the possibility of informationally efficient markets abstract a rational expectations equilibrium with positive demand for financial information does exist under fully revealing asset price contrary to a wide held conjecture whereas a continuum of investors is inconsistent with fully revealing equilibrium finitely many investors with average portfolios demand information in equilibrium if they can adjust portfolio size in an additive signal return model more information diminishes the expected excess return of a risky asset so that investors who only have a choice of portfolio composition or whose asset endowments strongly differ from the average portfolio are worse off under fully revealing price information market equilibria both with and without information acquisition are pareto efficient

micro processes of translation in the transfer of practices from mne headquarters to foreign subsidiaries the role of subsidiary translators recent research has increasingly emphasized the micro foundations of knowledge transformation in multi national enterprises mnes although the literature has provided ample evidence of the enablers of and barriers to the translation of practices less is known about the activities and efforts of translators that lead to specific types of translation in the context of the transfer of practices initiated at a mne s headquarters hq to foreign subsidiaries we apply a scandinavian institutionalist approach to examine the translation of corporate social responsibility reporting an hq initiated practice that is transferred to five foreign subsidiaries of a uk based mne our paper builds from a preliminary framework based on extant research to develop an extended framework of the micro processes of translation by theorizing the sequence of the micro processes undertaken by translators identifying the conditions under which they occur and connecting them to the three types of translation we provide a deep understanding of the micro foundations of translation when transferring practices from hq to subsidiaries our paper shows that translation is an evolving phenomenon and illuminates the importance of attending to the social spatial and temporal situatedness of translators it also brings insights into the individual experience of institutional distance and its effects on translation

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

mne institutional advantage how subunits shape transpose and evade host country institutions scholars increasingly emphasize the impact of institutions on multinational enterprises mnes but the opposite relationship has attracted less research that is mne agency in relation to institutions based on a comparative case study of six mnes from the united states and sweden this paper remedies this it explores and explicates mne subunits strategic responses to host country institutional constraints and opportunities in five different regions a new institutional approach is adopted which allows for an investigation of mne subunit agency in relation to normative and cognitive institutions as well as regulative ones this fine grained analysis reveals not only what kinds of responses mne subunits invoke but why and how they are able to respond we identify four strategic responses by which subunits shape transpose and evade institutions in the pursuit of competitive advantage innovation arbitrage circumvention and adaptation these responses are driven by three key enablers multinationality foreignness and institutional ambiguity that serve to enhance and heighten three mechanisms reflexivity role expectations and resources by linking the enablers and the mechanisms to specific types of strategic responses in a framework and typology the paper not only contributes to emerging research on the interplay between mnes institutions and strategy but to strategy practice

escaping the iron cage liabilities of origin and csr reporting of emerging market multinational enterprises this article examines the link between the condition of institutional voids in emerging markets and the use of the practice of corporate social responsibility csr reporting by emerging market multinational enterprises em mnes based on neo institutional theory and in light of the specificity of emerging markets we propose a positive relationship between institutional voids and csr reporting home country institutional voids push companies to internationalize as a way to escape the institutional constraints and inefficiencies in their own markets but at the same time create legitimacy challenges for these companies abroad in particular em mnes from less institutionally developed countries are likely to face liabilities of origin negative perceptions in host countries about these firms willingness and ability to conduct legitimate business csr reporting is an effective strategy to overcome such liabilities and barriers to legitimation as it conveys to host countries and global stakeholders alignment with global meta norms and expectations internationalization listing on developed country stock exchanges and time further magnify em mnes legitimacy challenges and thus the use of csr reporting to mitigate them our hypotheses are supported in a longitudinal study of 157 of the largest em mnes ranked by the united nations conference on trade and development unctad between 2004 and 2011

strong form efficiency with monopolistic insiders we study market efficiency in an infinite horizon model with a monopolistic insider the insider can trade with competitive market makers and noise traders and observes privately the expected growth rate of asset dividends in the absence of the insider this information would be reflected in prices only after a long series of dividend observations thus the insider s information is long lived surprisingly however the monopolistic insider chooses to reveal her information very quickly within a time converging to zero as the market approaches continuous trading although the market converges to strong form efficiency the insider s profits do not converge to zero

