institutional exceptions on global projects a process model this inductive study offers an examination of 23 cases in which informants from firms engaged in large scale global projects reported unforeseen costs after failing to comprehend cognitive cultural normative and or regulative institutions in an unfamiliar host societal context the study builds on the conceptual framework of institutional theory the findings which include propositions and a generic narrative model contribute to theoretical knowledge of how institutional exceptions arise how they are resolved and how they typically involve three general phases ignorance sensemaking and response the findings also articulate the kinds of institutional transaction costs that an entrant incurs in each of the three phases and the conditions that lead to the growth of these costs

income dispersion and counter cyclical markups recent advances in measuring cyclical changes in the income distribution raise new questions how might these distributional changes affect the business cycle itself we show how counter cyclical income dispersion can generate counter cyclical markups in the goods market without any preference shocks or price setting frictions in recessions idiosyncratic labor productivity shocks raise income dispersion lower the price elasticity of demand and increase imperfectly competitive firms optimal markups the calibrated model explains not only many cyclical features of markups but also cyclical and long run patterns of standard business cycle aggregates

what do we know about macroeconomics that fisher and wicksell did not the answer to the question in the title is a lot in this essay i argue that the history of macroeconomics during the 20th century can be divided into three epochs

nonparametric bounds on the returns to language skills this paper applies the theoretical literature on nonparametric bounds on treatment effects to the estimation of how limited english proficiency lep affects wages and employment opportunities for hispanic workers in the united states i analyse the identifying power of several weak assumptions on treatment response and selection and stress the interactions between lep and education occupation and immigration status i show that the combination of two weak but credible assumptions provides informative upper bounds on the returns to language skills for certain subgroups of the population adding age at arrival as a monotone instrumental variable also provides informative lower bounds copyright 2005 john wiley sons ltd

national and organizational culture differences and international joint venture performance this study examines the effect of dimensions of national and organizational culture differences on international joint venture ijv performance based on data from a survey of executives from joint ventures between indian partners and partners from other countries we found that the presumed negative effect from culture distance on ijv performance originates more from differences in organizational culture than from differences in national culture

location and the multinational enterprise john dunning s thoughts on receiving the journal of international business studies 2008 decade award a retrospective by john h dunning on location and the mne written in the form of responses to questions posed by rajneesh narula in an interview recorded at the university of reading which was shown at the jibs decade award session at the aib annual meetings in milan june 2008

language friction and partner selection in cross border r d alliance formation how does language friction affect alliance formation language friction is a form of cultural friction arising from structural differences in the respective languages used by potential partners to reason and solve problems together a little language friction may prompt partners to rethink solutions thereby enhancing collaboration but excessive friction may impede collaboration we develop a language friction index lfi to quantify relative differences in linguistic structure for any language pair utilizing a unique data set of semiconductor design activities 1988 2001 our empirical analysis finds an inverted u shaped relationship between partners lfi and the likelihood of cross border research and development rd 2 the effects of language friction are economically significant and strategically consequential 3 certain aspects of language friction occur independent of language proficiency and persist despite the use of lingua franca to reduce language barriers 4 linguistic diversity is an indirect marker of cognitive diversity which is useful in boosting creativity especially in first time collaborations 5 beyond r d alliances language friction may also influence other types of strategic interactions and organizational processes

markups aggregation and inventory adjustment in this paper i suggest a unified explanation for two puzzles in the inventory literature first estimates of inventory speeds of adjustment in aggregate data are very small relative to the apparent rapid reaction of stocks to unanticipated variations in sales second estimates of inventory speeds of adjustment in firm level data are significantly higher than in aggregate data the paper develops a multisector model where inventories are held to avoid stockouts and price markups vary along the business cycle the omission of countercyclical markup variations from inventory targets introduces a downward bias in estimates of adjustment speeds obtained from partial adjustment models when the cyclicality of markups differs across sectors this downward bias is shown to be more severe with aggregate rather than firm level data similar results apply not only to inventories but also to labor and prices montercarlo simulations of a calibrated version of the model suggest that these biases are quantitatively significant

overtime labor employment frictions and the new keynesian phillips curve abstract this paper presents a new keynesian nk model that is extended to differentiate between straight time and overtime work the model proposes that the new keynesian phillips curve nkpc should be estimated with marginal cost measured in terms of overtime labor the resulting coefficient estimates are in accordance with theory and statistically significant for the hybrid nkpc which allows for backward looking price setters but not for the purely forward looking nkpc in the hybrid model backward looking behavior is found to be predominant the paper also shows that the incorporation of employment frictions predetermined employment and convex adjustment costs in nk models helps reconcile the frequent price changes found in the microdata with the degree of sluggishness in inflation adjustment to output changes at the macro level

