction do business cycles matter the question would have seemed recherche a scant decade ago when understanding and explaining business cycle phenomena were the bread and butter of macroeconomics but recently with the revival of interest in growth theory it has become customary to argue that business cycles are an unimportant second order problem the locus classicus for this position is lucas 1987 a particularly sharp statement of it launches the recent growth textbook by barro and sala i martin 1995 4 5 if we want to understand why countries differ dramatically in standards of living then we have to understand why countries experience such sharp divergences in long term growth rates even small differences in these growth rates when accumulated over a generation or more have much greater consequences for standards of living than the kind of short term business fluctuations that have typically occupied the attention of macro economists to put it another way if we can learn about government policy options that have even small effects on the long term growth rate then we can contribute much more to improvements in standards of living than has been provided by the entire history of macroeconomic analysis of countercyclical policy and fine tuning certainly there is a superficial ring of truth to this assertion since one s standard of living today is obviously higher in a rich country in a recession than in a poor country in a boom however to infer from this that business cycles are unimportant one needs to assume additionally a dichotomy between business cycles and growth so that explaining why economies grow and why they experience fluctuations are treated as analytically distinct questions 1 if the dichotomy is granted then the conclusion follows because a policy of eliminating business cycle fluctuations would have no effect on the growth rate and so would confer a smaller welfare benefit over a long time horizon than a small increase in the growth rate over that same horizon but in our view this is a false dichotomy we believe that business cycles can affect growth granted this are business cycles good or bad for growth much of the emerging literature seems to suggest that recessions are good for growth if correct this would seem to make countercyclical stabilization policy not just unimportant but positively harmful caballero and hammour 1994a b present models in which recessions are viewed as times of cleansing or a pit stop for the economy so that recessions are good for growth aghion and saint paul 1991 argue in the same vein at first glance these models would seem to suggest that recessions and therefore business cycles are good for growth but on closer inspection there are two analytically distinct questions i are recessions good for growth and ii are business cycles good for growth suppose one accepts the caballero hammour argument that recessions are good for growth pari passu it should follow symmetrically that booms are bad for growth so that the net effect of a business cycle washes out to a first order of approximation so that a fortiori a successful countercyclical policy which eliminated business cycles would have no first order effect on growth conlisk 1989 by contrast presents a model which focuses specifically on the second question one of the few such papers of which we are aware his model is a neo schumpeterian evolutionary growth model which predicts that business cycles will be good for growth because of greater opportunities for innovation we disagree with these conclusions a more severe business cycle leads to increased uncertainty for firms which we think ought to reduce the return to capital and hence reduce the incentive to invest this should lead to reduced capital accumulation and therefore to slower growth along the transitional path and also to a smaller steady state capital labour ratio in a neoclassical growth model or lead to a slower overall growth rate in an endogenous growth model

does bank ownership increase firm value evidence from china abstract direct bank ownership of company shares is believed to benefit borrowing companies in developed markets however little is known about how such bank relationship works in emerging markets where the relative costs and benefits of such practice become less straightforward due to loose institutional background and weak governance utilizing novel data on bank equity ownership and board structure of listed companies in china one of the leading emerging markets we find that 1 banks hold considerable shares of listed companies 2 banks appoint board members through equity holdings 3 bank ownership promotes company access to bank capital 4 companies with banks as leading shareholders witness relatively poor operating performance such results are robust with alternative performance measures industries and sample periods further analysis indicates that inefficient investments resulting from bank ownership are responsible for the disappointing performance our results provide new insights to the debate regarding the merits of bank equity ownership of companies and emphasize how banking and corporate finance behave differently in emerging markets due to their unique institutional background

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

nationality and subsidiary ownership patterns in multinational corporations this paper examines the notion that the multinational s nationality influences its foreign subsidiary ownership decisions it identifies theoretically meaningful constructs to represent nationality and examines under carefully controlled conditions their influence on subsidiary ownership preferences in american and european multinationals the paper concludes that there are indeed significant differences in ownership preferences among various nationalities that can be explained using cultural as well as economic variables but that these differences may become weaker in larger multinationals

the dynamics of technological unemployment this article compares the short and long run effects of technological progress on employment it presents a simple model of frictional unemployment capturing the negative creative destruction effects of technological change on employment in the long run faster technological change accelerates job obsolescence which reduces the equilibrium level of employment but it is also shown to have short run positive and potentially important effects on employment this tends to partially reconcile the schumpeterian view of the effects of technological change on labor markets with facts such as the response of most oecd unemployment rates to the 1970s productivity slowdown