competitive rational expectations equilibria without apology abstract consider a financial market with n risk averse asymmetrically informed traders when n grows at the same rate as noise trading prices in competitive and in strategic rational expectations equilibrium converge to each other at a rate of 1 n equilibria in the two scenarios are close when noise trading volume per informed trader is large in relation to risk bearing capacity both equilibria converge to the competitive equilibrium of a limit continuum economy as the market becomes large at a slower rate of 1 n the results extend to endogenous information acquisition and the connections with the grossman stiglitz paradox are highlighted

wages and labor management in african manufacturing using matched employer employee data on 10 african countries this paper examines the relationship beween wages worker supervision and labor productivity in manufacturing wages increase with rm size for both production workers and supervisors we develop a two tier model of supervision that can account for this stylized fact and we t the structural model to the data employee data is used to derive a rm speci c wage premium that is purged of the effect of worker observables we nd as trong effect of both supervision and wages on effort and hence on labor productivity labor management in sub saharan africa appears problematic with much higher supervisor to worker ratios than in morocco and a higher elasticity of effort with respect to supervision

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

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

equilibrium price formation and the value of private information an economy is analyzed in which agents first choose whether to acquire costly information about the return to a risky asset and then choose demand functions that determine the allocation of assets it is a well known paradox that if agents are price takers and prices are fully revealing then an equilibrium with costly information acquisition does not exist it is shown that if the price formation process is modeled explicitly and agnets are not price takers then it is possible to have an equilibrium with fully revealing prices and costly information acquisition article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

cultural and language skills as resources for boundary spanning within the mnc we examine the role of cultural and language skills as resources for individuals boundary spanning ability in multinational corporations our combined qualitative and quantitative analysis shows that cultural and language skills influence the extent to which individual boundary spanners perform four functions exchanging linking facilitating and intervening boundary spanners with both cultural and language skills perform more functions than those with only cultural skills and language skills are critical for performing the most demanding functions key boundary spanners have properties that potentially make them not only valuable organizational human capital but also rare and difficult to imitate theoretical and practical implications are discussed

block ownership and firm specific information this study examines the impact of block ownership on the firm s information environment previous research shows that stock price efficiency depends on the cost of acquiring private information as well as on the precision of this information blockholders have a clear advantage over diffuse atomistic shareholders in terms of the precision and acquisition cost of their private information we hypothesize that this informational advantage will manifest itself primarily in the firm specific component of stock returns our empirical findings confirm that blockholders increase the probability of informed trading and idiosyncratic volatility and decrease the firm s stock return synchronicity these results hold for both inside and outside blockholders but are insignificant for blocks controlled by employee stock ownership plans esops overall our findings support the contention that ownership structure plays a significant role in shaping the firm s information environment

how do firms comply with international sustainability standards processes and consequences of adopting the global reporting initiative this paper addresses the issue of the influence of global governance institutions particularly international sustainability standards on a firm s intra organizational practices more precisely we provide an exploratory empirical view of the impact of the global reporting initiative gri on a multinational corporation s corporate social responsibility csr management practices we investigate standard compliance by comparing the stated intention of the use of the gri with its actual use and the consequent effects within the firm based on an in depth case study our findings illustrate the processes and consequences of the translation of the gri within the organization we show that substantive standard adoption can lead to unintended consequences on csr management practices specifically it can influence the management structure and csr committee function the choice of csr activities the relationships between subsidiaries the temporal dimension of csr management and the interpretation of csr performance we also highlight the need to look at the relationship dynamics or lack of between standards finally we illustrate and discuss the role of reporting and its influence on management in order to better understand the internal issues arising from compliance with standards

institutional theory and the cross national transfer of employment policy the case of workforce diversity in us multinationals this paper uses a comparative institutionalist approach combined with a power interests perspective to examine the processes whereby diversity policy is internationalised by us multinational companies it argues that the process of policy transfer to uk subsidiaries is complicated by incomplete and contested institutionalisation of diversity within the us itself and by differing conceptions of diversity between the us and the uk the ability of actors within the uk subsidiaries to mobilise and deploy specific power resources allows them to resist the full implementation of corporate diversity policy leading to a range of compromise accommodations it is argued that the findings have more general implications for analysing the transfer of hr practices between national business systems

