on the concavity of the consumption function at least since keynes 1935 many economists have had the intuition that the marginal propensity to consume out of wealth declines as wealth increases nonetheless standard perfect certainty and certainty equivalent versions of intertemporal optimizing models of consumption imply a marginal propensity to consume that is unrelated to the level of household wealth we show that adding income uncertainty to the standard optimization problem induces a concave consumption function in which as keynes suggested the marginal propensity to consume out of wealth or transitory income declines with the level of wealth

an institution based view of international business strategy a focus on emerging economies leveraging the recent research interest in emerging economies this perspective paper argues that an institution based view of international business ib strategy has emerged it is positioned as one leg that helps sustain the strategy tripod the other two legs consisting of the industry and resource based views we then review four diverse areas of substantive research 1 antidumping as entry barriers 2 competing in and out of india 3 growing the firm in china and 4 governing the corporation in emerging economies overall we argue that an institution based view of ib strategy in combination with industry and resource based views will not only help sustain a strategy tripod but also shed significant light on the most fundamental questions confronting ib such as what drives firm strategy and performance in ib

competition cooperation and innovation organizational arrangements for regimes of rapid technological progress abstract discussions of the link between firm size and innovation are outmoded because the boundaries of the firm have become fuzzy in recent decades strategic alliances constellations of bilateral agreements among firms are increasingly necessary to support innovative activities such alliances can facilitate complex coordination beyond what the price system can accomplish while avoiding the dysfunctional properties sometimes associated with hierarchy antitrust law and competition policy need to recognize that these new organizational forms are often the functional antithesis of cartels though they may have certain structural similarities a more complete understanding of bilateral contracts and agreements ought to reveal when and how cooperation can support rather than impede innovation and competition

foreign direct investment mode choice entry and establishment modes in transition economies in this study we bridge two streams of foreign direct investment literature specifically studies on establishment mode choice i e the choice between an acquisition and a greenfield establishment and studies on entry mode choice i e the choice between a wholly owned outlet and a subsidiary with shared ownership we arrive at a conceptual synthesis for an examination of the effects of the same predictors on the dual entry establishment mode choice made in the context of a single foreign investment we demonstrate that a parent firm s technological intensity international strategy and experience determine both establishment and entry mode choices moreover we apply williamson s new institutional economics to investigate the influence of institution building on multinational enterprises dual investment choice in the context of transition economies we test empirically the possible moderating effect of a host country s institutional environment we conclude that the degree of the host country s institutional advancement moderates the effect of both technological intensity and international strategy on the establishment and entry mode choice

consumer response to the reagan tax cuts abstract this paper uses micro data from the consumer expenditure survey to estimate the response of household consumption to the second and third phases of the reagan tax cuts since these phases were pre announced they allow for an unusually clean test of the canonical life cycle permanent income model consumption is found to be excessively sensitive to the tax cuts counter to the model liquidity constraints and other standard explanations do not appear to explain this excess sensitivity the consumption response is larger than previously estimated for tax refunds and more concentrated in nondurables these differences have important implications for the structure of tax changes in particular for choosing between varying withholding rates versus varying lumpy final tax payments and refunds

money interest rates and exchange rates with endogenously segmented markets we analyze the effects of money injections on interest rates and exchange rates when agents must pay a baumol tobin style fixed cost to exchange bonds and money asset markets are endogenously segmented because this fixed cost leads agents to trade bonds and money infrequently when the government injects money through an open market operation only those agents that are currently trading absorb these injections through their impact on these agents consumption these money injections affect real interest rates and real exchange rates the model generates the observed negative relation between expected inflation and real interest rates as well as persistent liquidity effects in interest rates and volatile and persistent exchange rates

the performance of us corporations 1981 1994 this study decomposes the performance of us public firms between 1981 and 1994 into year industry corporate focus and firm effects performance is measured by tobin s q accounting profitability and a hybrid measure the results show that firm effects were more important to performance than industry effects although industry effects had a large permanent component corporate focus was not important the stylized facts suggest that competitive advantages that is differences between direct competitors in the same industry were at least as important as industry influences on performance industry influences were more predictable and sustainable than competitive advantages however

productivity spillovers from foreign direct investment evidence from uk industry level panel data this paper examines intra industry productivity spillovers from foreign direct investment fdi in the uk manufacturing sector the empirical analysis uses panel data for 48 uk industries over the period 1991 1995 a major contribution is empirical evidence on spillover effects in situations where the host country is developed the results indicate that the very presence of fdi has a positive spillover impact on the productivity of uk owned firms the analysis also shows that the extent to which local firms benefit from the introduction of advanced technology depends largely on their own technological capabilities

consumer response to tax rebates many households received income tax rebates in 2001 of 300 or 600 these rebates represented advance payments of the tax cut from the new 10 percent tax bracket based on a survey of a representative sample of households this paper finds that only 22 percent of households receiving the rebate would spent it instead they would either save it or use it to pay off debt this very low rate of spending represents a striking break with past behavior which would have suggested a much higher rate of spending the low spending rate implies that the tax rebate provided a very limited stimulus to aggregate demand this abstract was borrowed from another version of this item

from hybrids to hierarchies shareholder wealth effects of joint venture partner buyouts this study examines the parent firm performance implications of joint venture jv partner buyouts which involve the conversion of a hybrid governance structure to an internal unit within the firm s hierarchy transaction cost theory as developed and applied in the international literature and market entry research is extended to the post entry investment setting to isolate sources of value creation or dissipation from the governance changes effected by jv partner buyouts the evidence complements recent research on jv longevity and its determinants copyright 2001 john wiley sons ltd

competitive consequences of interfirm collaboration how joint ventures shape industry profitability recent international business research on international joint ventures focuses on how firms can use such ventures for knowledge access and learning to enhance their competitiveness thereby increasing competition in the industry by contrast research in industrial organization economics has observed that firms can also use joint ventures in various ways to attenuate competition in this paper we join these two streams of research to investigate the conditions under which joint ventures reduce or enhance competition by empirically testing the effects of different types of joint ventures on industry profitability our results suggest that joint ventures can be pro competitive or anti competitive depending on whether or not they are formed between competing firms represent foreign market entry and operate in relatively concentrated industries our paper shows the importance of adopting a contingent approach to evaluating the competitive implications of joint ventures and it also points to the value of reinvigorating international business research on the competitive context and consequences of interfirm collaboration