variable capital utilization and international business cycles this paper develops a two country international business cycle model with variable capital utilization using a standard depreciation in use technology variable capital utilization significantly reduces the required size of productivity shocks needed to replicate observed output volatility by 20 40 further the model generates positive comovement across countries in wages hours and investment while preserving empirically accurate predictions regarding the relative cross country correlations of output and consumption and the countercyclical behavior of net exports finally accounting for variable capital utilization reduces cross country correlation of true productivity shocks relative to that of the standard solow residual

demand markups and the business cycle abstract we generalize the demand side of a real business cycle model introducing non homothetic intratemporal preference aggregators over differentiated final goods under monopolistic competition this generates markups which vary with aggregate consumption we estimate a flexible preference specification through bayesian methods and obtain results consistent with substitutability across goods that is increasing in consumption the associated markup variability magnifies the propagation of shocks through additional substitution effects on labor supply and consumption

seeking commonalities or avoiding differences re conceptualizing distance and its effects on internationalization decisions past research established distance s key influence on internationalization however theoretical issues methodological challenges and inconsistent results hinder scholarship on why distance plays such an influential role to address these problems we draw from cognitive research on similarity comparisons to re conceptualize distance and test a model of internationalization decisions analyzing the verbal protocols of executives considering a series of internationalization opportunities we demonstrate that over and above objective distance indicators considerations that reduce distance commonalities and considerations that augment distance differences have distinct effects on decisions of where when and how to internationalize as such our study contributes new insights for understanding the nature and effects of distance across different dimensions of distance and internationalization decisions moreover internationalization theories have come to emphasize different theoretical rationales for explaining the influential role of distance on different decisions by integrating these rationales together with the notion that distance reducing commonalities and distance augmenting differences have distinct implications for internationalization decisions we introduce the notion that it is not only the addition of distance considerations that matters but also the directionality of such changes doing so our study points to new theoretical and methodological insights to help address prior criticisms and advance future research

evaluating microfoundations for aggregate price rigidities evidence from matched firm level data on product prices and unit labor cost a number of competing business cycle models have recently emerged all of which can explain why nominal shocks have real effects 1 although sharing a large number of common features a key difference between these models lies in the assumptions of how firms set prices and process information yet there exists very little direct micro evidence on the credibility of these assumptions this paper uses detailed data on product prices and unit labor cost merged at the firm level to evaluate competing sets of assumptions regarding firms price setting behavior thereby we provide firsthand evidence on the empirical relevance of the microfoundations of different dynamic stochastic general equilibrium dsge models

beyond cultural distance switching to a friction lens in the study of cultural differences my 2001 article provided a critical review of one of the most popular constructs in international business and in the management and business literature as a whole namely cultural distance it listed various illusions implicit yet unsubstantiated and refutable assumptions that underpinned a construct set to capture the essence of cultural differences the paper questioned the validity of the measure the resultant findings obtained in such international business applications as foreign direct investment patterns sequence entry mode and performance and ultimately the wisdom of continuing the use of the measure and its underlying construct in this retrospective i review subsequent work that tested some of the original observations the impact the article has had and in particular how we can redirect research away from the static cultural distance paradigm toward the dynamic interaction of the actual entities that come into contact in international business

language training language proficiency and earnings of immigrants in norway this paper uses a simple probit model to determine the impact of language training on the language proficiency of third world immigrant men in norway it also estimates the labour market returns to norwegian language proficiency the results show that immigrants who participate in language training programme are more likely to acquire speaking and reading proficiencies in norwegian language than those who do not contrary to expectation language proficiency has no significant effect on immigrants earnings a probable explanation may be that immigrants need norwegian language proficiency to get into jobs in the norwegian labour market once they are in employment their wages are not necessarily determined by their proficiency in norwegian consistent with the assimilation hypothesis earlier waves of immigrants have higher earnings than do more recent waves and part of the initial earnings deficit experienced by more recent immigrants can be attributed to language deficiency there was no evidence of s

