global strategies multinational subsidiary roles and economic impact in scotland young s hood n and dunlop s 1988 global strategies multinational subsidiary roles and economic impact in scotland reg studies 22 487 497 this paper considers in a preliminary way the influence of mne global strategies on foreign subsidiary roles in scotland and from this some of the economic effects on the scottish economy are highlighted the study is based on a postal survey of mne subsidiaries in scotland the responses being analysed using the statistical techniques of cluster analysis and discriminant analysis despite the weaknesses of the former technique in particular the preliminary findings suggest substantial benefits to the economy from the one third of affiliates in the strategic independent product specialist categories as compared with the conventional branch plants rationalized manufacturers and miniature replica subsidiaries young s hood n et dunlop s 1988 strategies globales role des filiales des societes multi nationales et impact economique en ecosse

regional diversification and firm performance this study examines how regional diversification affects firm performance the results indicate that regional diversification has linear and curvilinear effects on firm performance regional diversification enhances firm performance linearly up to a certain threshold and then its impact becomes negative the results also show that firms of developed countries maximize their performance when they operate across a moderate number of developed regions and a strictly limited number of developing regions this explains why internationalization by most international firms is regional rather than global

on the determinants of direct foreign investment evidence from east and southeast asia abstract a model of derived demand for foreign capital by a multiple product monopolist is estimated for seven asian countries direct foreign investment dfi inflows are estimated to be less elastic with respect to the costs of capital including taxes than to wages and to be more elastic with respect to aggregate demand in export markets than domestic demand the output deterrent effect of higher wages is estimated to outweigh any substitution toward greater capital intensity the estimates also suggest that dfi rises with greater costs within the investors home countries no similar effect occurs with respect to costs in rival host countries and concerns for political stability have overlain economic determinants

a market performance comparison of u s firms active in domestic developed and developing countries direct foreign investment dfi may benefit investors through superior cash flows or lower risk relative to purely domestic firms this paper considers three groups of u s firms those without significant international operations those with international operations in developed countries and those with international operations in developing countries after performing risk return performance analysis on the three groups the findings show developing country dfi results in inferior performance but that there are no statistically significant differences in market performance among the three

price indexes inequality and the measurement of world poverty i discuss the measurement of world poverty and inequality with particular attention to the role of purchasing power parity ppp price indexes from the international comparison project global inequality increased with the latest revision of the icp and this reduced the global poverty line relative to the us dollar the recent large increase of nearly half a billion poor people came from an inappropriate updating of the global poverty line not from the icp revisions even so ppp comparisons between widely different countries rest on weak theoretical and empirical foundations i argue for wider use of self reports from international monitoring surveys and for a global poverty line that is truly denominated in us dollars

product and international diversification among japanese multinational firms this paper examines the relationship of performance with product and international diversification on japanese multinational firms from 1977 to 1993 we show the relationships between diversification and performance change over time through the use of multiple time periods and accounting for keiretsu membership results show that while diversity strategies vary between keiretsu and non keiretsu firms performance is not much different across time periods performance varies considerably but strategies are less variable product diversity has weak effects on firm performance only in one time period while international diversification has negative profitability and positive growth consequences in in some periods these results suggest first that diversification strategies and their effects on performance vary across time periods and generally produce some unexpected findings we do not find strong interactive diversity effects copyright 2000 john wiley sons ltd

new venture internationalization strategic change and performance a follow up study abstract although many scholars business experts and government agencies enthusiastically advise all firms including new and small ventures to internationalize such advice does not appear to be based on empirical evidence few researchers have empirically examined the link between new venture performance and the internationalization of new ventures at best the evidence suggests that there is no significant relationship we used a sample of 62 u s new venture manufacturers in the computer and communications equipment industries during the late 1980s these industries were purportedly globalizing and may have been leading other industries into increased international operations we found that higher levels of internationalization percentage of foreign sales to total venture sales were associated with higher relative market share two years later however there was no significant direct relationship between percentage of international sales and subsequent return on investment roi perhaps international operations simply cost more than expected or perhaps as macmillan and day 1987 found in their study of corporate ventures over a 4 year time period increases in market share may be a prelude to higher roi as scale benefits translate into higher profitability however the 2 year time period of our study may simply not be long enough for investments in higher market shares to produce improved profits during the 2 year study period many of the ventures changed their level of internationalization of the 36 ventures who were domestic no international sales in the prior study 10 expanded into international markets over the 2 years of the 26 originally international ventures international sales of at least 5 half increased their percentage of international sales nine reduced it and four stayed the same whereas the average change in international sales percentage of the ventures was only 2 9 percentage points the large standard deviation of 13 0 percentage points and the leptokurtic distribution 9 2 reflected the dramatic changes made by some of the ventures using subgroup analysis we examined these changes in percentage of international sales in conjunction with changes in strategies and performance ventures that had increased international sales relative to those that had not exhibited more positive associations between the degree of strategic change and performance as measured in terms of both relative market share and roi increased international sales in technology based new ventures seems to require simultaneous strategic changes in order to positively impact venture performance this study is a follow up to mcdougall s 1989 finding that technology based new ventures that had sales in foreign markets had significantly different strategies than similar ventures that sold their products only domestically the current study enriches the previous findings by adding consideration of 1 changes in degree of internationalization 2 changes in strategy and 3 venture performance although we found no performance penalty associated with increasing international sales alone indiscriminant advice for new ventures to sell in foreign markets without other supporting strategic actions is inconsistent with our findings internationalization alone did not lead to increased profitability entrepreneurs of young technology based firms who are considering internationalization should take heed of our results internationalization of sales does not appear to be a simple matter of applying established strategies and procedures developed for a domestic arena successful internationalization appears to require changes in the venture s strategy as well