household saving micro theories and micro facts in this survey we review the recent theoretical and empirical literature on household saving and consumption the discussion is structured around a list of motives for saving and how well the standard theory captures these motives we show that almost all of the motives for saving that have been suggested in the informal saving literature can be captured in the standard optimizing model particular attention is given to recent work on the precautionary motive and its implications for saving and consumption behavior we also discuss the behavioral or psychological approach that eschews the use of standard optimization techniques and focuses instead on direct consideration on saving we provide a section on facts who save and how much we then discuss informally the recent decline in the u s saving rate and whether the theory is of much use in understanding this and other changes in aggregate saving rates over time we do not find any convincing explanation for the change in saving rates we also discuss some analyses of saving behavior over the life cycle addressing such questions as whether households save enough for retirement and whether the consumption patterns of older households can be rationalized within a simple life cycle model we also review a great number of studies of the consumption euler equations based on our analysis of the studies cited we conclude that there is still mixed evidence that consumption is excessively sensitive to income we also examine in depth the recent empirical literature on the precautionary motive we conclude that although some households do seem to have a significant precautionary motive at some points in their life cycle this motive is not so strong empirically as some investigators suggest

testing for liquidity constraints in euler equations with complementary data sources previous tests for liquidity constraints using consumption euler equations have frequently split the sample on the basis of wealth arguing that low wealth consumers are more likely to be constrained we propose alternative tests using different and more direct information on borrowing constraints obtained from the 1983 survey of consumer finances in a first stage we estimate probabilities of being constrained which are then utilized in a second sample the panel study of income dynamics to estimate switching regression models of the euler equation our estimates indicate stronger excess sensitivity associated with the possibility of liquidity constraints than the sample splitting approach

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

corporate combinations and common stock returns the case of joint ventures the gain to stockholders from mergers is well documented however there is little evidence as to whether the source of the gain is due to synergy or management displacement merger is just one of an almost limitless variety of ways in which firms combine resources to accomplish some objective a joint venture is another in addition to being of interest as an independent phenomenon because the original managements of the parent firms remain intact under a joint venture investigation of wealth gains from joint ventures provides an opportunity to isolate the management displacement hypothesis from the synergy hypothesis as the source of gains in corporate combinations our results are 1 there are significant wealth gains from joint ventures 2 the smaller partner earns a larger excess rate of return while the dollar gains are more equally divided and 3 the gains scaled by resources committed yield premiums similar to those in mergers we are inclined to interpret our results as supportive of the synergy hypothesis as the source of gain from corporate combinations this paper is an empirical investigation of the common stock returns of u s companies that enter into joint ventures with other u s companies we consider joint ventures in the context of what is by now a burgeoning literature examining the security returns of companies involved in intercorporate mergers and tender offers 1 in this context our objective is to provide evidence as to the source of the well documented gains to stockholders of firms involved in mergers and tender offers in addition joint ventures are an interesting economic phenomenon in their own right they are undertaken by many of the largest u s companies involve billions of dollars in capital expenditures annually and are subject to considerable scrutiny in the popular press in this regard our analysis provides data on what is as yet a relatively unexplored area of economic activity 2 a corporate merger represents the joining together of all the resources of two companies under a single management to accomplish some set of objectives empirical studies have found that mergers generally result in significant increases in the total market values of the merging firms with the stockholders of the

transaction costs and consumption abstract the rational expectations permanent income hypothesis re pih fails to explain several well documented features of consumption behavior first the estimated marginal propensity to consume mpc for unanticipated transitory income shocks is often much higher than what the theory warrants second the estimated mpc is typically much bigger for small shocks of this type than for large shocks third consumption is often smoothed against large anticipated future income changes but not always against small changes this paper argues that these findings can be reconciled within a re pih model that includes a cash in advance constraint and an assumption that the agent is required to pay a fixed transaction cost to transfer wealth between cash and assets key results of the paper include first the agent follows an s s rule with respect to cash holdings when he makes wealth transfer decisions second the mpc within the no transfer band is higher than that out of the band and can be as high as exactly equal to one and third the agent smoothes consumption in response to news of large future income changes but not necessarily to small ones

the response of expenditures to anticipated income changes panel data estimates standard models of intertemporal allocation predict that the time path of expenditures should be independent of the time path of income recently two papers parker 1999 and souleles 1999 have suggested that u s households have a high marginal propensity to spend within year anticipated income changes we use an expenditure survey panel from spain to re examine this issue we exploit two important features of the spanish data first we have quarterly panel data that follows households for more than four quarters second we use the fact that workers are exogenously sorted into one of two payment schemes some receive the same amount each month of the year and others receive an extra payment in june and december the extra payment is large and predictable we examine the detailed pattern of expenditures over the year to see whether they differ between the two groups we fail to find even weak differences we complement this with a conventional euler equation analysis of excess sensitivity our predicting equation for quarterly earnings growth is much better than usual and is likely to give a powerful test of the hypothesis that predictable changes in income do not lead to changes in expenditure patterns the results of this analysis confirm the graphical analysis we find no evidence of excess sensitivity we conclude that households in normal times do smooth consumption over the year we suggest a reconciliation of our results with those of parker and souleles

the effect of strategic alliances on firm productivity in south korea using a rich firm level data set from south korea this article analyses the impact of strategic alliances on firm performance focusing on how firm productivity is affected by alliance types such as joint venture joint technical development technical alliance joint marketing and coproduction as well as alliance structures such as intra and inter industry alliances total factor productivity tfp is estimated through the semi parametric method suggested by levinsohn and petrin 2003 in addition a two stage least squares 2sls method is applied to reduce the potential endogenous problem between productivity and strategic alliance choices the empirical results found in this article indicate that the engagement in joint ventures positively affects firm productivity and that the formation of international intra industry alliances has a positive impact on firm productivity