equilibrium in a durable goods market with lumpy adjustment abstract durable goods are an important component of the business cycle equilibrium models of durable goods markets are made difficult by the lumpy nature of individual purchases we show that a straightforward approximation of the distribution of durable goods holdings gives rise to a tractable equilibrium model we analyze the case of competition as well as that of a monopoly producer

u s china trade negotiations practices procedures and outcomes this study sought to examine and identify 1 the mechanics of u s china trade negotiations 2 how a company prepares for such negotiations 3 the factors that contribute to the success or failure of such negotiations and 4 the outcomes of such negotiations data pertaining to these characteristics were collected from 138 u s firms engaged in china trade relationships between certain variables such as extent of preparation for the negotiations type of programs used and incidences of success were examined based on these results implications for management were drawn

sustainable competitive advantage combining institutional and resource based views this article suggests that the context and process of resource selection have an important influence on firm heterogeneity and sustainable competitive advantage it is argued that a firm s sustainable advantage depends on its ability to manage the institutional context of its resource decisions a firm s institutional context includes its internal culture as well as broader influences from the state society and interfirm relations that define socially acceptable economic behavior a process model of firm heterogeneity is proposed that combines the insights of a resource based view with the institutional perspective from organization theory normative rationality institutional isolating mechanisms and institutional sources of firm homogeneity are proposed as determinants of rent potential that complement and extend resource based explanations of firm variation and sustainable competitive advantage the article suggests that both resource capital and institutional capital are indispensable to sustainable competitive advantage 1997 john wiley sons ltd

the perverse effects of partial labour market reform fixed term contracts in france we argue that the effects of a partial reform of employment protection by allowing firms to hire workers on fixed term contracts may be perverse the main effect may be high turnover in entry level jobs leading to higher not lower unemployment even if unemployment falls workers may be worse off going through many spells of unemployment and entry level jobs before obtaining a regular job considering french data for young workers since the early 1980s we conclude that the reforms have substantially increased turnover without a substantial reduction in unemployment duration if anything the effect on their welfare appears to have been negative

coordination versus flexibility in wage formation a focus on the nominal wage impact of productivity in germany greece ireland portugal spain and the united states wage coordination between countries of the european monetary union emu aims at aligning nominal wage growth with labour productivity growth at the national level we analyse the developments in germany the emu s periphery countries greece ireland portugal and spain along with the united states over the period 1980 to 2010 apart from the contribution of productivity to nominal wages we take into account the contributions of prices unemployment replacement rates and taxes by means of an econometrically estimated nonlinear equation resulting from a wage bargaining model we further study the downward rigidities of nominal wages the findings show that in past times of low productivity price inflation and reductions in unemployment still put significant upward pressure on nominal wage growth the periphery countries are far from aligning nominal wage growth with productivity growth german productivity is a major wage determinant but surely not the only one within the context of a free bargaining

productivity during recessions with banking crises inter industry evidence abstract using sectoral data from 104 countries over 40 years we show that per worker productivity declines during recessions the adverse effect is particularly strong if recessions are accompanied by banking crises and especially in sectors and countries with greater financial frictions

dynamics of worker flows and vacancies evidence from the sign restriction approach this paper establishes robust dynamic features of the worker reallocation process in the us labor market i use structural vars with sign restrictions which take the form of restricting the short run negative relationship between vacancies and unemployment i e beveridge curve despite the weakness of these restrictions they reveal a clear unambiguous pattern that when unemployment increases and vacancies drop i both the separation rate and gross separations rise quickly and remain persistently high ii the job finding rate and vacancies drop in a hump shaped manner and iii gross hires respond little initially but eventually rise these results point to the importance of job loss in understanding us labor market dynamics this pattern also holds with respect to different kinds of shocks that induce the same beveridge curve relationship this paper also considers the disaggregate model which uses data disaggregated into six demographic groups and incorporates transitions into and out of the labor force i show that the separation rate continues to play a dominant role among prime age male workers while for other groups changes in the job finding rate are more important copyright 2009 john wiley sons ltd

