tacitness learning and international expansion a study of foreign direct investment in a knowledge intensive industry this paper examines the impact of knowledge tacitness on a firm s propensity to establish plants in foreign rather than domestic locations our predictions build on knowledge based internalization and evolutionary theories of foreign direct investment we argue that the tacitness of technology has an inverted u effect on the propensity to undertake foreign investment we also expect that as a firm learns about a technology it will become more likely to make foreign investments we examine two forms of learning that which accumulates as a function of the number of plants previously built by the firm transfer based learning and that which accumulates as a function of time since the firm started using a technology time based learning we investigate empirical effects in a sample of investments in the memory segment of the semiconductor industry our predictions about the curvilinear effect of tacitness are supported the results also suggest that learning is a matter of taking time to become acquainted with the use of the technology and of gaining experience through successive foreign plant investments the study adds to the understanding of the effects of knowledge on corporate expansion

is everything neutral in his well known analysis of the national debt robert barro introduced the notion of a dynastic family this notion has since become a standard research tool particularly in the areas of public finance and macroeconomics in this paper we critique the assumptions on which the dynastic model is predicated and argue that this framework is not a suitable abstraction in contexts in which the objective is to analyze the effects of public policies we reach this conclusion by formally considering a world in which each generation consists of a large number of distinct individuals as opposed to one representative individual we point out that family linkages form complex networks in which each individual may belong to many dynastic groupings the resulting proliferation of linkages between families gives rise to a host of neutrality results including the irrelevance of all public redistributions distortionary taxes and prices since these results are not at all descriptive of the real world we conclude

mnc knowledge transfer subsidiary absorptive capacity and hrm based on a sample of 169 subsidiaries of multinational corporations mncs operating in the usa russia and finland this paper investigates the relationship between mnc subsidiary human resource management hrm practices absorptive capacity and knowledge transfer first we examine the relationship between the application of specific hrm practices and the level of the absorptive capacity second we suggest that absorptive capacity should be conceptualized as being comprised of both employees ability and motivation further results indicate that both ability and motivation absorptive capacity are needed to facilitate the transfer of knowledge from other parts of the mnc

back to basics behavioral theory and internationalization international business ib scholars over reliance on a select few theories leaves our understanding of firm internationalization incomplete the behavioral theory of the firm btf can offer new insights and can be used to model a broad range of firm actions we focus on the three basic btf components problemistic search learning by doing and vicarious learning these components help us understand why firm behaviors are more dynamic and heterogeneous than other theories allow btf with its emphasis on how firms assess performance according to aspiration levels selectively learn and update routines and selectively incorporate the learning of others is better suited to examine the diversity and change increasingly observed in internationalization decisions we explain why scholars should move beyond dynamizing static theories and show btf s applicability to behaviors involving change such as multi mode market entries and market re entries btf also helps examine the decision to internationalize in the first place nascent firm internationalization location choices international market adaptation and headquarter subsidiary relationships we encourage ib scholars to use theories that can handle the complexity increasingly associated with modern firm growth and propose btf as a promising starting point

transfer of marketing know how in international strategic alliances an empirical investigation of the role and antecedents of knowledge ambiguity the competitive nature of knowledge transfer and the process of organizational learning between partners constitute a fundamental challenge for both academics and practitioners alike by focusing on one type of competency marketing know how this research examines the role of knowledge ambiguity pertaining to the process of knowledge transfer in international strategic alliances based on a cross sectional sample of 151 multinationals and a structural equation methodology this study empirically investigates the antecedents of knowledge ambiguity tacitness asset specificity complexity experience partner protectiveness cultural distance and organizational distance further the strength of the relationships between these theoretical constructs and ambiguity is examined in light of the possible moderating effects of collaborative experience firm size and the duration of the alliance entered consistently tacitness emerges as the most significant determinant of knowledge transferability moreover the effects of cultural distance asset specificity and prior experience are moderated respectively by the firm s level of collaborative experience the duration of the alliance and the firm s size