is there a retirement savings puzzle in this paper we ask whether households are saving enough for their retirement we use data on income expenditure and expenditure components to analyse patterns of behaviour at and around the time of retirement for successive date of birth cohorts we compare periods of unemployment to periods of retirement and separate expenditures into categories reflecting work related expenditures basic necessities and other goods we find that income typically falls by more at unemployment than retirement but the reverse is true for expenditure we observe falls in expenditure at retirement for all expenditure categories using a stochastic life cycle model including mortality rates we assess the anticipated impact of retirement on consumption against that of unemployment the inter relationship between goods and leisure explains a large part of the persistent fall in expenditure at retirement we argue that the only way in which the life cycle hypothesis could be reconciled with the remaining unanticipated dip in consumption would be with the systematic arrival of unexpected adverse information at the time of retirement

impacts of new entry and horizontal joint ventures on industrial rates of return data resources inc regional load curve models vols 1 and 3 aug sept 1981 engle robert clive w j granger allen mitchem and ramu ramanathan some problems in the estimation of daily load shapes and peaks modelling and analysis ofelectricity demand by time of day electric power research institute epri ea 1304 dec 1979 engle robert f clive w j granger and ramu ramanathan regional load curs e models querj s model long run forecasts and sensitidvity analysis epri ea 1672 vol 4 sept 1981 granger clive w j robert f engle ramu ramanathan and allan andersen residential load curves and time of day pricing an econometric analysis journal ofeconometrics 9 1979 13 32 granger clive w j et al a regional load curve model specification and estimation electric power research institute forthcoming graybill franklin theory and application of the linear model north scituate ma duxbury press 1976 hanushek eric a efficient estimators for regressing regression coefficients the american statistician 28 may 1974 66 67 mitchem allen a regional model of time of day elasticity demand a tiuo stage approach unpublished phd dissertation university of california at san diego 1981 poirier dale economic issues in land forecasting modelling and analysis of electricity demand by time oj day epri ea 1304 dec 1979 ramanathan ramu robert f engle and clive w j granger regional load curlve models querj s model long run forecasts and sensitivity analysis epri ea 1672 vol 2 aug 1981 university of arizona engineering experiment station modelling and analysis of electricity demand by time of day epri ea 1304 dec 1979 proceedings of the epri workshop at san diego u s department of commerce notes on temperaturehumidity index l s 5922 june 1959

a structural model on the impact of prediscovery licensing and research joint ventures on innovation and product market efficiency abstract using a novel database on prediscovery licensing agreements one type of r d cooperation as well as detailed firm level and semiconductor market specific information we estimate the impact of prediscovery licensing agreements pdlas on innovation and product market efficiency our results show that pdlas reduce innovative activity in the semiconductor industry by 10 percent or 4089 patents throughout the 1989 1999 period on the contrary research joint ventures a different type of r d cooperation increase innovative activity based on a structural model we provide evidence that pdlas increase production costs and semiconductor prices by 1 percent which results in customers paying an additional 1 1 billion for semiconductors per year beyond the common concern that r d cooperations facilitate coordination activities in product markets via price fixing our study highlights that pdlas can be used as an instrument to coordinate r d activities which can reduce innovation activity and increase costs and prices

firm survival and industry evolution in vertically related populations this paper examines how the density and governance of vertically related populations affect the life chances of organizations we integrate the literatures on organizational ecology and vertical integration to develop a theory of how 1 specialized upstream industries affect downstream survival rates 2 the prevalence of different governance forms among upstream and downstream organizations moderates this relationship and 3 different forms of governance exert differential competitive pressures on focal organizations we find evidence supporting our hypotheses in an empirical examination of the downstream laser printer industry and upstream laser engine industry this paper was accepted by jesper sorensen organizations

the reaction of household consumption to predictable changes in social security taxes the key implication of rational expectations and the basic life cycle permanent income hypothesis that predictable changes in income have no effect on the growth rate of consumption expenditures is examined this implication is important for understanding the effectiveness and optimal timing of fiscal policy the causes and propagation of business cycles and the effects of income fluctuations on the growth rate of the economy using household level consumption data from the consumer expenditure survey whether expenditures on nondurable goods increase contemporaneously with predictable changes in social security tax withholding is tested it is found that households do change their consumption expenditures in response to the predictable fluctuations in income induced by the social security tax system

the stability of joint ventures reciprocity and competitive rivalry the focus of the following empirical analysis is the influence of reciprocity and long term relationships on the stability of joint ventures these cooperative incentives are offset by industry structural conditions which may promote competitive rivalry among the partners to separate these effects on joint venture survival the hypothesized relationships are proxied by variables drawn from industry and questionnaire data and estimated under a hazard model specification a theoretical implication of the findings is to suggest a shift of attention from the transaction to the economic relationship as the unit of analysis copyright 1989 by blackwell publishing ltd

pre emptive patenting joint ventures and the persistence of oligopoly abstract gilbert and newbery 1982 have examined pre emptive patenting and the persistence of monopoly the present paper considers pre emptive patenting when there are several incumbent firms rather than just one it is shown why the incumbent oligopolists behaving non cooperatively might fail to deter entry this suggests that a joint venture in r and d might be a useful entry deterring device insofar as it pools the incumbents incentives to prevent entry this is indeed the case for small innovations but for large innovations the formation of a joint venture weakens the incumbents incentive to innovate by removing the competitive stimulus between them

do firms learn to create value the case of alliances we investigate whether firms learn to manage interfirm alliances as experience accumulates we use contract specific experience measures in a data set of over 2000 joint ventures and licensing agreements and value creation measures derived from the abnormal stock returns surrounding alliance announcements learning effects are identified from the effects of unobserved heterogeneity in alliance capabilities we find evidence of large learning effects in managing joint ventures but no such evidence for licensing contracts the effects of learning on value creation are strongest for research joint ventures and weakest for marketing joint ventures these results are consistent with the view that learning effects are more important in situations characterized by greater contractual ambiguity copyright 2000 john wiley sons ltd