unemployment dynamics across oecd countries abstract the european community and the us have experienced vastly different unemployment dynamics over the last two decades this paper investigates whether these differences are due to exposure to different shocks or reacting differently to the same shocks with the premise of a search theoretic framework and a structural var methodology the paper robustly identifies aggregate versus reallocative shocks with the exception of spain where most of the dynamics seem to be driven by reallocation it is found that most differences in unemployment dynamics arise because of differences in responses to shocks in particular the us labour market is quicker to adjust than the european community this implies that eec economies might be dynamically sclerotic even if the size of the steady state labour market flows give the impression that european labour markets are quite active various identifying assumptions additional labour supply shocks and different variables are used yet the results appear robust

unemployment dynamics in britain we examine the inter related dynamics of the unemployment flows and stock our model allows them to be linked through the standard accounting identity but also through behavioural relationships we find that for the uk the bulk of the correlation between duration and the unemployment stock arises from the dependence of duration on unemployment taking careful account of the inter temporal identity outflow shocks have contributed little to the evolution of unemployment since the late 1960s given that the correlation of duration and unemployment arises from the behavioural relationship we show that unemployment dynamics arise mostly from shocks to the inflow unemployment remains one of europe s more pressing economic and social problems as highlighted in the eu s lisbon declaration of 2000 a dynamic approach to unemployment starts from the recognition that unemployment is a stock and changes through shocks to the outflow and inflow the research and policy focus has generally been on the outflow process or equivalently unemployment duration a glance at figure 1 shows why this might be so it reveals a very strong co movement of the unemployment rate and the proportion of the unemployed out of work for a year or more analysts have used data like this to argue that the source of unemployment fluctuations has been changes in the outflow process 1 possibly as a consequence of this most policies directed at reducing unemployment focus on improving the search effectiveness and employability of the currently unemployed the unemployment flows and stock are related in quite complex ways and in this paper we focus on these inter related dynamics the model we use allows them to be linked in two ways first there is the simple accounting relationship whereby shocks to the flows accumulate in the stock second search and matching models suggest behavioural relationships of the flows depending on unemployment the presence of the nonlinear accounting identity in the model makes the analysis of the joint system problematic so we proceed sequentially investigating first one link and then the other we find that for the uk the bulk of the correlation between duration and the unemployment stock displayed in figure 1 arises from the dependence of the former on the latter we find a strong dependence of the outflow rate on unemployment taking careful account of the inter temporal identity on the other hand outflow shocks have contributed little to the evolution of unem

a theory of wages and labor demand with intra firm bargaining and matching frictions this article provides a model of labor market equilibrium with search and within firm strategic bargaining we yield explicit closed form solutions with heterogeneous labor inputs and capital the solution exhibits overemployment we show that higher relative bargaining power for some groups of workers may lead to overemployment relative to other groups with such other groups being underemployed instead if they have a lower relative bargaining power similarly the hold up problem between capitalists and employees does not necessarily lead to underinvestment in physical capital beyond the neo classical analysis firms are the field of several strategic interactions between capital owners and labor between marginal employees and incumbents and more generally between different groups with various bargaining positions within the firm it is usually considered that the bargaining power of workers entails an employment level that is lower than in a competitive labor market and any increase in the bargaining power of workers raises unemployment these results are true for a wide class of models and notably in the now standard framework to analyze unemployment namely search and matching models of pissarides 2000 however stole and zwiebel 1996a 1996b show that the above results are totally changed in the intra firm bargaining model where employees engage in individual wage negotiation with the firm in fact under the assumption that contract incompleteness does not enable either party to commit to future wages and employment decisions they show that intra firm bargaining yields no rent for employees and gives rise to overemployment compared to a competitive labor market the basic idea of stole and zwiebel is that a firm with a diminishing marginal productivity of labor can decrease the bargained wage which increases in the marginal productivity of labor by raising employment in stole and zwiebel s setting firms overemploy strategically up to the point where workers get their reservation wage

appetite for destruction the impact of the september 11 attacks on business founding it is widely accepted that entrepreneurial creation affects destruction as new and better organizations technologies and transactions replace old ones this phenomenon is labeled creative destruction but it might more accurately be called destructive creation given the driving role of creation in the process we reverse the typical causal ordering and ask whether destruction may drive creation we argue that economic systems may get stuck in suboptimal equilibria due to path dependence and that destruction may sweep away this inertia and open the way for entrepreneurship to test this idea we need an exogenous destructive shock rather than destruction that is endogenous to the process of economic progress our identification strategy relies on the september 11 attacks as an exogenous destructive shock to the economic system centered on new york city consistent with our theoretical claim we find that 15months after the attacks the rate of business founding close to new york city exceeds the rate before the attacks even after controlling for the inflow of recovery funds furthermore the increase in the business founding rate after the attacks grows faster closer to manhattan than it does further away from the epicenter of destruction