knowledge sharing and social interaction within mnes social interaction between managers from different units of a multinational enterprise mne has been shown to be an important factor stimulating intra mne knowledge sharing face to face social interactions form a communication channel particularly conducive to the transfer of tacit non codified knowledge but intensive social interaction also provides opportunities for social construction of knowledge in a learning dialogue the first explanation sender receiver makes us expect social interaction to moderate positively the effects of the factors giving rise to knowledge flows in the first place such as differences in capabilities between mne subsidiaries the second perspective social learning also grants an independent effect to social interaction as a main factor stimulating intra mne knowledge flows we formulate hypotheses based on both perspectives and test these on data from 169 mne subsidiaries our findings show a considerable main effect of social interaction on all intra mne knowledge flows confirming the expectations based on the social learning model interaction effects based on the predictions of the sender receiver model are only partly confirmed these findings suggest that future research should devote more attention to the social constitution of mne knowledge

gratitude nostalgia and what now knowledge acquisition and learning a decade later we look at the development of absorptive capacity organizational learning and ijv research literatures since 1996 using our 1996 jibs paper as our centering point taking stock of the timing and patterns of citations to this paper opened up a unique window across time venues and topics this permitted us to more clearly position the paper vis a vis the contemporary corpus of the different literatures that provided the original context and impetus for us in the early 1990s the paper has been embraced and carried forward by the burgeoning community of international business ib scholars on transitional economies and on ijvs although the hungarian setting circa 1989 early 1990s was one we tended to view as a context to address and test theory based issues and assumptions from a broader management literature most indications of outward diffusion of our ideas beyond the ib community have been recent indeed over half the citations have occurred after 2003 we project our take on the current landscape toward the future providing suggestions about research opportunities

domestic alliance network to attract foreign partners evidence from international joint ventures in china partner selection is a critical issue in building international joint ventures ijvs we argue that foreign firms are more likely to select local firms with unique network structural advantages within a local alliance network we frame structural advantages as two network position traits centrality and brokerage specifically network centrality acts as a stronger network trait than brokerage in attracting foreign ijv partners however such a relationship may be moderated by foreign firms local experience and perceived capabilities we contend that when foreign firms have a high level of local market experience and perceived capabilities they may prefer a local broker over a centrally located local firm data on the domestic alliance network in china s electronics and information technology it industries largely support our hypotheses we conclude that as foreign investors become strategic insiders they may not only seek a local partner s capability attributes but also more critically pay attention to a local partner s domestic network

probing theoretically into central and eastern europe transactions resources and institutions since the 1990s central and eastern europe cee has provided unique societal quasi experiments which represent opportunities to test the applicability of existing theories in international business and management studies and to develop new ones specifically three lines of theorising have been advanced 1 organisational economics theories 2 resource based theories and 3 institutional theories for each of these theories we discuss how they contribute to the understanding of key issues such as entry strategies of foreign investors restructuring strategies of local incumbents and entry and growth strategies of entrepreneurs on this basis we assess how cee research has influenced the overall trajectories of theory development cee research has in particular highlighted the importance of contextual influences such as institutions thus scholars have aimed at incorporating institutions into theories such as organisational economics theories and resource based theories and advancing an institution based view of business strategy as a complementary perspective we outline how future research in cee and other emerging economies may advance this research agenda further

explaining ijv survival in a transitional economy through social exchange and knowledge based perspectives in this study we combine social exchange and knowledge based perspectives to develop a general path model of ijv survival we further refine our expectations by considering the transitional economic context of our study and the somewhat unique managerial values resulting from the legacy of marxist ideology results from structural equation modeling suggest that an imbalance in the management control structure between the parents leads to parental conflict and an increased likelihood of ijv failure an imbalance in the ownership control structure however had no influence on conflict or survival in general support from the foreign parent is positively related to ijv learning and ijv survival however higher levels of technical support provided by the foreign parent to the ijv reduced the level of parental conflict whereas management support had no effect on conflict our results suggest some dilemmas for firms pursuing ijvs in transitional economies although the foreign parent often contributes critical resources to the ijv providing it with bargaining power and a high level of influence an imbalance in management control between the partners may ultimately be detrimental to ijv survival copyright 2000 john wiley sons ltd