do consumers react to anticipated income changes evidence from the alaska permanent fund a central implication of the life cycle permanentincome hypothesis lc pih is that consumers should not respond to predictable changes in their income to test this hypothesis a number of recent papers have exploited natural experiments to identify anticipated income changes in particular recent work by parker 1999 uses the change in after tax income due to the cap on earnings subject to the social security tax and a related paper by souleles 1999 examines the response of consumption to income tax refunds surprisingly parker and souleles find that even when income is expected to change within the year expenditure is excessively sensitive to the timing of the income change while their results can be interpreted as evidence that our canonical model of consumption is inadequate an alternative explanation is that the anticipated income changes they exploit are small and irregular and that households will not bother to change their consumption paths when the computational costs involved are large relative to the utility gains in support of this interpretation browning and collado 2001 find that the seasonal consumption patterns of spanish households that work in sectors that provide regular bonus payments do not differ from those of households that do not receive bonus payments this paper adds to this evidence by exploiting a natural experiment provided by annual payments from the state of alaska s permanent fund to every resident in the state of alaska that should yield an unusually powerful test of the lc pih these payments are large and clearly anticipated by alaskan residents using the variation in the size of the payments over time and in the amount received by families of different sizes to identify the response of consumption to payments from the permanent fund i find no evidence that the consumption of alaskan households reacts to these payments in addition i find no evidence that the seasonal pattern of consumption in alaska differs from that in the other 49 states or that households in alaska are subject to fewer liquidity constraints engage in less buffer stock saving or spend a smaller fraction of their income on semidurable goods than households in the rest of the united states however although households in alaska do not overreact to payments from the permanent fund i find that the consumption of the very same households is excessively sensitive to their income tax refunds this evidence suggest that households will take anticipated income changes into account in their consumption decisions when the income changes are large regular and easy to predict but will not do so when they are small and irregular the paper proceeds as follows the next section of the paper presents details on the department of economics princeton university princeton nj 08544 and national bureau of economic research e mail chsieh princeton edu i am very grateful to the bureau of labor statistics bls for providing access to the data from the consumer expenditure survey and to its staff particularly steven henderson walter vandeheide and wolf weber for their generous assistance during my visits to the bls i also thank nanci jones for providing data and patiently answering questions on the operation of the alaska permanent fund anne case angus deaton jonathan parker and two referees provided useful comments the views expressed in this paper are personal and should not be attributed to the bls 1 i refer to the certainty equivalent version of the lc pih or one in which the expected variance of consumption is constant as is well known without these assumptions the lc pih only implies smoothing of marginal utility not necessarily of consumption 2 see christina h paxson 1992 john shea 1995 jonathan a parker 1999 nicholas s souleles 1999 martin browning and m dolores collado 2001 also see ronald a bodkin 1959 for an early example of the use of a natural experiment to test for excess sensitivity for comprehensive reviews of the large literature on empirical tests of the lc pih see angus deaton 1992 browning and annamaria lusardi 1996 and browning and thomas f crossley 2001 3 in 1998 for example the permanent fund paid 1 541 to every resident of the state of alaska

a theory of the consumption function with and without liquidity constraints fifteen years ago milton friedman s 1957 treatise a theory of the consumption function seemed badly dated dynamic optimization theory had not been employed much in economics when friedman wrote and utility theory was still comparatively primitive so his statement of the permanent income hypothesis never actually specified a formal mathematical model of behavior derived explicitly from utility maximization instead friedman relied at crucial points on intuition and verbal descriptions of behavior although these descriptions sounded plausible when other economists subsequently found multiperiod maximizing models that could be solved explicitly the implications of those models differed sharply from friedman s intuitive description of his model furthermore empirical tests in the 1970s and 1980s often rejected these rigorous versions of the permanent income hypothesis in favor of an alternative hypothesis that many households simply spent all of their current income today with the benefit of a further round of mathematical and computational advances friedman s 1957 original analysis looks more prescient than primitive it turns out that when there is meaningful uncertainty in future labor income the optimal behavior of moderately impatient consumers is much better described by friedman s original statement of the permanent income hypothesis than by the later explicit maximizing versions furthermore in a remarkable irony much of the empirical evidence that rejected the permanent income hypothesis as specified in tests of the 1970s and 1980s is actually consistent both with friedman s original description of the model and with the new version with serious uncertainty there are four key differences between the explicit maximizing models

reappraising the eclectic paradigm in an age of alliance capitalism this article discusses the implications of the advent of alliance capitalism for our theorizing about the determinants of mne activity in particular it argues that due to the increasing porosity of the boundaries of firms countries and markets the eclectic or oli paradigm of international production needs to consider more explicitly the competitive advantages arising from the way firms organize their inter firm transactions the growing interdependencies of many intermediate product markets and the widening of the portfolio of the assets of districts regions and countries to embrace the external economies of interdependent activities

the strategic alliance of the biotechnology firm this article applies the relevant theories of firm organization and inter firm relationships in the high tech environment to explain the institutional reasons that firms choose between internal or external approaches particularly this study tries to understand to what extent and in what way strategic alliances have impacts on individual firms organizational structure financial structure and firms activities also it tries to find out what type of firms tend to benefit most from alliances and thus use more inter firm agreements the theoretical findings are that due to liquidity constraint and asymmetric information reasons young research intensive firms need to use more alliances to survive in the fast changing high technology industry the empirical analysis employs 3 year panel data and finds that the results are consistent with the theoretical predictions

an analysis of cooperative research and development i analyze the effects of cooperative research whereby member firms agree to share the costs andfruits of a research project before they undertake it in this model industrywide agreements tend to have socially beneficial effects when the degree ofproduct market competition is low when there are r d spillovers in the absence of cooperation when a high degree of sharing is technologically feasible and when the agreement concerns basic research rather than development activities i show that a royalty free cross licensing agreement among any number offirms lowers the equilibrium level of innovation even though it increases the efficiency of r d through sharing

impacts of domestic joint ventures on industrial rates of return a pooled cross section analysis 1964 1975 empirical evidence on the relations among diversification concentration and profitability is inconclusive on whether any relation exists in this note changes in diversification and concentration in u s manufacturing industries are examined over the period 1963 72 when a major expansion in diversification took place the zero order correlations between changes in concentration and in diversification either out of or into an industry tend to be positive and significant the relation becomes insignificant when other variables especially market growth are controlled however a positive relation between changes in concentration and inbound diversification does remain significant among the less concentrated industries where it seems more likely to reflect real economies enjoyed by diversifying companies than the exercise of market power