cultural friction in leadership beliefs and foreign invested enterprise survival cultural friction posits that cultural differences may be either synergistic or disruptive but does not specify when or how synergies or disruptions emerge we theorize that synergies will emerge in foreign invested enterprises fies when cultural differences in leadership beliefs are less central to the host nation s cultural identity while disruption will occur when differences are in more culturally central leadership beliefs analyzing survival data from 274 fies in china we found support for these hypotheses with five of the six globe leadership dimensions as predicted differences in the participative and team oriented dimensions were associated with higher firm death while differences in the charismatic autonomous and self protective dimensions were associated with firm survival our results indicate that while there are areas where differences may indeed need to be accepted or minimized there are other areas where differences can be beneficial this requires that managers identify more central aspects of local culture to determine whether to minimize differences or to leverage their synergistic potential

whole country of origin network development abroad the support that networks offer during the internationalization process is well documented in the international business literature however this work has primarily focused on firm level networks while underappreciating the cooperative behaviors that may emerge among organizations in the pursuit of common network level goals to better understand these concerted and coordinated actions we engaged in a qualitative examination of two clusters of italian organizations abroad we observed that goal directed and governed networks emerged in these clusters bounded by their common desire to support italian firms internationalization this insight underlies our contributions to the international business and whole network literatures we offer a process model outlining the emergence of a particular type of whole network the country of origin network this process is much more distributed emergent and context dependent than previously theorized our model illustrates that network development involves the active and coordinated efforts of diverse actors working to create infrastructure that can be accessed by and shared between new and existing organizations our finding that both networks were governed utilizing a distinct but context appropriate governance structure provides new insight into how networks support internationalization furthermore it illustrates that whole network level support is distinct from but complementary to the firm to firm support highlighted in previous studies

customer markets credit market imperfections and real price rigidity according to standard theory an increase in demand should raise prices of goods given factor prices empirically however prices appear to be unaffected by short run variations in demand this paper suggests an explanation of this observation if customers react slowly to price changes and credit markets are imperfect prices may be unchanged or even fall when demand increases the reason is that when demand is high profits are high and firms can compete more intensely for customers without increasing their borrowing copyright 1991 by the london school of economics and political science

solving the single country sample problem in cultural distance studies selecting appropriate samples in cultural distance research is vital to producing valid empirical results over 80 of empirical cultural distance studies use a sample comprised of either a single home country with varying host countries or a single host country with varying home countries when difference scores are used in the calculation of cultural distance based on single country samples the resulting cultural distance measures typically are highly correlated with one or more of the varying countries underlying national culture dimensions making it impossible to determine whether findings are due to cultural distance or to varying countries national culture effects this is referred to as a confounded variables problem and means that for an overwhelming number of cultural distance studies we cannot with certainty have confidence in the verity of their findings to resolve this uncertainty we propose that cultural distance scholars select samples comprised of at least two home host countries we empirically demonstrate that two country samples where most of the national culture dimensions for the two countries differ create certitude with respect to results eliminating the cultural distance confounded variables problem we describe the single country sample problem illustrate the proposed a priori two country solution and suggest avenues for future research

endogenous market structures and optimal taxation this article provides optimal labour and dividend income taxation in a general equilibrium model with oligopolistic competition and endogenous firms entry in the long run the optimal dividend income tax corrects for inefficient entry the dividend income tax depends on the form of competition and the nature of the sunk entry costs in particular it is higher in market structures characterised by competition in quantities rather than those characterised by price competition oligopolistic competition leads to an endogenous countercyclical price markup as a result offsetting the distortions over the business cycle requires deviations from full tax smoothing

inflation variability real wage variability and production inefficiency in recent years economists have paid considerable attention to the relation between the rate of inflation and its temporal variance the consensus emerging from this discussion is that there exists a strong positive relation between the inflation rate and its temporal variance see for example okun 1971 gordon 1971 jaffe and kleiman 1977 and foster 1978 clearly the increased variability of the inflation rate is likely to involve social costs that concern inefficiency in consumption and in production thus in his nobel lecture friedman 1977 says the growing volatility of inflation and the growing departure of relative prices from the values that market forces alone shall set combine to render the econoniic system less efficient p 470 in general the interpretation given to production inefficiency resulting from increased variability in the inflation rate is that of a reduction in output to a level lower than that occurring under price stability for example levi and makin interpret friedman s inefficiency argument thus from the two components of friedman s argument we have that high inflation accompanied by high variability of inflation will mean a lower output levi and makin 1980 p 1023 it is our purpose in this paper to elaborate on the concept of the production inefficiency caused by increased inflation variability iv where we focus on the variability in the real wage caused by inflation variability we suggest a concept of inefficiency of production that relates average changes in the use of labour to average changes in output specifically it is shown that iv alters output and or labour employment in a way that is inferior to the relation between output and employment under stable prices that we suggest is the crux of production inefficiency resulting from iv this production inefficiency will emerge as a result of iv independently of whether output rises or falls as a result of iv indeed our analysis will illustrate that mean output may increase or decrease so that by using output alone as an index of efficiency we may obtain the unlikely result that iv raises production efficiency one result we derive en route is that under plausible assumptions about the production function labour employment may on average rise with iv notwithstanding this we show that efficiency in production declines this result may be used as an interpretation of the inefficiency concept as used by friedman thus friedman says these developments clearly lower economic efficiency it is less clear what their effect is on recorded unemployment 1977 p 466 we proceed by considering the basic model and showing the ambiguity of the effect of inflation variability on mean output in section i in section ii we show that iv introduces a production inefficiency defined upon the