informal institutions and absorptive capacity a cross country meta analytic study the informal institutions construct has not been well understood in prior research we contribute to the informal institutions literature by developing a generalized two by two conceptualization of institutions that juxtapose the dimension of behavioral uncertainty versus environmental uncertainty and the dimension of informal institutions versus formal institutions in particular we theorize informal institutions based on the extent to which they reduce behavioral uncertainty or environmental uncertainty as well as their alignment with the formal institutional environment with respect to the two types of uncertainty leveraging this fourfold typology we shed new light on the importance of informal institutional conditions in theories of firms absorptive capacity and performance using a cross country meta analytical approach we find that a firm s absorptive capacity is more positively related to performance outcomes in countries with informal institutions that reduce behavioral uncertainty and environmental uncertainty furthermore the misalignment between informal and formal institutions with respect to behavioral uncertainty and environmental uncertainty weakens the relationship between absorptive capacity and performance outcomes overall by re emphasizing the fundamental role of informal institutions in reducing behavioral and environmental uncertainties our typology offers a fine grained perspective to conceptualize informal institutions and constitutes an opportunity to advance theory in informal institutions and international business

from exogenous to endogenous economic networks internet applications economic agents behaviour is affected by their position in a network either exogenous or endogenous in which they interact with a sub set of neighbours only the network s links which may be generated by vertical and or horizontal relations or by more complex morphologies may explain the transition between dynamic equilibria and the instability of economic aggregates moreover networks shape strategic interaction among agents by determining their strategies the problem of access and interconnection particularly relevant in the internet is perhaps the best example a two way feedback between strategies and network structures arises instead when links are endogenous those features are clearly shown in the mechanism underlying the formation of peering links an dr d networks

selective intervention and internal hybrids interpreting and learning from the rise and decline of the oticon spaghetti organization infusing hierarchies with elements of market control has become a much used way of simultaneously increasing entrepreneurialism and motivation in firms however this paper argues that such internal hybrids particularly in their radical forms are inherently hard to successfully design and implement because of a fundamental incentive problem of establishing credible managerial commitments to not intervene in delegated decision making this theme is developed and illustrated using the case of the world leading hearing aids producer oticon in the beginning of the 1990s oticon became famous for its radical internal hybrid the spaghetti organization recent work has interpreted the spaghetti organization as a radical attempt to foster dynamic capabilities by organizational means neglecting however that about a decade later the spaghetti organization has given way to a more traditional matrix organization in contrast an organizational economics interpretation of oticon organizational changes is developed this lens suggests that a strong liability of the spaghetti organization was the above incentive problem frequent managerial meddling with delegated rights led to a severe loss of motivation and arguably caused the change to a more structured organization refutable implications are developed and the discussion is broadened to more general issues of economic organization

contextualising organisational learning lyles and salk in the context of their research hungary has been the focus of lyles and salk 1996 because their research interest organisational learning was of particular concern in joint ventures in that country at that time this allowed them to investigate in greater depth what drives knowledge acquisition and how it influences the performance of joint ventures this commentary reviews the contribution by lyles and salk as reflected in the subsequent literature the setting of the study in hungary 1993 raises the challenging question of how this particular context may have influenced the research outcomes i argue that the national context of radical environmental change and the organisational context of joint ventures incorporating privatised state firms crucially influence processes of organisational learning the importance of context suggests modifying future research agendas in international business and in organisational learning in particular i thus suggest that future research should incorporate context more explicitly to establish boundary conditions for theory and to develop managerially relevant insights

the double edged sword of cultural distance in international acquisitions this study aims to bring together seemingly contradicting arguments in the literature about the role of cultural distance in international acquisitions we offer a model that postulates that cultural distance relates negatively to international acquisition performance because it taxes integration capabilities during international acquisitions but that cultural distance also elevates the positive association of integration capabilities and international acquisition performance because it provides more learning opportunities that can only be exploited with strong integration capabilities empirical tests with a sample of international acquisitions by 118 us multinational companies provide support for the proposed model on one hand we find that cultural distance impedes understandability of key capabilities that need to be transferred and constrains communication between acquirers and their acquired units bringing about a negative indirect effect on acquisition performance on the other hand we find that cultural distance enriches acquisitions by enhancing the positive effects of understandability and communication on acquisition performance acquirers that can overcome the impeding effects of cultural distance on understanding key capabilities and effective communication appear to reap significant performance gains our study provides initial support for a double edged sword effect of cultural differences on acquisition performance and illustrates the importance of integration capabilities