competing globally allying locally alliances between global rivals and host country factors an emerging literature highlights the relationship between competitive intensity and the likelihood that two rival firms will form an alliance placing this argument in an international context we first suggest that the global competitive intensity between two rival multinationals positively affects the likelihood that they will ally in any host country additionally we highlight how a number of host country contextual factors moderate the relationship between global competitive intensity and alliance formation in a given host country we test our hypotheses with a sample of 13 global automobile companies operating in 27 countries and the results largely support our predictions

the dynamics of learning alliances competition cooperation and relative scope we show how the tension between cooperation and competition affects the dynamics of learning alliances private benefits and common benefits differ in the incentives that they create for investment in learning the competitive aspects of alliances are most severe when a firm s ratio of private to common benefits is high we introduce a measure relative scope of a firm in an alliance to show that the opportunity set of each firm outside an alliance crucially impacts its behavior within the alliance finally we suggest why firms might deviate from the theoretically optimal behavior patterns 1998 john wiley sons ltd

on the welfare effects and political economy of competition enhancing policies we analyse the welfare effects of policies that intensify product market competition and the channels through which they operate using a circular model of horizontal product differentiation with asymmetric costs we study the effects of increased price competition on market selection among incumbent firms cost reduction effort and entry of new firms the model also generates an endogenous demand for competition enhancing or retarding policies arising from cost heterogeneity and we demonstrate the possibility of a low competition political economy trap simulations of the model illustrate that the selection effects we analyse which traditional cost benefit analysis is unlikely to capture can be large

portfolio choice and trading in a large 401 k plan we study nearly 7 000 retirement accounts during the april 1994 august 1998 period several interesting patterns emerge most asset allocations are extreme either 100 percent or zero percent in equities and there is inertia in asset allocations equity allocations are higher for males married investors and for investors with higher earnings and more seniority on the job equity allocations are lower for older investors there is very limited portfolio reshuffling in sharp contrast to discount brokerage accounts daily changes in equity allocations correlate only weakly with same day equity returns and do not correlate with future equity returns

foreign direct investment and host country productivity the american automotive component industry in the 1980s although several studies have shown that inward foreign direct investment fdi often leads to greater host country productivity researchers have yet to determine the relative importance of direct technology transfer and competitive pressure to assess the relative importance of the two channels we examine the us auto component industry between 1979 and 1991 during this period japanese automobile assemblers began to produce vehicles in north america and began to purchase inputs from us auto component manufacturers those us manufacturers that sold components to japanese transplants would be the direct recipients of any technologies transferred from the japanese although we find that the direct investment by japanese assemblers was associated with overall productivity improvement in the us auto component industry we find little evidence of direct technology transfer the productivity growth of us suppliers affiliated with japanese assemblers was no greater than that of other non affiliated us suppliers further we find that the japanese assemblers tended to purchase components from less productive us suppliers and moreover that low productivity suppliers that sold goods to japanese assemblers had a higher survival rate than low productivity suppliers that did not sell to japanese firms the results suggest that increased competitive pressure in the auto sector was the main cause of overall productivity improvement at least during the initial stages of fdi of the 1980s

the rationale behind interfirm tender offers information or synergy this paper investigates the rationale behind interlirm tender offers by examining the returns realized by the stockholders of lirms that were the targets of unsuccessful tender offers and lirms that have made unsuccessful offers our results suggest that the permanent positive revaluation of the unsuccessful target shares documented by dodd and ruback 1977 and bradley 1980 is due primarily to the emergence of and or the anticipation of another bid that would ultimately result in the transfer of control of the target resources we also find that the rejection of a tender offer has differential effects on the share prices of the unsuccessful bidding firms depending upon whether the tender offer process results in a change in the control of target resources on the basis of these results we conclude that acquisitions via tender offers are attempts by bidding firms to exploit potential synergies not simply superior information regarding the true value of the target resources

financing innovations in uncertain networks filling in roadmap gaps in the semiconductor industry abstract complex technologies are often developed in inter organisational networks as actors try to reduce development costs and uncertainty about the viability of these innovations however as of to date it remains unclear how such innovations are financed collectively under conditions characterised by extreme uncertainty hence we explore how financial resources within innovation networks are mobilised and allocated this question is of particular importance to the development of system technologies that are viable only if all critical components are functional on time we explore this issue by reviewing the development of a radically new system technology for mass manufacturing microchips in the semiconductor industry in this industry technological roadmaps allow actors to identify critical components that still need to be developed these components are the so called roadmap gaps however suppliers can be reluctant to develop the required components at their own expense because of the high uncertainties involved in such cases providing financial support to component suppliers is a central task of innovation networks the empirical analysis shows that semiconductor manufacturers take both an individual and a collective approach to filling roadmap gaps this study contributes to prior research on innovation networks and financial management not only by identifying and clarifying these two approaches but also by revealing under which conditions they are used the findings are particularly relevant to scholars interested in the innovations of complex product systems cops

the impact of inward fdi on the performance of chinese manufacturing firms recent years have witnessed the emergence of china as one of the most important destinations for foreign direct investment fdi which reached us 403 98 billion by the end of 1999 moftec 2000 china is now the largest recipient of fdi in the developing world however the amount of fdi will underestimate its overall consequences if spillover effects are significant murphy 1992 o malley 1994 buckwalter 1995 this study investigates the impact of fdi on the performance of chinese locally owned firms in manufacturing

asset returns with transactions costs and uninsured individual risk abstract we explore whether incorporating an explicit motive for holding liquid assets within an equilibrium asset pricing model helps explain the following features of asset returns and turnover in the post war u s economy i the low risk free real interest rate ii the large spread between returns on liquid assets and stocks and iii the greater transaction velocity of liquid assets relative to stocks we introduce a demand for liquid assets by adding uninsured individual risk together with differential costs of trading securities numerical simulations attempting to match the return data generate a ratio of liquid assets to income considerably below observed levels