an assessment of the measurement of performance in international business research a sizeable body of international business ib research is devoted to building knowledge about the determinants of organizational performance a key precursor to accurately diagnosing why some organizations succeed in the international marketplace while others struggle is operationalizing performance appropriately yet to date no systematic investigation has considered how well ib research measures performance we examine the measurement of performance in 96 articles published in the academy of management journal administrative science quarterly journal of marketing journal of marketing research journal of international business studies management science organization science a nd thestrategic management journal between 1995 and 2005 the findings reveal that most studies do not measure performance in a manner that captures the multifaceted nature of the construct we describe the implications of these results and offer suggestions for improving future practice journal of international business studies 2008 39 1064 1080

the fundamental transformation in macroeconomics when factors enter into joint production they typically develop a degree of specificity with respect to each other it is well known that when combined with contracting difficulties specificity gives rise to a williamsonian fundamental transformation from an ex ante competitive relationship to an ex post bilateral monopoly the macroeconomic consequences of widespread specificity are far reaching specificity results in misallocation underutilization and unemployment of the economy s productive factors it hampers growth by depressing the incentives to replace what is outdated and to fully utilize the economy s resources it disrupts macroeconomic adjustment by inducing a wedge between timid creation and excessive destruction of the old system and it exacerbates downturns by elastifying the cyclical response of inelastic factors this abstract was borrowed from another version of this item

comparative analysis of firm demographics and survival evidence from micro level sources in oecd countries in this paper we present cross country evidence on firm size distribution firm demographic and post entry performance for 10 oecd countries we use harmonized firm level data drawn from business registers or social security records these data enable international comparisons and the identification of idiosyncratic country effects while average firm size differs across countries due to both sectoral specialization and within sector characteristics we find similar degrees of firm churning across countries in most of them about 20 of firms enter and exit most markets every year and about 20 40 of entering firms fail within the first 2 years of life however post entry growth of successful entrants is much higher in the usa than in europe which may be indicative of barriers to firm growth as opposed to barriers to entry

timing of investment and international expansion performance in china this study examines the multivariate and univariate performance effects of timing of fdi in an emerging economy at the business unit level a longitudinal analysis of industry wide firm specific data on fdi timing and foreign venture performance in china reveals that timing has a significant influence on overall as well as on individual aspects of venture performance it is observed that early entrants outperform late movers in terms of local market expansion and asset turnover whereas late movers are superior to early entrants with regard to risk reduction and accounting return during the initial period of international expansion factor analysis confirms that the importance of timing in affecting fdi decisions is as significant as that of internalization ownership or location factors

editorial does good marketing cause bad unemployment questionable methods for increasing nominal wages reduce real wages i e buying power by creating inflation shortages lower quality and long term unemployment to increase real wages i e the ability to buy more economic principles prescribe increasing productivity i e greater output from less input in contrast marketing principles prescribes increasing the value of output i e greater customer benefits through innovation beyond increasing real wages innovation spawns new occupations better matching individuals with skills and providing greater nonmonetary benefits i e job satisfaction unfortunately threatened entrenched incumbents often solicit protectionist legislation claiming negative externalities e g short term unemployment lower wages and burdens on society innovation does require labor to move from inferior to superior organizations i e unemployment however protectionism only delays and dramatically aggravates the inevitable trauma associated with progress as worker skills firm practices and buyer welfare fall further behind recent attacks demonizing wal mart e g the dubious vlasic pickle claim epitomize this situation they are archaic vanilla protectionism menacing both imperiled consumers and every consumer driven business