endogenous market structures in international trade natura facit saltum abstract almost all of the large literature on international trade with imperfect competition assumes exogenous market structures the purpose of this paper is to develop a simple model that generates alternative market structures as nash equilibria for different parameterizations of the basic model equilibrium market structure is a function of the underlying technology familiar configurations such as a duopoly competing in exports or a single multinational producing in both markets arise as special cases small tax policy changes can produce large welfare effects as the equilibrium market structure shifts implying discontinuous jumps in prices quantities and profits

an empirical examination of multinational corporate capital structure this paper examines whether there are systematic differences in the traditional capital structure determinants between mncs and dcs and if there are additional uniquely international factors that may help explain the capital structure choice of multinational corporations the results suggest that specific international factors such as political risk and exchange rate risk are relevant to the multinational capital structure decision that multinationals have higher agency costs than purely domestic firms and that international diversification does not lower earnings volatility for multinational corporations

are we realizing our potential joining up science and technology policy in the english regions science policy in england is determined within a governance system in which regional interests and perspectives are over looked in favour of short term national excellence regional policies and the creation of the new regional development agenciesboth are critically dependent on central government decisions over the spatial location of rd thus regional diverences and strengths are overlooked by whitehall departments in favour of the most vocal and well networked representatives from a limited number of companies uneven scientific development with a lack of diversity in england is not a rational market decision but a continually reinforcing consequence of a chain of government policy decisions

performance of transnational corporations in less developed countries this study analyzes the determinants of the performance of a sample of 153 tncs in 6 light manufacturing industries in the 5 asean countries firm profitability increased as the firm s market share advertising and r d intensity increased and as the market shares of the 2 largest firms in the industry and tariffs increased profitability decreased as the market share of the third largest firm in the industry increased as import penetration increased as the growth in the firm s sales increased and as the number of home countries of the tncs in the industry increased

bargaining power ownership and profitability of transnational corporations in developing countries as the bargaining power of the transnational corporations tncs in the sample increased relative to the bargaining power of the host country and as the desire of the tncs for a high level of equity ownership increased the percent equity ownership of the tncs in their subsidiaries increased the relationship between percent equity ownership and subsidiary success from the tncs viewpoint however was j shaped high and low levels of equity ownership were associated with high levels of success control of critical operational variables by the tnc was directly related to success

mne subsidiaries versus domestic enterprises an analysis of their ownership and location specific advantages this paper compares the ownership advantages of multinational enterprises mnes subsidiaries and domestic enterprises dmes in greece previous studies have tested the hypothesis that ownership specific advantages oa are a major source of firm differences this study analyses the processed food sector sic 20 the leading industrial sector in greece with the highest inward and outward internationalization degree using a panel data set of 75 firms and 5 years the findings of a probabilistic regression analysis indicate that there are significant differences between the two groups of firms in the degree of possession of observed ownership advantages mne subsidiaries have higher market shares use multiplant operations and have higher advertising and r d to sales ratios compared to dmes dmes use their well established position knowledge of domestic and regional market conditions and size economies in order to compete effectively with mne subsidiaries it is inferred that pursuit of domestic ma

income and democracy existing studies establish a strong cross country correlation between income and democracy but do not control for factors that simultaneously affect both variables we show that controlling for such factors by including country fixed effects removes the statistical association between income per capita and vari ous measures of democracy we present instrumental variables estimates that also show no causal effect of income on democracy the cross country corre lation between income and democracy reflects a positive correlation between changes in income and democracy over the past 500 years this pattern is con sistent with the idea that societies embarked on divergent political economic development paths at certain critical junctures jel d7 e 1

on analyzing the world distribution of income consideration of world inequality should cause reexamination of the key concepts underlying the welfare approach to measuring income inequality and its relation to measuring poverty this reexamination leads to exploration of a new measure that allows poverty and inequality to be considered in the same framework incorporates different approaches to measuring inequality and allows varied expressions of the cost of inequality applied to the world distribution of income for 1820 1992 the new measure provides different perspectives on the evolution of global inequality

multinational corporations vs domestic corporations international environmental factors and determinants of capital structure this paper examines whether or not u s based multinational corporations mncs have different capital structures than u s domestic corporations dcs and if so what causes the differences in explaining the difference between the capital structures of mncs and dcs previous studies tended to directly discuss the relationships between international environmental factors e g political risk foreign exchange risk and the capital structure a framework of analysis is proposed in this paper that examines the influence of environmental factors on the firm related capital structure determinants e g agency costs bankruptcy costs that in turn affect the capital structure of the mnc among the determinants that are examined more emphasis is placed on the discussion of agency costs since no previous studies have applied this concept in the international arena empirical tests were conducted to investigate whether mncs are significantly different from dcs regarding agency costs of debt bankruptcy costs and capital structure contrary to conventional wisdom the empirical findings show that mncs do not have lower bankruptcy costs and that they tend to have lower debt ratios than dcs

foreign direct investment theories entry barriers and reverse investments in u s manufacturing industries this paper investigates empirically whether industrial organization oriented fdi theories explain the recent phenomenon of reverse foreign direct investment in the u s based on the distribution of fdi in two digit sic manufacturing industries we find that capital and advertising intensities act as entry barriers to foreign investments in the u s we also observe that foreign multinationals are attracted by the u s market size and that they invest heavily in industries with intensive r d combined with marketing efforts

