international risk and perceived environmental uncertainty the dimensionality and internal consistency of miller s measure increasingly scholars have suggested that there is a need to approach the problem of international risk from a multidimensional perspective brouthers 1995 miller 1993 shan 1991 miller 1992 1993 developed and tested the most comprehensive framework to date miller 1993 showed high inter rater reliability in his measure of perceived environmental uncertainty peu in this paper we test the dimensionality of the scales from a statistical viewpoint and find that the statistical determination is reasonably consistent with miller s conceptual determination we also investigate miller s measure by comparing scales conceptualized by miller with ones determined by factor analysis we test the reliability of these scales and find that the conceptualized scales have generally high internal consistency in samples of both manufacturing and service firms however the findings also suggest that several changes in the peu measure are warranted resulting in a refinement of miller s measure which we have labeled peu 2

industry and country effects on managers perceptions of environmental uncertainties international management research highlights political government policy and macroeconomic uncertainties strategy studies focus on input supply product market and competitive uncertainties this study develops and tests the reliability of an instrument for measuring managers uncertainly perceptions data analyses using an international sample provide insights into the relative importance of country and industry factors for explaining managers perceptions of different environmental uncertainties

tax policy and aggregate demand management under catching up with the joneses this paper examines the role for tax policies in productivity shock driven economies with catching up with the joneses utility functions the optimal tax policy is shown to affect the economy countercyclically via procyclical taxes i e cooling down the economy with higher taxes when it is overheating in booms and stimulating the economy with lower taxes in recessions to keep consumption up thus models with catching up with the joneses utility functions call for traditional keynesian demand management policies but for rather unorthodox reasons

international corporate entrepreneurship and firm performance the moderating effect of international environmental hostility abstract globalization of the world economy has encouraged u s companies to leverage their resources and skills by expanding into existing or new foreign markets u s companies have also acquired new capabilities by locating important functional activities overseas and joining with foreign partners in new markets through alliances and joint ventures these opportunities however are tempered by the constraints imposed by the competitive forces that exist in international environments aggressive government intervention technological changes and fierce local rivalries all contribute to hostile international environments for u s firms global expansion success in global business operations requires resourcefulness and entrepreneurial risk taking the activities of u s companies in foreign markets therefore provide a unique opportunity to examine the effects of international corporate entrepreneurship ice efforts on company performance ice is defined as the sum of a company s efforts aimed at innovation proactiveness and risk taking these efforts offer an important means of revitalizing and renewing established companies and improving their performance few studies have empirically examined the effects of ice activities on companies financial performance this study used data from 98 u s companies to 1 determine the impact of ice efforts on firm performance and 2 explore the moderating effect that the perceived hostility of the international environment has on the relationship between ice and company performance the results showed that ice was positively associated with a firm s overall profitability and growth as well as its foreign profitability and growth those firms that aggressively pursued ice in international environments with higher levels of hostility had higher return on assets roa but did not achieve significantly higher levels of growth however as hostility in the international environment continued to intensify roa rose and then fell as companies increased their ice activities thus there was a point of diminishing returns to a company s aggressive pursuit of ice under excessive environmental hostility the results highlight both the rewards and risks of pursuing ice companies benefit from ice activities by achieving higher overall performance as well as foreign profits and growth in revenue however the aggressive pursuit of ice does not always guarantee superior performance our results show that the payoff from ice is moderated by executives perceptions of the hostility of their firm s international business environment our findings highlight the importance of ice for organizational success both overall and in foreign markets yet the results compellingly suggest that there are upper limits to the potential gains a firm achieves from its aggressive pursuit of ice when the international environment in which it competes is hostile

hedging foreign exchange exposures independent vs integrative approaches many financial managers think that foreign exchange hedging decisions are mainly a choice between to hedge or not to hedge nevertheless previous researchers applied ederington s portfolio approach and found that even for risk minimization a complete hedge does not lead to the lowest risk instead there exists an optimal hedging ratio which yields the lowest variance however the discussions of these former studies were concentrated on a single foreign currency cash flow in the real world financial managers are more likely to expect multiple cash flows arriving at different times even for the same foreign currency this paper therefore discusses whether financial managers should hedge these cash flows independently or combine them under one integrative hedging scheme it is shown that while the independent approach does not lead to the lowest risk its hedging effectiveness is close to that of the integrative approach given the time and resource constraints of financial managers the simpler independent approach appears to be a better choice

a framework for integrated risk management in international business treatments of risk in the international management literature largely focus on particular uncertainties to the exclusion of other interrelated uncertainties this paper develops a framework for categorizing the uncertainties faced by firms operating internationally and outlines both financial and strategic corporate risk management responses

on the relationship between firm size and export intensity export marketing literature supports the view that firm size is positively related to export intensity although the empirical findings have been mixed a number of theoretical arguments are used to support this proposition i e international marketing economies of scale limited managerial and financial resources of small firms decisionmaker s risk perception based on a large survey of the italian manufacturing industry the article falsifies the proposition and challenges some widely held assumptions in export marketing literature