knowledge transfer capacity and its implications for the theory of the multinational corporation this study updates and extends research on foreign entry modes by examining the impacts of knowledge transfer capacity and knowledge tacitness research on international corporate expansion has long emphasized that deploying intangible knowledge based assets is required for successful international expansion more recently research from a knowledge based perspective has addressed the role of tacitness in constraining a firm s ability to transfer knowledge internationally we combine these perspectives to describe how knowledge tacitness affects the relative suitability of four archetypal entry modes exporting licensing establishing an alliance and wholly owned entry we then examine and develop conceptually a seldom studied firm characteristic knowledge transfer capacity we offer predictions that describe the combined effects of knowledge tacitness and transfer capacity on entry mode choice we distinguish between the transfer capacity of the organization that develops knowledge source transfer capacity and that of the organization that seeks to access that knowledge recipient transfer capacity the discussion addresses how our model generalizes to knowledge seeking strategies and to the study of ongoing multinational networks the study enriches and reconciles multiple theoretical perspectives on entry strategy it brings together the study of knowledge characteristics and firm heterogeneity in the theory of the multinational corporation and in international and strategic management more generally journal of international business studies 2003 34 356 373 doi 10 1057 palgrave jibs 8400037

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

managing tacit and explicit knowledge transfer in ijvs the role of relational embeddedness and the impact on performance drawing on organizational learning and economic sociology we address how relational embeddedness between the foreign parent and international joint venture ijv managers influences the type of knowledge i e tacit and explicit transferred to the ijv and how the importance of relational embeddedness varies between young and mature ijvs we also examine the influence of tacit and explicit knowledge on ijv performance our results show the importance that tie strength trust and shared values and systems play in the transfer of tacit knowledge especially for mature ijvs our findings are consistent with uzzi s tenets tacit learning is accumulative assists in explaining explicit knowledge and is enhanced by social embeddedness we also find that the influence of transferred tacit knowledge on ijv performance stems principally from its indirect effect on the learning of explicit knowledge

trading uncertainty and market form this paper examines purely random multilateral matching among a large number of informationally isolated individuals who desire to trade the structure of links among traders is characterized by means of random graphs defined by a parameter that is chosen by prospective traders trading groups of all sizes including pairs as a special case result but the size distribution may contain a mass point at infinity that is within a certain subset of the entire economy trading uncertainty is entirely eliminated the equilibrium price distribution consists of a mass point and of a mixture of densities copyright 1990 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the emergence of economic organization abstract a model of decentralized markets is studied in which transactors follow simple adaptive rules transactions are coordinated by specialist trading firms that bear the costs of market disequilibrium starting from an initially autarkic situation in which none of the institutions that support exchange exist computer simulation shows that for a wide range of parameter values a fully developed market economy will emerge spontaneously moreover in virtually every case where a market economy develops one of the commodities traded will emerge as a universal medium of exchange being traded by every firm and changing hands in every act of exchange

learning and protection of proprietary assets in strategic alliances building relational capital one of the main reasons that firms participate in alliances is to learn know how and capabilities from their alliance partners at the same time firms want to protect themselves from the opportunistic behavior of their partner to retain their own core proprietary assets most research has generally viewed the achievement of these objectives as mutually exclusive in contrast we provide empirical evidence using large sample survey data to show that when firms build relational capital in conjunction with an integrative approach to managing conflict they are able to achieve both objectives simultaneously relational capital based on mutual trust and interaction at the individual level between alliance partners creates a basis for learning and know how transfer across the exchange interface at the same time it curbs opportunistic behavior of alliance partners thus preventing the leakage of critical know how between them copyright 2000 john wiley sons ltd

what are the most promising conduits for foreign knowledge inflows innovation networks in the chinese pharmaceutical industry we study innovation networks in emerging markets where foreign actors have been identified as key sources of knowledge spillovers as well as progenitors of industry clusters focusing on connectivity as a channel for international knowledge sourcing we widen our lens beyond mnes to include critical innovative actors such as research institutions i e universities and research centers we examine the geographic dispersion of co inventor networks generated by us patents associated with the chinese pharmaceutical industry previous research has highlighted the role of organizationally driven mne networks as enablers of foreign knowledge inflows to less developed countries however our results emphasize the critical role of individually motivated networks arising from advanced economy research institutions in connecting china to global knowledge networks