multinational corporations and trade structure first a model of horizontally and vertically integrated firms is developed these firms are then embedded in a general equilibrium model of trading countries it is shown how multinational corporations emerge as a result of differences across countries in factor compositions intersectoral intraindustry and intrafirm trade can coexist and intrafirm trade takes place in invisibles headquarter services and intermediate inputs it is shown how the various trade components depend on the structure of the world economy the model predicts trade patterns which are close to observed trade patterns the importance of multinational corporations in the conduct of foreign trade has been recognized for many years nevertheless there exists no well articulated theory that explains the conditions for their emergence and predicts under these conditions a structure of trade that comes close to observed trade patterns i have developed in helpman 1984 a theory which is designed to fill in this gap and it is the purpose of this paper to extend it in order to make it better fit reality my earlier work builds on the standard theory of monopolistic competition in differentiated products in which every firm produces a single variety the distinguishing feature of that study is the interpretation of the technology so as to allow for specialized inputs which service plants that are geographically separated from the location of the inputs employment in particular those inputs can be located in one country and service plants located in other countries management and product specific rd multinational corporations have often production facilities in several countries see for example u s tariff commission 1973 chapter iii moreover in my earlier work all intra firm trade consisted of trade in the services of the specialized inputs i e in headquarter services while empirically a large part of intra firm trade takes place in intermediate inputs see buckley and pearce 1979 hence there is a need to extend the theory in order to take account of these missing features and in order to evaluate their contribution to the explanation of trade patterns this task is undertaken in the following sections by incorporating the model of the horizontally and vertically integrated firm from helpman 1983 into the theory of

choice of foreign market entry mode impact of ownership location and internalization factors firms interested in servicing foreign markets face a difficult decision with regards to the choice of an entry mode the options available to a firm include exporting licensing joint venture and sole venture several factors that determine the choice of a specific foreign market entry mode have been identified in previous literature these factors can be classified into three categories ownership advantages of a firm location advantages of a market and internalization advantages of integrating transactions this study examines the independent and joint influences of these factors on the choice of an entry mode multinomial logistic regression model is employed to test the hypothesized effects

configurations of strategy and structure in subsidiaries of multinational corporations a three fold typology of subsidiary roles world mandate specialized contributor local implementer was induced from the literature and its empirical validity was confirmed adopting a configurational approach we then explored the ways in which subsidiary structural context varies across subsidiary role types structural context characteristics were determined through a discussion of the underlying principles of the hierarchy and heterarchy models of multinational organization the key findings were a higher strategic autonomy in world mandates than in local implementers b a more internationally configured value chain in world mandates and specialized contributors than local implementers c lower levels of internal product flows in world mandates than the other two types and d a significantly lower performance in specialized contributors implications for a configurational model of subsidiary management and for heterarchy as a higher level conceptualization are discussed

measuring poverty in a growing world or measuring growth in a poor world the extent to which growth reduces global poverty has been disputed for 30 years although there are better data than ever before controversies are not resolved a major problem is that consumption measured from household surveys which is used to measure poverty grows less rapidly than consumption measured in national accounts in the world as a whole and in large countries particularly india china and the united states in consequence measured poverty has fallen less rapidly than appears warranted by measured growth in poor countries one plausible cause is that richer households are less likely to participate in surveys but growth in the national accounts is also upward biased and consumption in the national accounts contains large and rapidly growing items that are not consumed by the poor and not included in surveys so it is possible for consumption of the poor to grow less rapidly than national consumption without any increase in measured inequality current statistical procedures in poor

the ownership advantage in latin american fdi a sectoral study of us direct investment in mexico this article develops a model which tests the hypothesis that sectoral fdi flows from the united states to mexico over a four year period can be explained by the ownership advantages of us multinationals theoretical developments in the concept of ownership advantage are used to guide the formulation of the research the findings suggest that direct investment into us mnes affiliates in mexico is driven by benefits derived from embedded human knowledge technology embodied advantages and possibly from scale advantages local r d is negatively associated with fdi

multinational corporations vs domestic corporations financial performance and characteristics the analysis in this paper is composed of two segments first the financial performance of a sample of multinational corporations mncs is compared with that derived for a control group of domestic corporations dmcs using market based performance measures then the paper presents a comparison of selected financial characteristics of the firms in the two groups the results suggest the dmcs appear to have a significantly superior risk adjusted market based performance are significantly less capitalized and have higher total risk as well as higher systematic risk the fact that mncs are substantially larger than dmcs is not found to be a significant factor in explaining the observed difference between the two groups performance

a three stage theory of international expansion the link between multinationality and performance in the service sector it is generally assumed that the performance of a firm improves with greater multinationality yet recent empirical studies have shown both a u shaped relationship which suggests an initially negative effect of international expansion on performance before the positive returns of international expansion are realized and an inverted u shaped relationship which suggests that international expansion beyond an optimal level is again detrimental to performance and results in a negative slope this paper proposes a new unified three stage theory of international expansion that incorporates both concepts in a sigmoid hypothesis it then tests this on data from 11 service industries highlighting the difference between knowledge based and capital intensive service sectors

the boundaries of multinational enterprises and the theory of international trade this paper begins with a review of empirical evidence on multinational firms conceptual underpinnings of a theory are developed relying in particular on the notion of knowledge capital as a mobile joint input into geographically separated production facilities this idea is embedded in a simple two country general equilibrium model that supports multinational production in equilibrium under conditions consistent with the empirical evidence the final section examines internalization and shows why certain properties of knowledge capital also imply a preference for transferring technologies internally within the firm rather than through arm s length markets

comparative analysis of the foreign investment evaluation practices by u s based manufacturing multinational companies a large sample of u s based manufacturing multinational companies were surveyed regarding their investment valuation practices it was found that a foreign direct manufacturing investment fdmi is motivated primarily by profit rather than the recently proposed behavioral considerations b the majority of companies practice project by project analysis of the simple accept reject type rather than the comparative project analysis advocated by financial analysts c most of the companies utilized criteria for single investments cash flows and cost of capital that were in general agreement with the analytical literature d companies were concerned more with business risk than currency and political risks moreover all three types of risk were evaluated subjectively and accounted through adjustments in the required rates of return rather than the cash flows of the fdmi as specified in financial research e analysis of demographic and behavioral variables for possible relationships to fdmi evaluation practices yielded interesting but variable specific results the questionnaires were mailed in may 1979 and the personal interviews were conducted during december 1979 and the first six months of 1980