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

multinational investment under uncertainty in the chemical processing industries this study uses a sample of chemical processing industries to evaluate the effect of two types of uncertainty on the decision to invest in an industry it analyzes the effects of relative price uncertainty through exchange rates and input prices and demand uncertainty on the probability of expansion in a particular country the study then focuses on the behavior of individual companies and distinguishes companies by whether or not they are multinationals in the production of the product the results confirm previous evidence that exchange rate uncertainty has a negative effect on capacity expansions by domestic corporations and no effect on investment by multinational corporations finally the study also shows that expansions of production capacity in this industry are more likely to occur in those countries where capacity utilization is higher

state corroding federalism competition among local governments in a decentralized political system is often thought to discipline lazy or corrupt officials improving public good provision and increasing welfare some scholars note possible distortions due to spillovers or a race to the bottom but suggest that central transfers or regulations can remedy these both arguments take for granted a framework of constitutional order in which the central government can collect taxes allocate transfers and enforce regulations autonomously but what if it can t we show that if central enforcement capacity is endogenous interjurisdictional competition may itself erode the center s ability to channel competition in welfare enhancing directions regional governments may compete for capital by shielding firms from central tax collectors bankruptcy courts or regulators the equilibrium result is weaker central law enforcement and usually lower welfare interjurisdictional competition corrodes the state we illustrate with three examples from russia china and the us of cases in which such competition apparently encouraged subnational politicians to help firms evade central taxes or regulations

global strategy and multinationals entry mode choice this paper makes a case directed towards establishing the importance of global strategic considerations in choosing multinationals entry mode specifically it is our contention that beyond the environmental and transaction specific factors well established in the literature to affect the entry mode decision we should also consider the strategic relationship a multinational envisages between its operations across borders in reaching this decision after incorporating various global strategic variables into an eclectic framework of the factors influencing the entry mode choice this paper tests both the validity of the overall framework and the importance of each entry mode determinant in differ entiating among entry modes this is done based on ninety six multinational managers responses to a survey questionnaire concerning their entry mode decision experiences the results suggest that an express incorporation of global strategic variables into an analysis of the entry mode decision is warranted

decentralization of governance and development all around the world in matters of governance decentralization is the rage even apart from the widely debated issues of subsidiarity and devolution in the european union and states rights in the united states decentralization has been at the center stage of policy experiments in the last two decades in a large number of developing and transition economies in latin america africa and asia the world bank for example has embraced it as one of the major governance reforms on its agenda for example world bank 2000 burki perry and dillinger 1999 take also the examples of the two largest countries of the world china and india decentralization has been regarded as the major institutional framework for the phenomenal industrial growth in the last two decades in china taking place largely in the nonstate nonprivate sector india ushered in a landmark constitutional reform in favor of decentralization around the same time it launched a major program of economic reform in the early 1990s on account of its many failures the centralized state everywhere has lost a great deal of legitimacy and decentralization is widely believed to promise a range of benee ts it is often suggested as a way of reducing the role of the state in general by fragmenting central authority and introducing more intergovernmental competition and checks and balances it is viewed as a way to make government more responsive and efe cient technological changes have also made it somewhat easier than before to provide public services like electricity and water supply relatively efe ciently in smaller market areas and the lower levels of government have now a greater ability to handle certain tasks in a world of rampant ethnic cone icts and separatist movements decentralization is also regarded as a way of diffusing social and political tensions and ensuring local cultural and political autonomy these potential benee ts of decentralization have attracted a very diverse range

the role of oligarchs in russian capitalism using a unique dataset we describe the degree of ownership concentration in russian economy and its role in shaping economic and political institutions in russia in particular we find that russian oligarchs do control a substantial part of the economy while the relative weight of their firms in russian economy is huge they do not seem to be excessively large by the standards of the global economy where most of them are operating the oligarchs seem to run their firms more efficiently than other russian owners controlling for industry region and size