action characteristics as predictors of competitive responses a central question in competitive dynamics is whether a competitive response can be predicted this study links various characteristics of actions with the total number and the time lag of competitors responses the hypothesized relationships were tested with a sample of competitive moves among u s airlines the results suggested that responses are influenced by the characteristics of the actions that evoked them specifically the total number of competitors affected by an action and the importance to these competitors of the markets under attack by the action increase the number of competitive responses strategic as opposed to tactical actions or actions which require substantial implementation efforts reduce the number and delay the timing of rivals counteractions finally contrary to prediction competitors who have a high stake in the markets under attack by a competitive move react slowly

innovation and cooperation implications for competition and antitrust n k robel laureate robert solow and his colleagues on mit s industrial productivity commission recently noted dertouzos lester and solow 1989 p 7 undeveloped cooperative relationships between individuals and between organizations stand out in our industry studies as obstacles to technological innovation and the improvement of industrial performance and later p 105 that interfirm cooperation in the u s has often though not always been inhibited by government antitrust regulation these striking conclusions warrant further exploration unfortunately industrial organization textbooks still discuss horizontal cooperation and competition almost exclusively in terms of standard cartel theory on the other hand vertical cooperation contracting is viewed differently and some textbooks provide treatments of supplier buyer relationships in which cooperation is viewed as enhancing efficiency both in the textbooks and in policy discussion among economists cooperation among competitors is highly suspect being perhaps the last bastion of what was once referred to as the inhospitality tradition in antitrust as a result very little literature addresses how cooperation among competitors can promote competition notwithstanding that cooperation among competitors may sometimes be essential if innovating firms are to compete in today s increasingly global markets imai and baba 1989 such cooperation is already important in japan and in europe 1

monopolistic competition and multiproduct brand names the excess capacity theorem pertaining to monopolistic competition implies a trade off between variety and cost this article shows that the excess capacity theorem does not hold if firms market several products under a single brand name and if marketing efforts spill over from one product to another the argument of the article requires that selling efforts not be prejudged to be wasteful or redundant a position adopted and defended in harold demsetz s writing on monopolistic competition within that framework the article constructs a counterexample to the excess capacity theorem copyright 1989 by the university of chicago

mode size and location of foreign direct investments and industry markups abstract several studies find that inward foreign direct investment fdi raises host industries competition and productivity using aggregate fdi measures the monetary flows or the change in the industries foreign production share yet fdi flows are composed of many individual heterogeneous investments reflecting this heterogeneity i ask how the average traits of the individual investments that constitute the fdi flow further affect the host while the results show that inward fdi does heighten competition for us manufacturing industries in 1987 1991 price cost markups fall even more when foreign investments locate further away from incumbent industry which is consistent with endogenous location choice

myopia liquidity constraints and aggregate consumption a simple test this note conducts a simple test for myopia and liquidity constraints in aggregate u s consumption the test exploits the fact that under myopia consumption should be equally sensitive to predictable income declines and increases while under liquidity constraints consumption should be more sensitive to predictable income increases than to declines using quarterly postwar data the author shows that aggregate consumption is in fact more sensitive to predictable income declines than increases this perverse asymmetry is inconsistent with both myopia and liquidity constraints but is qualitatively consistent with recent theoretical work incorporating loss aversion into intertemporal preferences

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

arms race or detente how interfirm alliance announcements change the stock market valuation of rivals most prior event studies find that the announcement of a new alliance is accompanied by a positive stock market response for the partners this result has usually been interpreted as evidence for the prevailing view that alliances are effective vehicles for partners to acquire or access new skills and thus become stronger competitors however partners should also earn positive abnormal returns if alliances are used to shape competitive interactions attenuating competitive intensity industry wide in this study we disentangle these different mechanisms by examining how alliance announcements affect the stock market s evaluation of allying firms rivals if an alliance is expected to make partner firms more competitive this should lead to negative abnormal returns for partners rivals if an alliance is expected to facilitate a reduction in competitive intensity this should lead to positive abnormal returns for rivals results from an event study analysis of research and development alliances in the telecommunications and electronics industries during 1996 2004 provide evidence consistent with competition attenuation in some alliances our research thus challenges the increasingly narrow focus on learning and resource accumulation through alliances and calls for broader consideration of the roles and effects of collaboration both for individual firms and for industry structure

excess sensitivity and asymmetries in consumption an empirical investigation most empirical studies on liquidity constraints classify a consumer as being constrained on the basis of a single indicator such as the asset to income ratio in this analysis the authors model the probability that a consumer faces liquidity constraints as a function of multiple social and economic factors this probability function is estimated simultaneously with the degree of excess sensitivity of consumption to income in a switching regressions framework the switching regressions apply optimal weights to the densities for the euler equations in the two states and are less susceptible to sample misclassification our results based on data from the cex confirm that liquidity constrained consumers are excessively sensitive to variables already known to economic agents however there is also evidence that the unconstrained consumers exhibit behavior that is inconsistent with the theoretical predictions further analysis suggests that such behavior could be explained by time non separable preferences copyright 1997 by ohio state university press

the choice between mergers acquisitions and joint ventures the case of japanese investors in the united states this paper investigates the determinants of the choice between two alternative methods of pooling similar and complementary assets the merger acquisition and the greenfield equity joint venture two theories of the determinants of that choice are tested on a sample of japanese investments in the united states the results show that equity joint ventures are preferred over acquisitions when the desired assets are linked to nondesired assets because the u s firm owning them is large and not divisionalized when the japanese investor has little previous experience of the american market and hence seeks to avoid postmerger integration problems when the japanese investor and the u s partner manufacture the same product and when the industry entered is growing neither very rapidly nor very slowly

social security benefits consumption expenditure and the life cycle hypothesis this paper examines the impact of changes in social security benefits on aggregate consumption expenditure under the null hypothesis there should be no contemporaneous effect at the monthly frequency because increases in benefits have always been announced at least 6 weeks prior to payment the paper develops overwhelming evidence contrary to the null that benefits have affected aggregate spending the results have strong implications for several important issues including ricardian equivalence government policy irrelevance and the excess sensitivity of consumption to changes in income