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

from m p to ma p multinationality alignment and performance rather than searching for a universal optimal level of multinationality for all firms we argue that firm specific attributes should result in firm specific optimal levels of multinationality specifically we draw upon transaction cost and internalization theory to argue that there will be different optimal levels of multinationality for individual firms and if firms internalize foreign operations to an extent less than or greater than their individual optimal levels transaction costs will increase and performance will decrease to test this idea we use transaction cost models in the context of large us law firms during the time period from 1986 through 2008 to estimate firm specific optimal multinationality next we test relationships between alignment with or deviations from firm specific optimal levels of multinationality and performance ma p consistent with the ma p hypothesis insufficient and excessive levels of multinationality are both negatively related to financial performance in addition excessive multinationality is positively associated with downside performance risk one key implication is that an ma p approach may offer greater theoretical validity and clarity than traditional multinationality and performance m p approaches

strategic trade policy when firms can invest abroad when are tariffs and quotas equivalent abstract this paper investigates the equivalence of tariffs and quotas when the market in question is imperfectly competitive and open to direct foreign investment the absence of a foreign supply response under a quota so critical to the analysis of the differential impact of tariffs and quotas under imperfect competition is called into question by the potential occurence of direct foreign investment the paper proves the equivalence of optimal tariffs and quotas when the markets are oligopolistic and open to direct foreign investment

technological capabilities and patterns of innovative cooperation of firms in the uk regions iammarino s piva m vivarelli m and von tunzelmann n technological capabilities and patterns of innovative cooperation of firms in the uk regions regional studies this paper focuses on the relationship between firms technological capabilities and different forms of cooperation for innovation paying specific attention to the role of regional location of the firm the findings based on the fourth uk community innovation survey cis4 show that cooperation within business groups vertical cooperation with customers and suppliers and horizontal cooperation with universities turn out to be significantly associated with firms technological capabilities however it is found that the analysis for the uk as a whole masks stark regional differences in terms of the relationship between local and non local collaborative linkages and firms technological capabilities and competences iammarino s piva m vivarelli m and von tunzelmann n

international expansion of emerging market enterprises a springboard perspective in this article we present a springboard perspective to describe the internationalization of emerging market multinational corporations em mnes em mnes use international expansion as a springboard to acquire strategic resources and reduce their institutional and market constraints at home in so doing they overcome their latecomer disadvantage in the global stage via a series of aggressive risk taking measures by aggressively acquiring or buying critical assets from mature mnes to compensate for their competitive weaknesses we discuss unique traits that characterize the international expansion of em mnes and the unique motivations that steer them toward internationalization we further delineate peculiar strategies and activities undertaken by these firms in pursuit of international expansion as well as internal and external forces that might compel or facilitate their propulsion into the global scene we finally explain the risks and remedies associated with this international springboarding strategy and highlight major issues meriting further investigation

the developing world is poorer than we thought but no less successful in the fight against poverty a new data set on national poverty lines is combined with new price data and almost 700 household surveys to estimate absolute poverty measures for the developing world we find that 25 of the population lived in poverty in 2005 as judged by what poverty typically means in the world s poorest countries this is higher than past estimates substantial overall progress is still indicated the corresponding poverty rate was 52 in 1981 but progress was very uneven across regions the trends over time and regional profile are robust to various changes in methodology though precise counts are more sensitive

the measurement of the degree of foreign involvement this paper extends errunza and senber 1984 in assessing the relationship between alternative measures of the degree of foreign involvement dfi and the conditions under which the use of a specific measure will not affect the outcome of empirical studies on corporate international diversification the results suggest that among 21 pairs of seven most widely used series of dfi only three series foreign assets foreign earnings and foreign tax ratios in two pairs are equivalent evidence of constant returns to scale between the ratio of foreign to total assets and the ratio of foreign to total earnings is also discussed

estimating and combining national income distributions using limited data a major problem encountered in studies of income inequality at regional and global levels is estimating income distributions from data that are in summary form in this article we estimate national and regional income distributions within a general framework that relaxes the assumption of constant income within groups we propose a technique to estimate the parameters of a beta 2 distribution using grouped data we model regional income distribution using a mixture of country specific distributions and examine its properties we use the techniques to analyze national and regional inequality trends for eight east asian countries and two benchmark years 1988 and 1993

the characteristics and performance of korean joint ventures in ldcs little has been reported on joint ventures between firms from newly industrialized countries and developing countries this paper examines twelve characteristics of a sample of korean firms with partners in developing countries ldcs and contrasts them with existing research where a developed country firms have linked with firms in other developed countries and b developed country firms have linked with local firms in developing countries as part of the analysis ten hypotheses were formulated and tested

licensing versus direct investment a model of internalization by the multinational enterprise a firm must decide whether to serve a foreign market by exporting building a foreign branch plant or licensing the production to an existing foreign producer the existence of reputations implies that any licensing agreement must provide a licensee with the incentive to maintain the reputation this creates a motive for the firm to internalize transactions by building a branch plant i e by becoming a multinational the model reflects a more general notion that the inability of the firm to control a licensee s agent s actions can provide incentives for multinational activity the paper explores the determinants of the firm s mode of operation as well as the consequences of certain government policies