unemployment in britain male unemployment in britain has risen from around 2 per cent in the 1950s to around 17 per cent in 1985 see figure 1 the figures are for male unemployment because there is no consistent series for women 1 even more remarkably unemployment has fallen in only three years out of the last twenty 1973 1978 and 1979 to account for this we need a model that explains both changes in the natural or non accelerating inflation rate of unemployment nairu and deviations from it we use a three equation supply side model centred on the labour market this has two main features the first concerns the determination of employment in the short run the labour demand function that we use cuts through the fruitless debate now raging especially in europe as to whether current unemployment is classical or keynesian according to the classical view employment is too high because real wages are too high according to the keynesian view real wages are not binding and unemployment is high because the product market does not clear with prices too high relative to nominal demand the whole debate is set in the framework of perfect competition yet in perfect competition prices are set by impersonal forces and it is not clear what could possibly stop prices clearing the market it is much more reasonable to think of prices as being set by imperfectly competitive firms existing prices being the best they can think of given the demand they face in this context firms demand for labour will depend on both the real product wage and the level of real aggregate demand this is the demand function we estimate and it conforms both to common sense and to the data however this does not imply that employment can be made to grow without limit by pumping up real demand for in the medium term when price surprises are eliminated our model determines three variables employment real wages and real demand on the basis of three equations an employment equation a price equation and a wage equation thus in the medium term there is a natural level of employment and corresponding to this a natural level of real aggregate demand the second key feature of our model concerns the medium term determination of unemployment in the medium term the planned mark up of wages over prices in wage settlements must be consistent with the mark up of prices over wage costs in employers pricing behaviour for if wage setters try to set real product wages higher than is consistent with employers pricing behaviour this generates ever increasing inflation thus the key to understanding unemployment in the medium term is the behaviour of wage setters if events occur that push them towards too high real wages then unemployment has to rise to offset these influences we shall call these influences wage pressure variables or push factors and they are clearly crucial in understanding unemployment the variables here include the social security system employment protection

competition effects of price liberalization in insurance insurance services have a prominent role in modern societies empirical evaluation of market interactions in insurance is however scarce to fill this gap two models are proposed each captures the main features of either regulated or deregulated markets three levels of decisions reinsurance sales effort and prices generate testable predictions on firm behavior with respect to sales effort choices recent evolution of the portuguese market provides a natural data set for application estimation before and after price deregulation reveals a noticeable change in behavior coordination has characterized the interaction under price regulation competition between firms has increased after deregulation copyright 1996 by blackwell publishing ltd

an open economy new keynesian phillips curve for the u k abstract we estimate a pricing equation or new keynesian phillips curve nkpc obtained from a structural dynamic model of price setting based on rotemberg 1982 sticky prices in the united states journal of political economy 90 6 1187 1211 and extended to capture employment adjustment costs and the openness of the united kingdom this model nests the baseline gali and gertler 1999 inflation dynamics a structural econometric analysis quarterly journal of economics 110 127 159 and sbordone 2002 prices and unit labor costs a new test of price stickiness journal of monetary economics 49 265 292 relationship between inflation and marginal cost in the limiting case of no employment adjustment costs no impact of relative prices of imported inputs on real marginal cost and a constant equilibrium markup our findings indicate that each of our modifications to the baseline nkpc model is important for u k data so that inflation in the u k is explained both by changes in employment and by changes in real import prices in general and real oil prices in particular external competitive pressures also seem to affect u k inflation via their impact on the equilibrium price markup of domestic firms