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

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

learning from competing partners outcomes and durations of scale and link alliances in europe north america and asia this paper investigates the outcomes and durations of strategic alliances among competing firms using alliance outcomes as indicators of learning by partner firms we show that alliance outcomes vary systematically across link and scale alliances link alliances are interfirm partnerships to which partners contribute different capabilities while scale alliances are partnerships to which partners contribute similar capabilities we find that partners are more likely to reorganize or take over link alliances than scale alliances by contrast scale alliances are more likely to continue without material changes the two types of alliances are equally likely to shut down at similar ages these results support the view that link alliances lead to greater levels of learning and capability acquisition between the partners than do scale alliances copyright 2000 john wiley sons ltd

the sensitivity of consumption to transitory income estimates from panel data on households we investigate the stochastic relation between income and consumption specifically consumption of food within a panel of about 2 000 households our major findings are 1 consumption responds much more strongly to permanent than to transitory movements of income 2 the response to transitory income is nonetheless clearly positive 3 a simple test independent of our model of consumption rejects a central implication of the pure life cycle permanent income hypothesis the observed covariation of income and consumption is compatible with pure life cycle permanent income behavior on the part of80 percent of families and simple proportionality of consumption and income among the remaining 20 percent as a general matter our findings support the view that families respond differently to different sources of income variations in particular temporary income tax policies have smaller effects on consumption than do other more permanent changes in income of the same magnitude this abstract was borrowed from another version of this item

parent firm performance across international joint venture life cycle stages the benefits that firms obtain from investing in international joint ventures ijvs can be reinforced or reduced by the management of later stages of collaboration this paper presents an analysis of the shareholder wealth effects of ijv formation and five types of ijv termination the empirical findings challenge common assumptions in the ijv literature contrast prior evidence on the performance implications of market entry and exit through acquisitions and divestitures and demonstrate the value of integrating ijv life cycle stages in future research

the life cycle model of consumption and saving a central implication of life cycle models is that agents smooth consumption we review the empirical evidence on smoothing at frequencies from within the year up to across a lifetime we find that life cycle models particular those which incorporate realistic features of markets and goods have more empirical successes than failures we also show that some apparent deviations from theoretical predictions imply very small welfare losses for agents finally we emphasize that the coherence of life cycle models imposes an important discipline when incorporating new features into models

consumption liquidity constraints and asset accumulation in the presence of random income fluctuations recent empirical research flavin 1981 hagashi 1982 has rejected the certainty equivalent formulation of permanent income hypothesis hall 1978 these findings are often attributed to households inability to borrow completely against expected future labor income this paper is a theoretical investigation of optimal consumption behavior under risk aversion random income fluctuations and borrowing restrictions our principle objective is to establish the existence and to investigate the properties of the stationary probability distribution which characterizes the asymptotic behavior of consumption under these conditions this abstract was borrowed from another version of this item

the output and profit effects of horizontal joint ventures the effects of production joint ventures on their parents profits and total industry output are analyzed using a conjectural variations model joint ventures that represent new producing entities are shown to be more likely because the profits of parents in the same industry are more likely to increase under conditions of cooperative as opposed to rivalrous behavior under the same circumstances industry output increases although a modest rise in cooperation among firms suffices to reverse these effects the precise results are shown also to depend upon the degree of coordination of the output decisions of the joint venture and its parents copyright 1992 by blackwell publishing ltd

dancing with the enemy relational hazards and the contingent value of repeat exchanges in m a markets i examine the problem of relational hazards between repeat exchange partners and the contingent roles of trade uncertainty and future exchange prospects in moderating the potentially conflicting effects of past exchanges on these hazards thereby facilitating or restraining the formation of relational embeddedness on the data of advisory relationships in u s mergers and acquisitions from 1981 to 2004 i find that firms that repeatedly hire the same investment banks as financial advisors tend to overpay for acquisition targets as reflected by negative investor reactions measured in the cumulative abnormal return in addition the degree of overpayment increases with the frequency of prior exchanges this adverse effect of exchange history grows if the uncertainty regarding the target firm rises however better prospects for future business with acquiring firms help mitigate this negative effect although this moderating effect varies across the types of exchange experience the findings suggest that a potentially complex and nuanced process underlies repeat exchanges which are an oft claimed precursor of relational embeddedness to deliver tangible economic benefits this study contributes to the emerging literature on the dark side of embeddedness and more broadly to the sociology of markets and organizations by substantiating the contingency mechanisms that shape the value of a repeat relationship in market exchanges

the boundaries of the firm revisited why do firms exist what is their function and what determines their scope these remain the central questions in the economics of organization they are also central questions for business executives and corporate strategists the worldwide volume of corporate mergers and acquisitions exceeded 1 6 trillion in 1997 it is hard to imagine that so much time effort and investment bankers fees would be spent on adjusting firm boundaries unless there was some underlying economic gain indeed the exceptional levels of merger and acquisition activity over the past two decades are a strong indication that economically significant forces do determine organizational boundaries the study of firm boundaries originated with the famous essay by coase 1937 who raised the question of why we observe so much economic activity inside formal organizations if as economists commonly argue markets are such powerful and effective mechanisms for allocating scarce resources coase s answer was in terms of the costs of transacting in a world of imperfect information when the transaction costs of market exchange are high it may be less costly to coordinate production through a formal organization than through a market in large part thanks to the work of williamson 1975 1985 recent decades have seen a resurgence of interest in coase s fundamental insight that firm boundaries can be explained by efficiency considerations our understanding of firm boundaries has been sharpened by identifying more precisely the nature and sources of transaction costs in different circumstances in the process the focus of

permanent income current income and consumption evidence from two panel data sets in this article i estimate euler equations that is the first order conditions of the consumers maximization problem using data from two data sets consumption data are taken from the consumer expenditure survey income data are taken from the panel study of income dynamics because the data for the estimation come from two samples i use a generalization of the instrumental variables estimator the two sample instrumental variables estimator i find evidence that consumption is excessively sensitive to predictable income growth the estimates of the coefficient of excess sensitivity for three consumption measures range from 2 to 5