the virtues of gradualism and legitimacy in the transition to a market economy this paper presents a simplified model of sectoral restructuring in eastern europe a move towards allocative efficiency is desired by the reform minded government but the shift to higher productivity which such efficiency requires would lead to massive layoffs and labour reallocation in the transition period we look at the impact of political constraints unanimity and or majority worker approval on reform proposals when the government faces a heterogeneous workforce holding private information on relative outside opportunities when the budgetary consequences of exit compensations are so important as to make partial reforms preferable to full reforms gradualism emerges as the optimum in a dynamic context without government commitment it is also shown that under democratic majority rule a government in control of the agenda of reforms can win majority approval for plans which end up hurting majority interests intertemporally by threatening to switch majorities in future reform proposals this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item

economic exposure and integrated risk management most corporate risk management research focuses on particular risk exposures to the exclusion of other interrelated exposures by contrast this study models corporate risk exposures using a multivariate approach integrating the distinct exposures of interest to finance international business and strategy researchers the paper addresses the implications of multivariate modeling for corporate risk management some key methodological issues arising in empirical estimation of corporate economic exposures and directions for research on integrated risk management 1998 john wiley sons ltd

misreading liberalisation and privatisation the case of the us energy utilities in europe in response to energy market liberalisation and privatisation initiatives promoted by the eu and other european states in the 1990s a large number of us energy utilities expanded their activities in europe mainly through acquisitions the size of their investment was a decade later matched by the ensuing scale of their retreat wealth destruction and often forced exit combining interviews industry studies published financial data and company reports this article examines critically their strategy and in light of widespread failures seeks to answer the question of what went wrong it is argued that mistakes might have been avoided through greater appreciation of how market liberalisation evolves given changing government priorities and general sovereign risk

the exchange rate exposure of a global competitor this paper analyzes the exposure of operating cash flows to an exogenous exchange rate change for a firm operating internationally as a multimarket oligopolist i e a global competitor and facing demand that depends in a general way on the exchange rate it is shown that exposure is the sum of a base case exposure identified in other studies and two other components terms associated with exchange rate induced demand shifts and terms associated with competitors s reoptimization following the exchange rate shock in general the magnitudes of these additional terms are significant especially in the presence of asymmetries across markets and firms numerical examples are provided that incorporate asymmetries corresponding to stylized facts about some u s markets and u s manufacturers

the effect of national context on perceptions of risk a comparison of planned versus free market managers a model is developed to explain the effect of national context on risk related decisions an essential feature of risk related decisions is substantial uncertainty or inadequate information as well as significant consequences regarding future outcomes we argue that differences in information flows and consequences across national institutional environments affect the perceived uncertainty of decision situations for this reason the institutional environment in which managers reside should play a fundamental and systematic role in influencing their perceptions of risk we test our model on managers from two environments that contrast in terms of information and consequences related to risk a free market economy the u s and a centrally planned economy the czech republic in 1992 our results indicate that the institutional environment does indeed play a strong and systematic role in explaining managers risk related decisions thus national environment appears to be an important contextual condition to which the propensity to take risks is sensitive

the impact of income shocks on health evidence from cohort data we study the eect of permanent income innovations on health for a prime aged population using information on more than half a million individuals sampled over a twenty five year period in three dierent cross sectional surveys we aggregate data by date of birth cohort to construct a synthetic cohort dataset with details of income expenditure socio demographic factors health outcomes and selected risk factors we then exploit structural and arguably exogenous changes in cohort incomes over the eighties and nineties to uncover causal eects of permanent income shocks on health we find that such income innovations have little eects on health but do aect health behaviour and mortality

government intervention in the venezuelan petroleum industry an empirical investigation of political risk two important aspects of political risk analysis that have not received much attention in the literature are a the reasons why multinational firms experience different types of intervention and b the timing of intervention in order to address these issues this research develops a conceptual model of political risk based on the premise that host government intervention is related to specific objectives of the government vis a vis multinational firms information reflecting the attainment of objectives motivates the government to intervene in a given manner the application of this model to the case of the venezuelan petroleum industry from years 1947 to 1976 provides some support for this model and gives insight into the timing of specific types of intervention

understanding the structural characteristics of a firm s whole buyer supplier network and its impact on international business performance building on the network theory and the concept of organizational ambidexterity we investigate the impact of structural characteristics of a firm s whole buyer supplier network network density betweenness centralization and average clustering coefficient on its international business ib performance we also explore the moderating roles of average path length and pagerank centrality using a manually collected dataset and a robust empirical methodology we find that while network density is negatively related betweenness centralization and average clustering coefficient have an inverted u shape and a u shaped relationship with ib performance respectively we also find significant moderation effects and in the process we show the economic importance of firms whole buyer supplier network to their ib performance we contribute to the international business and whole buyer supplier network literature