distance without direction restoring credibility to a much loved construct in this commentary we build on shenkar s 2001 award winning critique of cultural distance arguing that most distance constructs in fact suffer the same flaws because they oversimplify the relationship between countries overlook their subjective and context specific nature and pay insufficient attention to the mechanisms through which distance operates the idea of distance however has intrinsic value moreover its considerable appeal and undeniable effectiveness have made it a well entrenched construct therefore we see merit in redressing its weaknesses and offer several suggestions for doing so these include allowing for the influence of firm level characteristics that either moderate the effects of distance or render distance at least in part subjective with varying consequences for different mnes maintaining directionality by distinguishing between distance and the tendency toward a particular characteristic and acknowledging asymmetry and conceptualizing the effects of distance and the mechanisms through which it operates more carefully by drawing on concepts and measures from a variety of disciplines by offering ways to strengthen both its theoretical foundations and measurement we hope to enhance the usefulness of one of international business theory s most central constructs

foreign trade elasticities and import discipline this paper provides new evidence on the trade as discipline7rsquo hypothesis by considering the determination of price cost margins with a panel of 41 four digit us food manufacturing industries from 1972 to 1987 following the empirical specification suggested by competitive fringe oligopoly models we include estimated domestic demand elasticities and cross price elasticities of import demand as explanatory variables and the empirical results confirm the importance of these variables in assessing the hypothesis

endogenous market structures and the business cycle we propose a flexible prices model where endogenous market structures and search and matching frictions in the labor market interact endogenously the interplay between firms endogenous entry strategic interactions among producers and labor market frictions represents a strong amplification channel of technology shocks on labor market variables and helps addressing the unemployment volatility puzzle consistently with u s evidence new firms create a large fraction of new jobs and grow faster than more mature firms net firms entry is procyclical and the price mark up is countercyclical

business cycles and the relationship between concentration and price cost margins using a newly constructed panel data base we examine changes in price cost margins in 284 manufacturing industries between 1958 and 1981 a key finding is a dramatic narrowing of the spread between the margins of concentrated and unconcentrated industries over this period we provide evidence that this narrowing is a result of the greater sensitivity of price cost margins in more concentrated industries to demand fluctuations this finding is robust to the inclusion of other industry variables and to measures of import competition the results indicate that cross sectional estimates of the concentration margins relationship are likely to be both biased and misleading

national culture and international business a path forward the anniversary of kogut and singh s construct of cultural distance is a good time to reflect on this immensely popular but flawed construct assess the efficacy of the remedies offered for its reform and refinement and chart an alternative approach that represents a departure from distance as the dominant paradigm with which to view and analyze the impact of national culture on cross border business the proposed alternative a contact based framework shifts attention from what sets cultures apart towards the actual cultural interface that firms and their executives experience when participating in an international transaction with this lens the cultural exchange is regarded as an evolving interactional process of engagement which commences prior to a transaction and proceeds through the life of the inter party arrangement and beyond and whose potential to yield negative or positive outcome is subject to specific contingencies implications for theory methodology and practice are delineated

business cycles in international historical perspective business cycle models seek to answer the question of why economies go through cycles of recession and recovery or boom and bust any theory of the business cycle makes two sorts of claims what shocks are most important in disturbing the economy and what economic structure is necessary for propagating these shocks for example one common explanation of business cycles begins with monetary shocks and then seeks to explain why monetary shocks are not purely neutral as neoclassical theory would have it and instead have real effects at least in the short term early models in this vein were often implicitly or explicitly based on the proposition that markets do not clear continuously early equilibrium real business cycle theories instead emphasized the importance of real shocks especially to technology which may cause socially efficient fluctuations even when markets are always in equilibrium more recent models have attempted to marry the equilibrium approach to macroeconomics with the substantive keynesian ideas that money is not neutral and that economic fluctuations are costly new keynesian theories of the business cycle admit the possibility of a number of economic shocks including monetary and technology shocks but then focus on explaining how nominal price rigidities within the economy can turn these shocks into recessions or booms other models show that business cycles driven by keynesian animal spirits are consistent with rigorous microfoundations and rational expectations seeking empirical evidence for and against these various approaches we turn business cycle theories loose on perhaps the greatest macroeconomic laboratory

national culture and expatriate deployment we hypothesize that expatriate deployment is a control function predicted by home country culture dimensions with transaction cost and agency repercussions rather than culture in the aggregate this departure from the traditional conceptualization and measurement of cultural impact also yields a hypothesized asymmetrical effect which is tested for a multi country sample of 236 multinational subsidiaries using multiple measures of national culture hypotheses are supported with assertiveness and power distance confirmed as prime predictors of expatriate deployment