miners politics and institutional caryatids accounting for the transfer of hrm practices in the brazilian multinational enterprise this article contributes to the growing stream of research on power and micro politics in the mne it is situated in the critical realist epistemology it adopts burawoy s extended case study method together with a context sensitive and an actor centered mode of explanation the case is intriguing a mne from brazil expands into canada the united kingdom switzerland and norway and imposes a new pay and performance management system contrasting with existing host norms the article uses this to examine interrelated questions about the influence of an emerging economy parent business system and how this interacts with the well developed institutional regulation of the host countries hence we are forced into the interesting realm of multilevel analysis about mnes power relations and institutional change we argue that the transfer of hrm practices within mnes is best explained by a consideration of institutions organizational structures actors postures within and beyond the mne and their relational interplay specifically it requires an analysis of the macro political context home and host institutional influences subsidiaries size mode of establishment history value chain location and the host economies dependence on foreign investment on which actors identities and interests are formed and on which the ensuing micro political relations are played out

wages profits and rent sharing the paper suggests a new test for rent sharing in the u s labor market using an unbalanced panel from the manufacturing sector it shows that a rise in a sector s profitability leads after some years to an increase in the long run level of wages in that sector the paper controls for workers characteristics for industry fixed effects and for unionism lester s range of wages is estimated for rent sharing reasons alone at approximately 24 per cent of the mean wage

wages and profits in manufacturing firms matched panel evidence from brazil we provide evidence about the determinants of the wage structures of developing countries by examining the case of brazil our specific question is whether brazil s dramatic income and wage dierentials can be explained by the division of rents between firms and their employees unlike in competitive labour markets using detailed individual level matched panel data covering a large share of manufacturing firms and more than 30 million workers between 1997 and 2002 we consider the endogeneity of profits by adopting dierent measures of profits and dierent instruments and by controlling for spell fixed eects our results robust to dierent specifications and tests indicate no evidence of rent sharing this conclusion contrasts with findings for most developed countries even those with flexible labour markets possible explanations for the lack of rent sharing include the weakness of labour market institutions the high levels of worker turnover and the macroeconomic instability faced by the country

rational expectations information acquisition and competitive bidding most rational expectations market equilibrium models are not models of price formation and naive mechanisms leading to such equilibria can be severely manipulable in this paper a bidding model is developed which has the market like features that bidders act as price takers and that prices convey information higher equilibrium prices convey more favorable information about the quality of the objects being sold than do lower prices bidders can benefit from trading only if they have a transactions motive or if they have access to inside information apart from exceptional cases prices are not fully revealing a two stage model is developed in which bidders may acquire information at a cost before bidding and for which the equilibrium price is fully revealing resolving a well known paradox

risk sharing in labor markets empirical work in labor economics has focused on rent sharing as an explanation for the observed correlation between wages and profitability the alternative explanation of risk sharing between workers and employers has not been tested using a unique panel data set for four african countries authors find strong evidence of risk sharing workers in effect offer insurance to employers when firms are hit by temporary shocks the effect on profits is cushioned by risk sharing with workers rent sharing is a symptom of an inefficient labor market risk sharing by contrast can be seen as an efficient response to missing markets authors evidence suggests that risk sharing accounts for a substantial part of the observed effect of shocks on wages

rates of return on physical and human capital in africa s manufacturing sector in this paper two sets of issues are addressed using panel data from the manufacturing sector of five african countries first how high are the returns to human relative to physical capital second what is the relative importance of technology and endowments of human and physical capital in determining differences in earnings and productivity across the countries evidence from earnings functions shows that the private returns to both experience and education rise with the level of education private returns rise from 3 per cent at the primary level to 10 per cent at the secondary level and 35 per cent for tertiary evidence from the production function gives lower returns on education than from the earnings function rates of return on physical capital exceed 20 per cent and greatly exceed the average return on human capital data is available on the stocks of human and physical capital across the countries productivity and earnings differentials are shown to be large between cameroon and ghana these differences are due almost entirely to differences in physical not human capital endowments this abstract was borrowed from another version of this item