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

perspective absorbing the concept of absorptive capacity how to realize its potential in the organization field the purpose of this perspective paper is to advance understanding of absorptive capacity its underlying dimensions its multilevel antecedents its impact on firm performance and the contextual factors that affect absorptive capacity twenty years after the cohen and levinthal 1990 paper the field is characterized by a wide array of theoretical perspectives and a wealth of empirical evidence in this paper we first review these underlying theories and empirical studies of absorptive capacity given the size and diversity of the absorptive capacity literature we subsequently map the existing terrain of research through a bibliometric analysis the resulting bibliometric cartography shows the major discrepancies in the organization field namely that 1 most attention so far has been focused on the tangible outcomes of absorptive capacity 2 organizational design and individual level antecedents have been relatively neglected in the absorptive capacity literature and 3 the emergence of absorptive capacity from the actions and interactions of individual organizational and interorganizational antecedents remains unclear building on the bibliometric analysis we develop an integrative model that identifies the multilevel antecedents process dimensions and outcomes of absorptive capacity as well as the contextual factors that affect absorptive capacity we argue that realizing the potential of the absorptive capacity concept requires more research that shows how micro antecedents and macro antecedents influence future outcomes such as competitive advantage innovation and firm performance in particular we identify conceptual gaps that may guide future research to fully exploit the absorptive capacity concept in the organization field and to explore future fruitful extensions of the concept

the design of coordination and control mechanisms for managing joint venture parent relationships joint ventures jvs defined as independent organizations formed by the pooling of resources and sharing of equity by two or more firms are being formed at an increasingly rapid pace while much empirical research has examined the conditions which favor the formation of jvs less attention has been paid to the equally important issues of control and implementation which are the focus of interest in this study we identify two factors which are expected to influence the design of control mechanisms i e 1 the strategic interdependence between the jv and each parent and 2 the environmental uncertainty faced by the jv our empirical examination confirms the importance of the degree of strategic interdependence and the moderating role of environmental uncertainty in explaining the design of control mechanisms 1998 john wiley sons ltd

translating theoretical logics across borders organizational characteristics structural mechanisms and contextual factors in international alliances in this essay i critically review the 2006 jibs decade award article by lyles and salk knowledge acquisition from foreign parents in international joint ventures ijvs an empirical examination in the hungarian context this article develops theoretical arguments and empirically tests a two stage research question 1 what are the organizational characteristics and structural mechanisms between ijv parents that influence knowledge acquisition from the foreign parent and 2 what is the relationship between knowledge acquisition and performance in hungarian ijvs the most important contribution is the focus on both the antecedents and the consequences of knowledge acquisition in ijvs i also discuss subsequent research that draws heavily on the conceptual or empirical findings of the 2006 jibs decade award paper i conclude by suggesting areas of future research in the field of knowledge transfer organizational learning and international strategic alliances

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

international joint venture partner selection the role of the host country legal environment this study attempts to enhance our understanding of how a host country s legal environment influences international joint venture ijv partner selection criteria empirical results based on survey data collected on 169 ijvs revealed that host country rule of law perceptions negatively influence appropriation and coordination cost concerns which positively influence partner related criteria furthermore these concerns mediate the relationship between perceptions of host country rule of law and partner related criteria

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

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

an ising based dynamic model to study the effect of social interactions on firm absorptive capacity abstract we present a dynamic model of firm absorptive capacity which is consistent with a process oriented conceptualization and based on the teaching learning approach to investigate the effect of social interactions among the firm members on the firm absorptive capacity in particular two main learning processes are considered the explorative and the transformative learning to develop the model the ising approach which is a very well established framework to study the dynamics of social interactions is employed furthermore a simulation analysis is carried out to investigate the effect of two patterns and four levels of social interactions on the firm absorptive capacity results show that block diagonal patterns where interactions occur inside groups and not between groups such as in modular organizations lead to higher absorptive capacity compared to hierarchical patterns e g those exhibited by centralized organizations we also show that the relationship between the level of social interactions and the firm absorptive capacity follows an inverted u shape in the block diagonal patterns while the absorptive capacity decreases as the level of interactions rises in the hierarchical patterns finally we find that the social network also plays a moderating role on the relationship between the complementary knowledge and the firm absorptive capacity