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

on the future of international joint venture research international joint ventures ijvs are an important type of international strategic alliance isa and have been studied by scholars for decades resulting in a plethora of empirical studies publications and reviews yet an inadequate accumulation of knowledge exists as a closer look reveals much more than providing a summary and critical assessment of past contributions this paper develops an expansive research agenda based upon a deep understanding of past research and comprehensive frameworks that distill this research we identify a number of research opportunities that would not only advance ijv research but also closely related literatures and disciplines such as isas theories of the multinational firm international business research and strategic management

retrospectives do productive recessions show the recuperative powers of capitalism schumpeter s analysis of the cleansing effect schumpeter has often been interpreted as a liquidationist someone who is convinced that economic crises are necessary and unavoidable and thus that government nonintervention is a sound policy in such crises the first two sections of this paper discuss schumpeter s views in greater detail and suggest that categorizing him as a liquidationist is an oversimplification and as an unrepentant noninterventionist is incorrect although schumpeter was certainly not a strong supporter of public interventions he did see a role for public expenditure programs in particular circumstances during periods of recession schumpeter believed firmly in what he described as the recuperative powers of capitalism however when a depression becomes pathological there could be a role for government to intervene in order to understand the overall picture of schumpeter s message we will first try to explain schumpeter s analysis of recessions depressions and the other stages of business cycles we will also discuss how schumpeter perceived the recuperative powers of capitalism a core concept in schumpeter s analysis that allows him to distinguish between physiological and pathological recessions in the 1990s an active line of research examined the possibility that recessions may have a productive character along with their more obvious negative outcomes because recessions in some way might hasten the process of reallocating economic recourses from slower growth to faster growth sectors such models were sometimes referred to as neo schumpeterian but given our analysis of schumpeter s work we will question whether this label is appropriate

the cost of recessions revisited a reverse liquidationist view the observation that liquidations are concentrated in recessions has long been the subject of controversy one view holds that liquidations are beneficial in that they result in increased restructuring another view holds that this rise in restructuring is costly since liquidations are privately inefficient and essentially wasteful this paper proposes an alternative perspective on the basis of a combination of theory with empirical evidence on gross job flows and on financial and labour market rents we find that cumulatively recessions result in reduced rather than increased restructuring and that this is likely to be socially costly once we consider inefficiencies on both the creation and destruction margins copyright 2005 wiley blackwell

equity joint ventures and the theory of the multinational enterprise this paper extends the internalization approach to the theory of the multinational enterprise mne to include an expanded role for equity joint ventures using the transaction cost paradigm of williamson this paper explains why joint ventures may sometimes be preferred over wholly owned subsidiaries also presented is empirical work on joint venture performance in developing countries which demonstrates that under certain conditions joint ventures can be the optimal mode of foreign direct investment

a computational general equilibrium model with vintage capital abstract this paper presents a vintage capital model assuming putty clay investment and perfect foresight the model is written in discrete time and is simulated by using a second order relaxation algorithm by computing the eigenvalues of the dynamic system we have checked the conditions of existence and uniqueness of a solution blanchard and kahn s conditions and identified the echo effect that characterizes vintage capital models and the related dynamics of creation and destruction by calibrating the model on french data it has been proved useful to explain the medium term movements in the distribution of income in france during the last three decades

theory ahead of language in the economics of unemployment this paper discusses from the perspective of modern theories of unemployment several unemployment concepts that have been used over the years it argues that many of these concepts are of limited value and are dominated by a few simple concepts that are basic in the analysis of stochastic general equilibrium models

government production of investment goods and aggregate labor productivity abstract in this paper i estimate the impact on aggregate labor productivity of having government rather than private industry produce investment goods this policy was pursued to varying degrees by egypt india and turkey among others the policy has a large impact because there is both a direct effect it lowers productivity in the investment sector and a secondary effect it lowers the economy wide capital stock per worker i estimate that this policy alone reduced egypt s aggregate productivity by 30 and accounted for 20 of egypt s aggregate labor productivity gap with the united states during the 1960s

barriers to entry and development we ask whether barriers to entry are a quantitatively important reason for the income gap between developing countries and the united states we develop a tractable general equilibrium model that captures the effects of barriers to entry and the other main distortions typically considered in the development literature we carry our model to the data and ask it to match the main development facts from the penn world table we find that this requires large barriers to entry in developing countries which account for about half of the income gap with the united states

contracting productivity growth in this paper we analyze the interactions between growth and the contracting environment in the production sector allowing incompleteness in contracting implies that viable production relationships for firms and workers and therefore the profitability of industries depend on the rates of innovation and growth the speed at which new innovations arrive in turn depends on the profitability of production for the usual reasons examined in the endogenous growth literature we show that these interactions can have important implications which are consistent with observed phenomena in both the micro and macro environment in particular we demonstrate that a technological shock increasing productivity of research can through this interaction lead to a productivity slowdown and a shift in labor market contracts away from firms providing implicit guarantees of lifetime employment and towards shorter term contractor type arrangements we show the consistency of an increase in the proportion of the labor force under short term employment increased relative returns of workers in high productivity sectors and increased income inequality with a productivity slowdown of finite duration