the determination of profit margins in uk manufacturing this paper examines the determinants of profit margins in 91 u k manufacturing industries over the period 1983 86 it considers how the inclusion of labor market characteristics in empirical industrial organization specifications affects the estimated concentration margins relationship the empirical work pays detailed attention to the endogenous nature of variables derived from structural industrial organization models the authors report instrumental variables estimates of margins equations in which there emerges a significant role for labor market characteristics indeed both unionization and industrywide unemployment are found to depress profit margins the impact of concentration is seen to be biased downward when these variables are omitted

role conflict and role ambiguity of chief executive officers in international joint ventures this study examines the organizational and personal correlates of role conflict and role ambiguity of chief executive officers heading international joint ventures role conflict was found to be lower when the number of parent firms was higher and when the ceo had spent more years with the organization role ambiguity was found to be lower when the ceo had more years of education when the power distance and masculinity femininity gap between parents were lower and when the individualism collectivism and uncertainty avoidance gaps were higher the implications of these findings for role theory and international management are discussed

the effect of national culture on the choice of entry mode characteristics of national cultures have frequently been claimed to influence the selection of entry modes this article investigates this claim by developing a theoretical argument for why culture should influence the choice of entry two hypotheses are derived which relate culture to entry mode choice one focusing on the cultural distance between countries the other on attitudes towards uncertainty avoidance using a multinomial logit model and controlling for other effects the hypotheses are tested by analysing data on 228 entries into the united states market by acquisition wholly owned greenfield and joint venture empirical support for the effect of national culture on entry choice is found

european inflation and the new keynesian phillips curve author affiliation sandeep mazumder mazumds wfu edu acknowledgment i wish to thank the anonymous referees for their valuable comments and suggestions that helped shape this manuscript 1 introductionon june 1 1998 the european central bank came into being with the goal of maintaining price stability in the euro zone 1 the ability to describe inflation as accurately as possible has long been a key goal that macroeconomists pursue and in light of the introduction of the euro currency in the late 1990s this topic is particularly pertinent in europe to this end recent research has devoted a great deal of time to the new keynesian phillips curve nkpc a model that examines price setting behavior based on nominal rigidities founded on the work of authors such as taylor 1980 and calvo 1983 this model has not been without controversy but even so it remains a workhorse of macroeconomics perhaps attributable to the lack of a better alternative in particular the model is thought to have first seen genuine empirical success when gali and gertler 1999 estimated the nkpc using u s data and found that the model describes changes in u s prices considerably well indeed gali gertler and lopez salido 2001 conduct a similar exercise using european inflation data and find that the nkpc is even more applicable to the euro area than for the united states over the period from the 1970s to the latter 1990s one of the key innovations of these articles is that the labor income share equivalently real unit labor costs is used as the proxy for real marginal cost in the nkpc as opposed to previously used proxies such as detrended real output following in the same vein as gali gertler and lopez salido 2001 others have also found that the nkpc can be accurately used to describe inflation in europe for example rumler 2007 estimates the labor share nkpc for nine euro area countries and finds evidence in favor of the model while jondeau and bihan 2005 argue that the labor share nkpc may describe european inflation dynamics well depending on the number of leads or lags that one is willing to include into the model similarly leith and malley 2005 use the nkpc to find greater evidence of price stickiness in europe as compared to the united states where the proxy for real marginal cost is labor s share of income while some authors have questioned the empirical performance of the nkpc in europe when using different econometric techniques such as bardsen jansen and nymoen 2004 paloviita 2005 lawless and whelan 2007 boug cappelen and swensen 2010 a more obvious problem remains with the approach of gali gertler and lopez salido 2001 to estimating the nkpc for europe that has not received much attention in the literature that is the labor income share cannot be used to proxy for real marginal cost in the nkpc if we are to address the cyclicality of real marginal cost in a manner in keeping with predictions from basic microeconomic theory namely we believe that marginal cost is likely to be procyclical over the business cycle whereas the labor income share in fact moves countercyclically furthermore the labor share proxy of real marginal cost is founded on the assumption that labor input can be freely adjusted at a fixed real wage rate the problem with this assumption is that it ignores the notion of labor adjustment costs which is something that cannot reasonably be discounted specifically one can think of labor as being the product of the number of workers in an economy and the respective number of hours that they work seminal work by oi 1962 has argued that employment is not perfectly flexible in the short run something that the derivation of the labor share marginal cost proxy does not take into account this article reconsiders the derivation of a proxy for real marginal cost in a similar manner to that done in gali and gertler 1999 and gali gertler and lopez salido 2001 with the crucial difference that we account for the existence of labor adjustment costs