microfoundations in international management research the case of knowledge sharing in multinational corporations microfoundations have become an important theme in recent macro management research however the international management im field is an exception to this we document the lack of attention on microfoundations in im research by focusing on knowledge sharing a key im research field which we investigate by means of a keyword based literature study of the leading im and general management journals we discuss possible reasons why microfoundations have so far met with less resonance in im research we point to the training and background of im scholars as possible reasons we also highlight the significance that im scholars place on context and structure in explanation these may be seen as contrary to a microfoundations perspective a view that we show is incorrect we end by identifying several microfoundational issues in im research calling for a sustained effort with respect to theory heuristics and empirics

the role of human capital in earnings differences between black and white men d uring the past 50 years the earnings of black men have increased substantially both in absolute terms and relative to those of white men as shown in figure 1 in 1940 the black white weekly earnings ratio among men ages 25 34 was 49 percent by 1980 it had increased to 79 percent during the 1980s however the overall black white earnings gap did not narrow and at younger ages the gap actually widened although the 1980s is not the first decade since 1940 in which black men made little or no gains in relative earnings the 1950s was another the lack of progress in the 1980s is nevertheless puzzling and a source of concern this article examines the factors underlying the differential in earnings between black men and white men with a focus on the role of human capital since 1940 successive generations of black men entering the labor force have been increasingly more educated relative to white men both in terms of years of school completed and in the quality of schooling obtained as the education and income levels of black parents increased racial differences in the transmission of human capital in the home were also likely to have narrowed this convergence in educational differences combined with the migration of blacks out of the south contributed to the narrowing in the racial gap in earnings over the 1940 80 period particularly in the first half of the period but human capital factors education and migration were not the only source of convergence in black white differences in earnings the patterns of change in the earnings gap support the contention that declining labor market discrimination against blacks has also contributed to the rise in the black white earnings ratio moreover the acquisition of human capital itself has been strongly affected by societal and governmental discrimination since blacks were long provided with greatly inferior schooling resources

some stochastic processes of interdependent demand and technological diffusion of an innovation exhibiting externalities among adopters one frequently hears the opinion that as twentieth century society becomes more complex technological change assumes more significance and occurs at a more r apid pace investment in researclh and development results in a myriad of potential innovations yet as the frontiers of technology are plshed outward uncertainity about the usefulniess of innovations becomes an increasingly important factor in the decision whether or not to adopt the new innovation furthermore the decisions of individual economic agents tend to become increasingly interrelated many recent innovations are such that whether others adopt the device influences the benefits of adoption which accrue to a given consumer or firm such externalities may be positive for example consider a nation s decision to use the metric system the wearing of a style by a fashion leader a merchant s decision to accept a certain credit card or the purchase of a coinmunication device by someone with whom one desires to communicate or negative for instance imitation in the production of a faddish consumption item for which the potential market is limited or the pulrchase of a telephone by an obscene caller our goal is to analyze techn ological difflsioll with interdependencies when uncertainty and informational considerationis are an inherent part of the theoretical model the uncertainty may be of two types a technological ulncertainty the usefulness or quality of the innovation is at least partially unlknown and b adoption uncertainity incomplete or inaccurate knowledge about who is usinlg the innovation in our stochastic model adoptioni is reversible the decision to use the innovation is not permanent but rather agents may change their minds agents are not able to learn about the characteristics quality profitability usefulness etc of the innovation this assumption limits the applicability of

network structure and the diffusion of knowledge this paper models knowledge diffusion as a barter process in which agents exchange different types of knowledge this is intended to capture the observed practice of informal knowledge trading agents are located on a network and are directly connected with a small number of other agents agents repeatedly meet those with whom direct connections exist and trade if mutually profitable trades exist in this way knowledge diffuses throughout the economy we examine the relationship between network architecture and diffusion performance we consider the space of structures that fall between at one extreme a network in which every agent is connected to n nearest neighbours and at the other extreme a network with each agent being connected to on average n randomly chosen agents we find that the performance of the system exhibits clear small world properties in that the steady state level of average knowledge is maximal when the structure is a small world that is when most connections are local but roughly 10 percent of them are long distance the variance of knowledge levels among agents is maximal in the small world region whereas the coefficient of variation is minimal we explain these results as reflecting the dynamics of knowledge transmission as affected by the architecture of connections among agents