political connections ownership structure and private equity placement decision evidence from chinese listed firms in contrast with many other countries chinese listed firms must obtain approval to make private equity placements peps from the chinese security regulatory commission csrc a state bureau that regulates capital market financing we analyse the role of political connection pc and ownership structures when accessing private equity pe market while investigating the mechanisms through which political ties operate within the regulatory process of peps the findings suggest that pcs do not contribute to the firm s decision to apply for peps but firms with state ownership demonstrate a higher propensity to apply for peps pc and state ownership appear to help firms to obtain approval from the csrc and these firms are treated more favourably than their rivals without such connections politically connected firms spend less time in managing bureaucracy but pc and state ownership negatively affect proceeds from the pe market in china firms with politically connected directors with professional busines

on the timing and efficiency of creative destruction we analyze the timing pace and efficiency of ongoing job reallocation that results from product and process innovation there are strong reasons why an efficient economy ought to concentrate both job creation and destruction during recessions when the opportunity cost of reallocation is lowest incomplete contracting between labor and capital can disrupt this synchronized pattern and decouple creation and destruction transactional difficulties also lead to technological sclerosis characterized by excessively slow renovation government incentives to production may alleviate high unemployment but exacerbate sclerosis in contrast creation incentives increase the pace of reallocation an optimal combination of both policies restores economic efficiency

the structural determinants of external vulnerability the authors examine empirically how domestic structural characteristics related to openness and product and factor market flexibility influence the impact that terms of trade shocks can have on aggregate output for this purpose they apply an econometric methodology based on semi structural vector auto regressions to a panel of 90 countries with annual observations for the period 1974 2000 using this methodology the authors isolate and standardize the shocks estimate their impact on gdp and examine how this impact depends on the domestic conditions outlined above they find that larger trade openness magnifies the output impact of external shocks particularly the negative ones while improvements in labor market flexibility and financial openness reduce their impact domestic financial depth has a more nuanced role in stabilizing the economy it helps reduce the impact of external shocks particularly in environments of high exposure that is when trade and financial openness are high firm entry is unrestricted and labor markets are rigid

political connections and the process of going public evidence from china abstract we examine how political connections impact the process of going public specifically we test how political connections impact the pricing of the newly offered shares the magnitude of underpricing and the fixed cost of going public based on the experience of the newly public firms from chinese security markets and using multiple measures of political connections we find robust evidence that the issuing firms with political connections reap significant preferential benefits in the process of going public to be specific we find that firms irrespective of their ownership status with greater political connections have relatively higher offering price lower underpricing and lower fixed costs during the going public process

monopoly human capital accumulation and development abstract monopoly is an important barrier to development for it restricts the mobility of workers this gives rise to specificity problem and consequently weakens workers incentives to invest in human capital in a two sector general equilibrium model calibrated to the facts about the labor market i find that in the long run gdp can rise by about 2 6 times if these distortions are removed even if the monopoly markup and the degree of specificity are set at modest levels

developed country mnes investing in developing economies progress and prospect this study reviews research from 1970 through 2016 on developed country multinational enterprises dmnes entering and competing in developing economies to identify the current state of knowledge of this research and push it further we review the literature using bibliometric and qualitative content analyses covering leading journals and books we articulate frontier issues that are understudied yet critical to both theorization and practice of dmnes in developing economies we discuss the findings and conclusions from prior research along five key areas 1 entering developing economies 2 organizing local activities 3 managing alliances and joint ventures 4 competing in dynamic environments and 5 dealing with institutions governments and society we offer prospective insights into future agenda that have important implications for mne strategies and decisions and propose frontier directions that encompass strategic localization reverse transfer and adaptation co evolution with local business ecosystems reorganizing and restructuring and strategic responses to institutional and market complexity

how the ins and outs shape differently the u s unemployment over time and across frequencies abstract although the u s case has been studied extensively the importance of job finding and separation rates to unemployment variability remains unsettled the aim of this paper is to contribute to this debate by adopting a novel lens wavelet analysis we resort to wavelet analysis to unveil time and frequency varying features regarding the contribution of the job finding and job separation rates for the u s unemployment rate dynamics drawing on this approach we are able to reconcile some apparently contradictory findings reported in previous literature we find that the job finding rate is more influential for the overall unemployment behaviour but the job separation rate also plays a critical role especially during recessions in particular the job separation rate accounts for on average 53 per cent of the unemployment variability at short run fluctuations during recessions in sharp contrast with an overall contribution of 21 per cent over time and across frequencies