explaining the national cultural distance paradox past studies of the relationship between national cultural distance and entry mode choice have produced conflicting results some scholars find cultural distance associated with choosing wholly owned modes others find cultural distance linked to a preference for joint ventures in this paper we provide both theoretical and empirical evidence to explain the discrepant findings and thus help to resolve the national cultural distance paradox

foreign investor reactions to risk and uncertainty in antitrust u s merger policy investigations and the deterrence of foreign acquirer presence motivated by the potential for antitrust and competition policies to be protectionist in effect we formulate the theoretical prior that merger policy deters foreign acquirer participation in local m a markets the policy risk and policy uncertainty characteristic of merger review may negatively affect foreign acquirers more so than domestic acquirers thereby disadvantaging foreign acquisitions of local firms and deterring future cross border investment activities we test this prior by employing sector level data on u s merger policy investigations and foreign acquirer presence in u s m a markets over the 2002 2017 period our panel data methodological approach indicates that the risk and uncertainty characteristic of u s merger policy disproportionately deters the acquisition activities of foreign investors the empirical results also suggest that the application of competition and merger policies in other national jurisdictions where there is less of a strong commitment to antitrust principles might also be effectively protectionist

a survey of corporate programs for managing terrorist threats this article reports on a survey of united states based multinational corporations mncs and the corporate programs they use to reduce the impact of terrorism it was found that less than 50 of the mncs surveyed had formal programs to deal with a terrorist attack most of the mncs that did have an anti terrorist program spent their money on security equipment and not on training executives and their families the training that did take place concentrated on handling weapons and avoiding being kidnapped respondents were also critical of the federal government s lack of assistance in dealing with terrorists

environmental risks and joint venture sharing arrangements multinational enterprises mnes have responded to the open door policies of socialist countries in recent years by investing in their economies through joint ventures mnes must formulate their investment strategies to control and manage the environmental risks peculiar to a traditional centrally planned economy cpe in which contextual and transactional environments are blurred joint venture sharing arrangements may be structured to control exposures to uncertainties and to align the interests of transactional parties mostly state owned enterprises to those of the venture this study tests the hypothesis that a foreign investor s share in a joint venture in a cpe is inversely correlated with 1 the amount of uncertainties and risks and 2 the external dependency of the venture on the contextual and transactional relationships of the host country the hypothesis is supported by empirical evidence from data on american joint ventures in china

the politics of market socialism the debate over market socialism has ignored the importance of the assumptions about the objectives of politicians in determining resource allocation theory and evidence suggest that totalitarian socialism does not lead to efficient resource allocation because dictators do not maximize social welfare but democratic governments have political objectives different from social welfare as well the authors argue that because these governments command greater resources have more control rights under socialism democratic socialism even if it could exist is a less efficient system than democratic capitalism thus the political case against market socialism is even stronger than the economic case

whither russia a review of andrei shleifer s a normal country in this review the author reflects on the heated debates around views about russia s postcommunist transition expressed in essays collected in new andrei shleifer s book a normal country russia after communism harvard university press 2005 which were initially published at different times during transition she focuses on the three questions that have been in the center of the debate among academics and policymakers what should the sequencing and the speed of reforms be should a country have political centralization for fiscal decentralization to be efficient is russia normal the author argues that russia s most recent history provides convincing evidence in support of the logic of political and economic transformation as it was understood by shleifer as early as the beginning of the 1990s

federalism chinese style the political basis for economic success in china china s remarkable economic success rests on a foundation of political reform providing a considerable degree of credible commitment to markets this reform reflects a special type of institutionalized decentralization that the authors call federalism chinese style this form of decentralization has three consequences first it fosters competition not only in product markets but also among local governments for labor and foreign capital this competition in turn encourages local government experimentation and learning with new forms of enterprises regulation and economic relationships second it provides incentives for local governments to promote local economic prosperity finally it provides a significant amount of protection to local governments and their enterprises from political intrusion by the central government

the demise of expropriation as an instrument of ldc policy 1980 1992 this paper reports data collected on expropriation activity by developing countries from 1980 1992 extending previous work by kobrin 1984 kobrin s assumption that expropriation activity would continue to decrease over time and his reasons for this assumption are supported the paper introduces recent phenomena which further indicate that expropriation is unlikely to resurface in the near future as a source of multinational corporation developing country contention many developing countries now protect foreign direct investors from expropriation the broad scale movement in developing countries to privatize state owned enterprises also indicates that governments will not be eager to replace private sector activity with state ownership