the determinants of interindustry variation of foreign ownership in canadian manufacturing using two stage least squares to allow for the presence of simultaneous relationships this study obtains results which support the view that the pattern of foreign ownership in canada s manufacturing sector is determined in part by the ability of foreign firms to exploit intangible assets by producing in canada in addition the empirical findings suggest that managerial resources and relative labour costs are significant influences on the foreign firm s decision concerning direct investment in canada however the strongest influence on the extent of foreign ownership in canadian manufacturing industries appears to be simply the extent of multi plant development in the corresponding u s industries les facteurs determinants de la variation inter industrielle de la propriete etrangere dans le secteur manufacturier au canada a partir d une analyse utilisant la methode des moindres carres en deux etapes pour tenir compte de la presence de rapports simultanes entre variables on obtient des resultats qui soutiennent le point de vue de ceux qui disent que le pattern de propriete etrangere dans le secteur manufacturier canadien est determine en partie par l aptitude des entreprises a tirer profit d actifs intangibles en produisant au canada les resultats empiriques suggerent que les ressources manageriales et les couts relatifs de travail ont aussi une influence determinante sur la decision de la firme etrangere de faire un investissement direct au canada cependant l influence la plus forte sur le degre de propriete etrangere dans un secteur manufacturier canadien semble etre le developpement de l entreprise a plusieurs etablissements comme pattern de production dans le secteur industriel americain correspondant

top indian incomes 1922 2000 this article presents data on the evolution of top incomes and wages for 1922 2000 in india using individual tax return data the data show that the shares of the top 0 01 percent 0 1 percent and 1 percent in total income shrank substantially from the 1950s to the early to mid 1980s but then rose again so that today these shares are only slightly below what they were in the 1920s and 1930s this u shaped pattern is broadly consistent with the evolution of economic policy in india from the 1950s to the early to mid 1980s was a period of socialist policies in india whereas the subsequent period starting with the rise of rajiv gandhi saw a gradual shift toward more pro business policies although the initial share of the top income group was small the fact that the rich were getting richer had a nontrivial impact on the overall income distribution although the impact is not large enough to fully explain the gap observed during the 1990s between average consumption growths shown in national sample survey based data and the national accounts based data it is sufficiently large to explain a non negligible part of it

measuring the degree of internationalization of a firm in spite of both positivistic and instrumental research the reliability of measuring the degree of internationalization of a firm remains speculative we collected data on nine attributes of seventy four american manufacturing mncs alpha factor and frequency analyses revealed a linear combination of five variables with a reliability coefficient of 79 as a measure of the degree of internationalization of a firm we discuss the statistical and conceptual properties of the scale and their implications for content and construct validity

a new data set measuring income inequality this article presents a new data set on inequality in the distribution of income the authors explain the criteria they applied in selecting data on gini coefficients and on individual quintile groups income shares comparison of the new data set with existing compilations reveals that the data assembled here represent an improvement in quality and a significant expansion in coverage although differences in the definition of the underlying data might still affect inter temporal and international comparability based on this new data set the authors do not find a systematic link between growth and changes in aggregate inequality they do find a strong positive relationship between growth and reduction of poverty

are multinational corporations safer the failure probabilities of a sample of multinational corporations mncs are derived and compared with those of a control group of domestic corporations dmcs the results suggest that the mean insolvency probability of dmcs is significantly higher than that of the mncs it is also observed that mncs are significantly more capitalized and the standard deviation of their equity as well as their average systematic risk are also significantly lower furthermore the average insolvency probability of the dmcs is more sensitive to changes in the values of the parameters than those of the mncs

mnes and market valuation of firms a cross sectional study of indian electrical and electronic goods manufacturing firms this paper argues that inter firm differences in the direction of change in market valuation will depend mainly on the salience and unique risk characteristics of the firms these characteristics are largely influenced by mulinational enterprise mne affiliation the sample for the study consists of electrical and electronic manufacturing firms in india for 1994 1996 maximum likelihood estimates of the probit model show that even during a downswing in the stock market mne affiliates were able to hold their own and increase their market valuation these results hold good for a wide variety of products produced in this sector where both mnes and local firms compete the results have implications for theories relating to mnes stock market valuation and also for policy makers

bringing institutions into performance persistence research exploring the impact of product financial and labor market institutions this study challenges the implicit assumption of homogeneity in national institutional environments made in past studies of firm performance persistence we propose that home country institutions matter we focus on the impact of formal institutions in the product financial and labor markets arguing that they affect the size of pools of exchange partners and the types of exchanges allowed and condoned ultimately these restrictions affect competitive intensity among firms and firm performance persistence using data for over 10 000 firms from 33 countries over a 10 year time frame we show that antitrust law strength a product market institution designed to prevent collusion among firms is associated with decreases in performance persistence unskilled labor market flexibility a labor market institution that reduces legal constraints imposed on residual claimants managers and owners to take necessary actions to maintain or enhance profitability is associated with increases in performance persistence product liability law effectiveness another product market institution and corporate control market development a financial market institution are positively associated with performance persistence only in the case of mnes the two remaining financial and labor market institutions public equity market development respectively skilled labor market availability have a positive respectively negative impact for domestic firms only

strategic trade policy and welfare foreign equity ownership is shown empirically to weaken significantly and occasionally reverse common strategic trade policy results existing levels of u s cross ownership for example reduce the average optimal export subsidy by 47 relative to the brander and spencer journal of international economics 1985 18 83 100 value in industries with particularly high cross ownership and relatively small imputed labor rents optimal subsidies fall to less than one seventh of their former level previous studies which overlook high rates of cross ownership overstate the effectiveness of strategic policies most sharply in sectors with above average expected profitability scope for strategic investments and barriers to rent dissipation

internalization an event study test abstract the internalization theory of multinational firms proposes that direct international investment occurs when a firm has information related intangible assets with public good properties we find that firms with characteristics suggesting the presence of information based assets experience a significantly positive stock price reaction upon announcing a foreign acquisition on the other hand firms apparently lacking such assets experience at best zero abnormal returns upon announcing overseas acquisitions