information rigidities and asymmetric business cycles abstract we study the link between asymmetries of markups and firm exit rates and asymmetries in information acquisition along the u s business cycle we argue that a model of optimal firm exit under rational inattention produces lagged counter cyclical and positively skewed markups together with counter cyclical exit rates consistent with the empirical evidence our model also predicts counter cyclical information rigidities consistent with survey evidence

macroeconomic determinants of corporate failures evidence from the uk previous studies on the relationship between macroeconomic aggregates and business failures have been restricted to the description of the short run relationships among the variables this paper uses an error correction model ecm to investigate the determinants of uk corporate failures by modelling the short run and long run behaviours of corporate failure rates in relation to macroeconomic phenomena over the period 1966 1999 the findings indicate that failure rates are associated with interest rates credit profits price and corporate birth rates both in the short run and in the long run of these macroeconomic variables interest rate appears to be an important factor influencing failure rates and can be used as a feasible policy instrument to reduce the incidence of corporate failures the impact of the insolvency act 1986 has also been examined and its mitigating effect on corporate failures has been identified

the cleansing effect of recessions the authors investigate industry response to cyclical variations in demand production units that embody the newest process and product innovations are continuously being created and outdated units are being destroyed although outdated units are the most likely to turn unprofitable and be scrapped in a recession they can be insulated from the fall in demand by a reduction in creation the structure of adjustment costs plays a determinant role in the responsiveness of those two margins the calibrated model matches the relative volatilities of the observed manufacturing job creation and destruction series and their asymmetries over the cycle copyright 1994 by american economic association

endogenous vs exogenously driven fluctuations in vintage capital models in this paper we present a particular case of the creative destruction model of caballero and hammour quart j econ 111 1996 805 851 in which both exogenous and endogenous fluctuation sources are present we show that job creation follows a delayed differential equation with periodic coefficients the delay is equal to the optimal age of capital goods the period of the coefficients is equal to the period of an exogenous profitability cycle we mathematically show that job creation is asymptotically periodic with the same period as the profitability cycle furthermore using an explicit numerical method we find that replacement echoes generally dominate the short run dynamics finally we find that the combination of the two fluctuations sources favors the appearance of asymmetries in job creation and job destruction patterns

the scarring effect of recessions abstract according to the conventional view recessions improve resource allocation by driving out less productive firms this paper posits an additional scarring effect recessions impede the developments of potentially superior firms by destroying them during their infancy a model is developed to capture both the cleansing and the scarring effects a key ingredient of the model is that idiosyncratic productivity is not directly observable but can be learned over time when calibrated with statistics on entry exit and productivity differentials the model suggests that the scarring effect dominates the cleansing effect and gives rise to lower average productivity during recessions

deposit insurance and wealth effects the value of being too big to fail this paper investigates the effect on bank equity values of the comptroller of the currency s announcement that some banks were too big to fail and that for those banks total deposit insurance would be provided using an event study methodology we find positive wealth effects accruing to tbtf banks with corresponding negative effects accruing to non included banks we demonstrate that the magnitude of these effects differed with bank solvency and size we also show that the policy to which the market reacted was that suggested by the wall street journal and not that actually intended by the comptroller the role of deposit insurance has become a topic of increasing debate advocates argue that by removing the incentive to run deposit insurance protects individual financial institutions from instability in the intermediation process thereby providing stability to the financial system as a whole 1 the recent rise in bank failures and the concomitant crises in the s l industry however demonstrate that this stability is not guaranteed moreover critics note that deposit insurance may introduce incentive problems and wealth effects into the financial system both of which can impede the effective functioning of any deposit insurance system these problems have prompted concern about the structure of the current deposit insurance system and have led to numerous proposals regarding its restructuring 2 this paper investigates one aspect of this debate by analyzing the effect on bank equity values of the policy decision to insure completely some banks but not others specifically in september 1984 the comptroller of the currency testified before congress that some banks were simply too big to fail tbtf and that for those banks total deposit insurance would be provided while not explicitly naming the banks the comptroller admitted that this policy would apply to the eleven largest banks using an event study methodology we analyze