an adjustment cost model of long term employment in japan summary a dynamic factor demand model is presented which pays special attention to the prevalence of a longterm employment relationship in japan the model is based on the representation of technology by a variable cost function with adjustment costs for employment and capital stock where the variable cost consists of the sum of overtime costs and materials costs with employment being quasi fixed and scheduled hours institutionally regulated short run adjustments are mostly made by overtime hours application to a time series data on the japanese electrical machinery industry indicates quasi fixity of capital and employment and reproduces short run overshooting of overtime hours to compensate for the sluggish adjustment of employment

costs prices and profitablity in uk manufacturing the 1984 input output tables make it possible to estimate directly the cost structure of any industrial sector the results of this calculation are presented for the non food manufacturing sector for the period 1970 87 this cost estimate is found to be part of a co integrating set with output prices in contrast to the specification implied by a cobb douglas production function the other elements of the equilibrium vector are an index of capacity utilization positively related to the mark up and the variance of inflation proxying inflation uncertainty which is negatively related import prices have an indirect effect on the mark up via demand

the cyclical behavior of marginal cost and price the author examines the cyclical behavior of price marginal cost margins for u s manufac turing after 1956 short run marginal cost is markedly procyclical this is primarily due to procyclical overtime payments incurred beca use employment is not perfectly flexible in most industries output price fails to respond to the cyclical movement in marginal cost so price marginal cost margins are markedly countercyclical the res ults contradict business cycle theories that explain low production i n a recession by a high real cost of producing they support theories that explain low production in a recession by the inability of firms to sell their output copyright 1987 by american economic association

the response by the norwegian aluminium industry to changing market structure abstract this paper analyses how changes in market structure have affected the margins measured by the lerner index of norwegian aluminium plants instead of showing the expected negative trend due to increased competition internationally the margins are found to move procyclically around a constant that significantly exceeds zero three explanations for this stability in the levels of the margins are identified a better exploitation of scale economies increased productivity and product specialisation which allows norwegian producer prices to increase more rapidly than the international reference price

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

dynamic factor demands and the effects of energy price shocks a dynamic model is used to understand how sharp changes in energy prices affect investment behavior employment and energy use the authors discuss the theory behind their model selection model specifications estimation methods and data list parameter estimates and elasticities for the selected model and describe the simulations they conclude that 1 the data strongly reject the hypothesis of constant returns to scale within their specification of aggregate production 2 the data indicate adjustment costs on labor are small and 3 their results help reconcile some of the conflicting estimates of energy demand elasticities appearing in recent literature 23 references 3 figures 3 tables

labor market discrimination against hispanic and black men h ispanic american men have lower average wage rates than white non hispanics in 1975 the average white non hispanic male wage earner in the united states earned 5 97 an hour mexican men earned 4 31 72 as much as white non hispanics puerto rican men earned 4 52 76 as much and cuban men earned 5 33 89 as much as white non hispanics by way of comparison black men s average wages in 1975 were 4 65 78 of the white male wage several possible reasons for the hispanics lower wages come to mind among them are age and education geographic location immigration language difficulties and discrimination for example as shown in table 1 mexicans and puerto ricans are younger on average than the white non hispanic population and earnings tend to rise with age hispanics have lower average levels of education than white non hispanics and wages are positively associated with education many mexican americans live in the southwest where prices are relatively low moreover hispanics are more likely to be recent immigrants and to lack fluency in english than white non hispanics and so to be at a disadvantage in the labor market in addition there is a widespread belief that hispanics suffer from employment discrimination and cannot obtain the wages that their human capital would command if they were non hispanic whites how much of the wage differentials described above are due to each of these factors and to other inter group differences in wage related characteristics in particular how much impact does labor market discrimination have on the average hispanic man s wage and how does this compare with discrimination against blacks this paper provides answers to these questions a few other efforts have been made to analyze the relative earnings of hispanic and white nonhispanic men using 1960 and 1970 census data fogel 1966 poston and alvirez 1973 poston alvirez and tienda 1976 long 1977 and gwartney and long 1978 we use more recent data from the 1976 survey of income and education this data set enables us to measure wage rates more accurately and to specify the wage function more completely than does the census unlike previous analysts in estimating the wage function we take account of possible selectivity bias due to the distinction between average wage offers and average observed wages thus we hope to obtain a more accurate and up to date measure of labor market discrimination against hispanic men section ii explains the method used to separate the minority white non hispanic wage differential into the portions due to differences in average characteristics and the portion due to differences in unobserved factors and discrimination taking into account the possibility of selectivity bias in the observed wage sample section iii describes the data used in the study and the specification of the wage equation the breakdown of the observed wage differentials into components due to differences in participation in the wage and salary sector local price levels average characteristics and discrimination are presented in section iv section v summarizes our findings and discusses their implications for efforts to improve the economic situation of hispanics in the united states