the comparative performance of foreign and domestic firms in brazil abstract this paper analyzes data for 282 pairs of foreign owned and private brazilian firms which are matched by sales and by four digit manufacturing industry differences between the two types of firms are surprisingly large and highly significant compared to their local counterparts foreign firms operate fewer plants have higher ratios of value added to output higher levels of advertising and royalty payments greater exports higher labor productivity higher wages and greater capital intensity

promise and pitfalls in the use of secondary data sets income inequality in oecd countries as a case study this paper examines the role of secondary data sets in empirical economic research taking the field of income distribution as a case study we illustrate problems faced by users of secondary statistics showing how both cross country comparisons and time series analysis can depend sensitively on the choice of data after describing the genealogy of secondary data sets on income inequality we consider the main methodological issues and discuss their implications for comparisons of income inequality across oecd countries and over time the lessons to be drawn for the construction and use of secondary data sets are summarized at the end of the paper

true world income distribution 1988 and 1993 first calculation based on household surveys alone the paper derives world income or expenditure distribution of individuals for two years 1988 and 1993 it is the first paper to calculate world distribution for individuals based entirely on household survey data from 91 countries and adjusted for differences in purchasing power parity between the countries measured by the gini index inequality increased from an already very high 63 in 1988 to 66 in 1993 the increase was driven more by rising differences in mean incomes between the countries than by rising inequalities within countries the most important contributors were rising urban rural differences in china and slow growth of rural incomes in south asia compared to several large developed market economies

the world distribution of income falling poverty and convergence period we estimate the world distribution of income by integrating individual income distributions for 138 countries between 1970 and 2000 country distributions are constructed by combining national accounts gdp per capita to anchor the mean with survey data to pin down the dispersion poverty rates and head counts are reported for four specific poverty lines rates in 2000 were between one third and one half of what they were in 1970 for all four lines there were between 250 and 500 million fewer poor in 2000 than in 1970 we estimate eight indexes of income inequality implied by our world distribution of income all of them show reductions in global inequality during the 1980s and 1990s

outward direct investment by indonesian firms motivation and effects as part of indonesia s opening to the world economy over the past several years indonesian firms have begun to invest abroad this study compares indonesian firms that have invested abroad and those that have not and with third world multinationals and other mnes it found that the performance of indonesian firms that invested abroad improved dramatically after their investment in terms of management expertise exports quality and costs relative to their past performance and relative to the other firms in the sample these results support a conclusion that indonesian multinationals have gone abroad not only to exploit their ownership advantages but also to access and develop ownership advantages they did not previously possess

top incomes in the long run of history a recent literature has constructed top income shares time series over the long run for more than twenty countries using income tax statistics top incomes represent a small share of the population but a very significant share of total income and total taxes paid hence aggregate economic growth per capita and gini inequality indexes are sensitive to excluding or including top incomes we discuss the estimation methods and issues that arise when constructing top income share series including income definition and comparability over time and across countries tax avoidance and tax evasion we provide a summary of the key empirical findings most countries experience a dramatic drop in top income shares in the first part of the twentieth century in general due to shocks to top capital incomes during the wars and depression shocks top income shares do not recover in the immediate postwar decades however over the last thirty years top income shares have increased substantially in english speaking countries and in india and china but not in continental european countries or japan this increase is due in part to an unprecedented surge in top wage incomes as a result wage income comprises a larger fraction of top incomes than in the past finally we discuss the theoretical and empirical models that have been proposed to account for the facts and the main questions that remain open

the transaction costs theory of joint ventures an empirical study of japanese subsidiaries in the united states this paper offers the first large sample empirical study of the factors which influence the choice of japanese firms between full or partial ownership of their u s manufacturing subsidiaries it studies for the first time the ownership policies of investors of a single home country in a single host country thus keeping variations within home and host countries constant one methodological improvement over previous studies is the use as independent variables of the relevant characteristics of the investing firms these had been proxied in previous studies by data on u s industries entered the results suggest that the degree of ownership taken by japanese manufacturing investors in their american subsidiaries is driven by the same general transaction costs variables that determine the choices made by their u s counterparts japanese parents joint venture when they need to combine with other firms intermediate inputs which are subject to high market transaction costs an intriguing result however is the lack of significance of two variables which in the u s case strongly push towards full control of foreign subsidiaries in this study neither the japanese parent s r d nor its advertising intensities had any significant impact on their ownership policies

government research establishments state capacity and distribution of industry policy in britain heim c e 1988 government research establishments state capacity and distribution of industrial policy in britain reg studies 22 375 386 location decisions concerning government research establishments are examined to understand why defence and civil establishments were concentrated in the south in the late 1940s when regional policy to disperse economic activity was being actively promoted by the labour government world war two while increasing state capacity generally strengthened individual departments within central government with opposing views on regional policy thus having both positive and negative implications for pursuit of particular policies such as distribution of industry defence departments and the department of scientific and industrial research favouring southern locations generally prevailed over the board of trade the major exception the national mechanical engineering laboratory sent to scotland owed its location to political pressure more difficult to mobilize for oth

determinants of democracy a panel study of over 100 countries from 1960 to 1995 finds that improvements in the standard of living predict increase in democracy as measured by a subjective indicator of electoral rights the propensity for democracy rises with per capita gdp primary schooling and a smaller gap between male and female primary attainment for a given standard of living democaracy tends to fall with urbnization and with a greater reliance on natrual resources democracy has little relation to country size but rises with the middle class share of income the apparently strong relation of democracy to colonial heritage mostly disappears when the economic variables are held constant similarly the allowance for these economic variables weakens the interplay between democracy and religious affiliation however negative effects from muslim and non religious affiliations remain intact

measuring performance of international joint ventures international joint ventures ijvs are increasing in frequency and strategic importance however efforts to identify variables associated with ijv performance have been constrained by disagreements regarding the comparability and reliability of alternative performance measures and methods this study tests several hypotheses regarding the reliability and comparability of a range of objective and subjective measures of ijv performance as well as evaluating the relative utility of different data collection approaches