how do international joint ventures create shareholder value this study attempts to identify conditions under which announcements of international joint venture jv formation lead to increases in shareholder value of participating u s firms it does so by combining the singular theoretical foci of previous work on the topic and specifying previously unconsidered but conceptually important influences on firms expected jv performance the study s findings indicate support for the hypothesized effect of variables in partners task related competitive and structural context s but not those in these firms partner related and institutional context s specifically partner venture business relatedness the pursuit of r d oriented activity greater equity ownership and large firm size all are found to have a positive impact on firms jv based value creation although this study finds support for the performance impact of firm level competition the direction of this impact is contrary to that hypothesized no support is found for hypothesized effect of partner partner business relatedness previous jv experience partners relative firm size national cultural relatedness and jv host country political risk copyright 2000 john wiley sons ltd

the response of household consumption to income tax refunds a central implication of the life cycle or permanent income theory is that consumption should not respond to predictable fluctuations in income tests of this implication have yielded mixed results especially on micro data angus deaton 1992 martin browning and annamaria lusardi 1996 in large part this might be due to the difficulties of isolating the predictable component of income at the micro level most tests proceed by instrumenting for income but since the available instruments are typically poor such tests might be prejudiced against finding significant excess sensitivity of consumption to income john shea 1995 also it is not clear how closely the resulting econometric predictions of income coincide with agents actual expectations of income to avoid these difficulties this paper examines the response of household consumption to a particular type of income that is both predictable and transitory income tax refunds since a refund depends on events in the previous calendar year it is predictable income as regards consumption in the year of its receipt consequently under the life cycle theory consumption should not increase on receipt of a refund 2 in addition to testing the canonical model of consumption this paper provides estimates interpretable as the marginal propensity to consume mpc out of refunds since federal tax refunds now amount to over 80 billion per year averaging well over 1 000 per refund these estimates are of interest in themselves more generally they bear on the impact of even preannounced and temporary changes in fiscal policy the paper begins by surveying related studies in section i section ii describes the data the consumer expenditure survey cex which of the leading u s micro data sets has the most comprehensive coverage of expenditure the empirical specification is set out in section hi section iv reports the results and section v concludes

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

college tuition and household savings and consumption abstract despite the high cost of college there has been little study of the adequacy of household savings and other resources available to fund college to gauge their adequacy this paper examines households standard of living as they pay for college using the consumer expenditure survey the main finding is that households appear to do a relatively good job smoothing their consumption into the academic year despite large expenses this is consistent with the life cycle theory of saving and consumption there is some evidence of a delayed decline in consumption and of a decline for households with children first beginning college but the magnitudes of these declines are rather small

an economic model of international joint venture strategy the strategic choice between joint ventures licensing agreements and mergers is analysed using eight key factors suggested by internalisation theory the model explains the increasing role of international joint ventures in the 1980s in terms of the accelerating pace of technological innovation and the globalisation of markets it offers a range of predictions about the formation of joint ventures within industries across industries across locations and over time it exploits a powerful modelling technique that has many other applications in international business strategy

event studies in economics and finance the event study is an important research tool in economics and finance the goal of an event study is to measure the effects of an economic event on the value of firms event study methods exploit the fact that given rationality in the marketplace the effects of an event will be reflected immediately in security prices thus the impact can be measured by examining security prices surrounding the event in this paper event study methods are described including some of the potential complications an example is included to illustrate the approach

market valuation of joint ventures joint venture characteristics and wealth gains abstract along with rd that is the nature of relationship between partners the relatedness and the strategic implication of joint ventures to partners the extent of partners control over joint ventures and the corporate governance in parent firms the data set consists of two party equity joint ventures in the electronics industry that were launched between 1979 and 1988 the unit of analysis is the 174 u s firms out of 158 joint ventures of which 113 were cross border agreements and 45 were between u s firms the study applies the event study method to assess stockholders risk adjusted wealth gains and a cross sectional analysis based on a generalized least squares model to test the hypotheses contrary to popular belief our results show an overall favorable reaction to joint venturing in the stock market even though there is substantial variation according to contextual influences the findings show that stock market valuations reflect the economic potential of joint ventures and are affected by the degree and type of control shareholders and partners can exercise the first key finding in the study is that the valuation effect of joint ventures is multifaceted the market valuation of joint ventures depends on the relationship between partners the nature of partners contributions the extent of partners control over joint ventures and the corporate governance in parent firms our findings also show that partner size which has not been studied in prior studies is a critical variable affecting wealth gains from joint ventures our results certainly shed light on understanding the effect of size on corporate wealth gains from joint ventures the results provide conflicting support for most hypotheses depending on firm size implying that joint ventures have different strategic and managerial implications for the partners depending on size shareholders tend to perceive joint ventures as a risky entrepreneurial operation particularly for the smaller partners it is indeed difficult to protect the smaller partners firm specific know how from being appropriated by the other partners accordingly smaller firms role and degree of control in a joint venture substantially affect wealth gains from their joint venturing with larger corporations shareholders value majority equity sharing by smaller partners as an important governance mechanism to control resource flows and avoid opportunistic behaviors by the larger partners whereas this study extends the previous findings on positive wealth gains of joint ventures by examining contextual influences it also attempts to fill the void in the field of corporate entrepreneurship despite the growing interest in corporate entrepreneurship there has been little attempt to empirically examine its potential association with corporate financial performance in particular with market based performance measures or wealth gains financial theory posits that accounting based performance measures do not properly measure the value of managers entrepreneurial decisions rappaport 1986 argued that the true measure of the long run value of an investment decision is economic value for shareholders as measured by abnormal stock returns i e wealth gains our study is an extension of this fast emerging field of study on the relationship between corporate entrepreneurship and financial performance by focusing on corporate wealth gains from joint venturing with other firms in pursuit of entrepreneurial goals

internationalization of corporate technology through strategic partnering an empirical investigation this paper explores some trends in the internationalization of corporate r d efforts innovation output and strategic technology partnering in the past decade inter firm strategic technology partnering through which companies share their innovation efforts supplements the standard indicators of technological competence to broaden the scope from internal innovation processes to a wider range of innovative activities the international information technology industry is singled out for empirical study the main conclusion of this contribution is that even in a global industry such as information technology internationalization of innovation although by no means insignificant appears less important than expected