selling resistance and reconciliation a critical discursive approach to subsidiary role evolution in mnes studies of political dynamics between multinational enterprise mne parents and subsidiaries during subsidiary role evolution have focused largely on control and resistance this paper adopts a critical discursive approach to enable an exploration of subtle dynamics in the way that both headquarters and subsidiaries subjectively reconstruct their independent interdependent relationships with each other during change we draw from a real time qualitative study of a revealing case of charter change in an important european subsidiary of an mne attempting to build closer integration across european country operations our results illustrate the role of three discourses selling resistance and reconciliation in the reconstruction of the subsidiary parent relationship from this analysis we develop a process framework that elucidates the important role of these three discourses in the reconstruction of subsidiary roles showing how resistance is not simply subversive but an important part of integration our findings contribute to a better understanding of the micro level political dynamics in subsidiary role evolution and of how voice is exercised in mnes this study also provides a rare example of discourse based analysis in an mne context advancing our knowledge of how discursive methods can help to advance international business research more generally

global standardization or national differentiation of hrm practices in multinational companies a comparison of multinationals in five countries drawing on a dataset constructed from a parallel series of nationally representative surveys of multinational companies mncs we compare the performance management pm practices of mncs in the uk ireland canada spain denmark and norway in each country we analyze data relating to mncs from that country and of the foreign affiliates of us mncs we argue that there is evidence of standardization in the nature of practices across countries particularly evident in the analysis of us mncs standardization of practices among mncs is also evident in the rather limited variation in practices between us and indigenous mncs within each country moreover even where there is evidence of variation across and within countries this cannot be fully explained by adaptation to local institutional constraints but rather can be seen as the product of how distinct national contexts can promote the take up of practices

net trade and market efficiency in grossman and stiglitz 1980 abstract in this paper we correct part b of theorem 6 of grossman and stiglitz gs 1980 we demonstrate that when the private signal tends to be perfect the market converges to strong form efficiency and thus informed and uninformed traders have almost homogeneous beliefs about the stock payoff but there is still significant net trade rather than no trade as erroneously shown by gs we further show that when the stock price becomes more informative and thus traders beliefs about the stock payoff become closer the net trade may increase

explaining african economic performance africa has had slow growth and a massive exodus of capital in many respects it has been the most capital hostile region we review and interpret the aggregate level and microeconomic literatures to identify the key explanations for this performance there is a reasonable correspondence of the two sets of evidence pointing to four factors as being important these are a lack of openness to international trade a high risk environment a low level of social capital and poor infrastructure these problems are to a substantial extent attributable to government behaviour and the paper includes a review of the political economy literature which addresses that behaviour

inventories and risk in african manufacturing using a panel data set for zimbabwe which includes firm specific measures of contractual risk we show that contractual risk has a major effect on the holding input stocks and to a lesser extent the constitution of cash reserves this is consistent with inventories being a hedge against stockout risk by contrast firms facing more inter annual market risk hold less inventories this suggests that african manufacturers prefer adapting to long term market fluctuations as they materialise rather than building up inventories this interpretation is consistent with the finding that high market risk firms also have a low capacity utilisation rate

corporate social responsibility in europe and the u s insights from businesses self presentations the paper compares the extent and content of businesses communications about corporate social responsibility csr in france the netherlands the u k and the u s in particular the study investigates the nature of csr principles processes and stakeholder issues discussed in web pages the results show that businesses in the four countries do not display the same eagerness to appear as socially responsible and employ diverse means to convey social responsibility images

government intervention efficiency wages and the employer size wage effect in zimbabwe abstract this paper uses matched employer employee data from a survey of 201 manufacturing firms and 1609 of their workers conducted in zimbabwe in the summer of 1993 the results indicate that there is a substantial premium associated with employment in larger firms and that this premium cannot be explained by differences in worker quality and job characteristics nor is it eliminated by controlling for unionization minimum wages or other forms of government intervention the size premium is much larger for white collar than for blue collar workers these differentials are also found to be substantially larger than those estimated for other developed and developing countries the analysis uses the data about firm characteristics to explore a number of efficiency wage based explanations of the size differential and finds results which are consistent with but not conclusive proof of hiring turnover and morale based notions of efficiency wages