foreign ownership market structure and industrial performance brazil s electrical industry abstract using an industrial organization approach this article tests the hypothesis that the ownership of firms exerts an independent influence on industrial performance we compare the behavior of foreign and domestic firms in brazil s electrical industry in four areas the association of firms with particular types of domestic market structures their technology their trade conduct and their profitability regression analysis shows that tncs tend to produce in tightly organized differentiated oligopolies they generally employ a more capital intensive technology they import more per unit of sales but do not necessarily export more finally reported earnings of tncs are found not to be any higher than domestic firms but reported profits of all firms are positively related to the level of industrial concentration and product differentiation markets which tend to be the domain of tncs rather than domestic enterprises it is concluded that ownership is a strong variable of market structure in brazil s electrical industry and that the systematic effect of foreign ownership on industrial performance is not always helpful in attaining development objectives

inequality among world citizens 1820 1992 this paper investigates the distribution of well being among world citizens during the last two centuries the estimates show that inequality of world distribution of income worsened from the beginning of the 19th century to world war ii and after that seems to have stabilized or to have grown more slowly in the early 19th century most inequality was due to differences within countries later it was due to differences between countries inequality in longevity also increased during the 19th century but then was reversed in the second half of the 20th century perhaps mitigating the failure of income inequality to improve in the last decades jel d31 f0 n0 o0

market seeking mnes in an emerging market how parent subsidiary links shape overseas success this study extends research on parent subsidiary links applying new theoretical perspectives those of resource dependence and dynamic capability to the new empirical setting of an emerging market we suggest that parent subsidiary links help to mitigate emerging market threats by reducing external dependence and help to capitalize on emerging market opportunities by enhancing local responsiveness

firm size and foreign operations of multinationals the standard literature on multinationals emphasizes the importance of firm size in explaining foreign direct investment a typical statement for example by caves is that t he relation between direct investment and firm size with other factors held constant has been established statistically 1974 p 280 however descriptions of the role of firm size are often ambiguous as pointed out by hufbauer 1975 and swedenborg 1979 such descriptions do not make a clear distinction between the probability or likelihood that a firm would be a foreign investor and the extent of such investment or as expressed by swedenborg a firm s propensity to operate abroad the share of its production carried on outside its home country a study by horst 1972 which has become the basis for most statements about the importance of firm size dealt only with the probability that a firm would be a foreign investor or more specifically the probability that it would meet the criteria for being considered a multinational firm according to the definition used in the harvard studies including that of having a certain number of overseas operations cf vernon 197 1

political risk and dividend policy evidence from international political crises we examine the impact of political risk on firms payout policy using a large international sample across 35 countries over the period from 1990 to 2008 we find that global political crises raise the market perceived uncertainty and cost of external financing using crisis events as a proxy for political risk we document that past dividend payers are more likely to terminate dividends and that non payers are less likely to initiate dividends during periods of high political risk these findings suggest a precautionary incentive of managers in response to political shocks further analysis shows that the effect of political risk on payout policy is stronger for multinational corporations but can be attenuated by country specific institutional settings such as more stable political systems and stronger investor legal protection

monopolistic advantages and the international operations of firms disaggregated evidence from u s based multinationals the paper presents statistical evidence supporting the proposition that the kind of monopolistic advantage possessed by the firm is decisive as to which form of involvement it will choose to penetrate into foreign markets exporting versus producing abroad a decomposition of export flows into exports to affiliates intra company trade and exports to unaffiliated buyers proves to be a crucial element in the empirical test of this proposition

world welfare is rising estimation using nonparametric bounds on welfare measures abstract i take a new approach to measuring world inequality and welfare over time by constructing robust bounds for these series instead of imposing parametric assumptions to compute point estimates i derive sharp bounds on the atkinson inequality index that are valid for any underlying distribution of income conditional on given fractile shares and gini coefficients while the bounds are too wide to reject the hypothesis that world inequality may have risen i show that world welfare rose unambiguously between 1970 and 2006 this conclusion is valid for alternative methods of dealing with countries and years with missing surveys alternative survey harmonization procedures alternative gdp series or if the inequality surveys used systematically underreport the income of the very rich or suffer from nonresponse bias

prediction performance of earnings forecasts the case of u s multinationals prior accounting research has provided evidence of the information content of a company s actual or predicted accounting earnings prior studies have also found that factors such as firm size industry or systematic risk influence the accuracy of the earnings predictions this study investigates the accuracy and the consensus among forecasters of earnings estimates for u s domestic and u s multinational corporations companies were classified into a domestic or multinational type for this research following the criteria established by statement of financial accounting standards no 14 for required disclosure of foreign operations the empirical results indicate that the accuracy of earnings forecasts is significantly lower for purely domestic firms than for u s based multinationals likewise the level of consensus in earnings estimates submitted by financial analysts is significantly lower for u s domestic than for u s multinational firms

factors affecting inter industry variation of foreign ownership of manufacturing industry a set of hypotheses incorporating various explanations to foreign direct investment are developed and tested on a simultaneous equation model on australian data the analysis shows that foreign ownership of industry tends to be higher in the humanskill intensive and technology intensive industries high protection seems to be an important inducement for multinational enterprises participation in australian industry the results demonstrate how a major bias can be introduced when the simultaneity involved in the determination of foreign ownership is ignored

trade liberalization in a multinational dominated industry abstract existing theoretical models in the trade industrial organization literature assume almost exclusively that firms are national enterprises so that there is no international coordination by multinational firms we develop a model in which multinationals compete among themselves but coordinate production pricing and sales decisions across multiple plants and markets free entry and exit is assumed and cases in which the multinationals can and cannot segment markets are considered the model is simulated using data from the north american auto industry results are compared with a counter factual model calibrated to the same data which assumes national ownership of firms

cultural diversity and the performance of multinational firms we test the hypothesis that culturally related international diversification will have a positive impact on firm performance and that the opposite will be true for culturally unrelated globalization cultural diversity for fortune 500 firms was used to predict performance over a ten year period 1985 1994 controlling for several organizational and industry characteristics regression tests using nine indicators of cultural diversity revealed no significant cultural effects alternate interpretations are offered

determinants of foreign direct investment a tale of nine theoretical models abstract this paper presents a review of nine theoretical models of foreign direct investment fdi discussed are early studies of determinants of fdi 1 as well as determinants of fdi based on the neoclassical trade theory 2 ownership advantages 3 aggregate variables 4 the ownership location and internalization advantage framework 5 horizontal and vertical fdi models 6 the knowledge capital model 7 diversified fdi and risk diversification models 8 and policy variables 9 from each of the nine theories the relevant determinants of fdi are derived empirical studies indicate the importance of these determinants in the real world the paper shows that there is not one single theory of fdi but a variety of theoretical models attempting to explain fdi and the location decision of multinational firms therefore any analysis of determinants of fdi should not be based on a single theoretical model instead fdi should be explained more broadly by a combination of factors from a variety of theoretical models such as ownership advantages or agglomeration economics market size and characteristics cost factors transport costs protection risk factors and policy variables

global income distribution from the fall of the berlin wall to the great recession we present an improved panel database of national household surveys between 1988 and 2008 in 2008 the global gini index is around 70 5 having declined by approximately 2 gini points china graduated from the bottom ranks changing a twin peaked global income distribution to a single peaked one and creating an important global median class 90 of the fastest growing country deciles are from asia while almost 90 of the worst performers are from mature economies another winner was the global top 1 hence the global growth incidence curve has a distinct supine s shape with gains highest around the median and top

the causality between fdi and sector specific production in turkey evidence from threshold cointegration with regime shifts abstractthis article considers bidirectional nonlinear cointegration relation between fdi and industrial output in turkey the data cover the monthly period 2005 1 2013 10 for the time series of total industrial production 36 sub industrial sectors production and fdi following nonlinear threshold cointegration and vecms the article yields that i total industrial production and nine sub industrial productions have positive long run impact on fdi with significant error corrections ii six sub industrial productions have short term influence on fdi iii fdi has long run positive impulse on total industrial production and nine sub industrial productions with some significant error corrections and iv fdi affects four sub industrial productions in the short run as well as in the long run the results of vecms from i also reveal that the all short term adjustment parameters are found significant and powerful in 10 typical regimes regime 1s and in 5 extreme regimes regime 2s finally the outcom

regionalisation of science and innovation governance in japan kitagawa f 2007 the regionalization of science and innovation governance in japan regional studies 41 1099 1114 traditionally a country that has favoured the centralized national direction of industry science relationships japan is gradually transforming its innovation system with the regionalization of science and technology s t policies characterized by the promotion of clusters and academic entrepreneurship however there remain fundamental questions as to the development and actual potential of truly regional governance structures to guide science policy in target areas this paper examines developments in the governance of science and innovation in japan with a particular focus on the policy instruments used their impact on regional economic development organizational embeddedness in regions and the ability of regions to coordinate innovation support policies kitagawa f 2007 la regionalisation de la gouvernance de la science et de l innovation au japon regional studies 41

international investment location decisions abstract in international location tournaments governments compete for foreign investment with tax and other short run incentives such tournaments can be won if agglomeration economies are sufficiently powerful to overcome investors desire to spread investments as a hedge against risk we focus on manufacturing investments by u s multinationals in the 1980s our econometric results suggest that agglomeration economies are indeed the dominant influence on investor calculations paradoxically short run incentives have limited apparent impact on location choice we conclude that high cost tournament play is unnecessary for countries with good infrastructure development specialized input suppliers and an expanding domestic market

multinationality and performance among british manufacturing companies over the period 1972 84 profitability among 304 large british manufacturing companies was positively related to their degree of multinationality moreover increases in overseas production were strongly associated with increases in sales and profitability the profitability of multinational growth over the whole period was independent of its destination supporting the view that the primary source of the superior performance of multinationals was competitive advantage rather than the higher rate of profit in the industries of other countries

liability of foreignness natural disasters and corporate philanthropy this study examines how philanthropy can mitigate liability of foreignness lof in the aftermath of a national disaster a major disaster restructures the social landscape creating an avenue for corporate contributions to play a role in recovery and relief efforts this social restructuring offers a valuable opportunity for multinational enterprises mnes to establish strong local ties in turn mne contributions at such times have a stronger impact on their local acceptance thus mnes can use these events to strengthen their position in the community and mitigate lof using the context of a national disaster in india i test these arguments with a sample of 190 mnes and 660 domestic firms i found that in the aftermath of the disaster the increase in mne contributions was much larger and less strongly tied to promotional activities than the increase in contributions from domestic firms and this difference persisted over time moreover the performance implication of post disaster philanthropy was stronger for mnes than for domestic firms these findings suggest that philanthropy plays a more strategic role for mnes in the aftermath of a disaster and it has a pronounced effect on mitigating lof

what do we know about global income inequality in this paper we review the recent literature on global interpersonal income inequality while all estimates agree that the level is very high with a gini of between 0 630 and 0 686 in the 1990s there is no consensus regarding the direction of change we discuss methodological issues including the use of national accounts versus survey based estimates of mean income or consumption and the choice of purchasing power parity exchange rates findings of a rise or fall in global income inequality are not robust across different estimation methods and datasets given the diversity of estimates and various sources of uncertainty including gaps and errors in the underlying data we conclude there is insufficient evidence to determine the direction of change in global interpersonal inequality in recent decades

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