a survey of new keynesian theories of aggregate supply and their relation to industrial organization i survey the recent literature on the phillips curve along the way i will try to relate this literature to topics of interest to industrial organization i will also point out the gaps in our understanding and places where more careful micro economic analysis would be helpful to macroeconomists in the conclusion i summarize what an industrial organization economist might take away from this literature

gender earnings and the english skill acquisition of hispanic workers in the united states i introduction recently the number of english deficient residents has escalated in the united states according to the 1980 and 1990 decennial censuses individuals aged five years and older whose reported english verbal skills are not well or not at all rose from 4 22 million 2 of the population to 6 67 million 3 this percentage is more pronounced in the public schools according to han et al 1997 over 2 12 million students 5 1 of the 41 62 million public school students in grades k 12 were identified as being limited english proficient lep in the 1993 1994 school year other estimates such as those made by henderson abbott and strang 1993 put the public school lep share at over 6 increases in the lep numbers mirror the growth in the immigrant population as well as the relatively high fertility rates of language minority americans the hispanic and asian pacific islander ethnic groups account for much of this growth as shown by the national research council 1997 hispanics in fact are projected by the u s census bureau 1996 to become this nation s largest racial ethnic minority group in less than a decade policywise the growing lep population raises economic and social questions concerning for example the best schooling programs for children in this group as well as the impact of english proficiency in labor markets answers to some of these questions clearly require detailed and inclusive analyses 1 indeed many social scientists have linked the ability to communicate in english to labor market value and occupational selection 2 the bulk of this research however primarily focuses on men less is known on whether gender differently affects the english proficiency outcomes of language minorities researchers in other social science fields such as stevens 1985 1986 1992 cameron 1992 and ellis 1994 have considered gender disparities with respect to the acquisition of english skills 3 however these investigations have not fully implemented some of the empirical advances made by economists to analyze english proficiency moreover this extant work tends to focus solely on gender related english skill differentials at a single point in time in this study we use recent empirical strategies in the economics field to analyze labor market facets associated with the english skill acquisition of hispanic men and women we also employ a two period analysis that allows us to observe whether gender differences in the accumulation of english skills exist with respect to our previous discussion such knowledge facilitates the design of programs aimed at improving the english fluency of the lep population in particular we first track synthetic cohorts to investigate if the english proficiency acquisition made by hispanic workers during the 1980s varies with respect to gender we then test whether poor english skills differently affect the earnings and occupational sorting of hispanic men and women the 1 1980 and 1990 public use microdata samples pums are utilized in these labor market analyses our findings suggest that english skill procurement varies between hispanic men and women depending on age and schooling location we also find that women face a lower english deficiency earnings penalty that rises more rapidly with education than the penalty obtained by their otherwise similar male peers our occupational selection results parallel this penalty difference where english skills serve as a stronger sorting mechanism for hispanic women than men policy prescriptions from such analyses suggest that male oriented studies overestimate the earnings gains and understate the occupational sorting associated with acquiring english fluency ii english skill acquisition in the labor market our first objective tests whether women acquire english proficiency at a different rate than their male peers all of our empirical work relies on the 1 pums of the 1980 and 1990 u

marginal cost pricing when spot markets are complete the standard formulation of a spot market subject to uncertain excess demand uses a tatonnement process that restricts trade until the market clearing price is found here i present a model in which there is no restriction on trade during the process of the resolution of uncertainty about aggregate excess demand the idea is to enlarge the commodity space and define goods by the probability that they will sell in addition to other characteristics the probability of sale characteristic is the spot market analogue of the contingencies under which delivery will take place in the arrow debreu model a failure to distinguish goods by the probability of sale characteristic can lead to the rejection of the competitive paradigm even when everyone is a price taker and the allocation is efficient

the economics of immigration this literature review concerns the impact of immigration on the economy of the host country focusing on the experience of the united states the emphasis is on the period from the 1970s to the 1990s the author shows that research earlier in this period generally concluded that the economic effects of immigration were positive but that more recent research on later migrations have generally concluded that immigration may be having an adverse effect on the earnings of native unskilled workers and be placing an increased burden on welfare programs the importance of such economic analysis for the formulation of appropriate migration policies is stressed

an institutional logics approach to liability of foreignness the case of mining mnes in sub saharan africa prior research on firms liability of foreignness lof has emphasized the role of isomorphic behavior in overcoming lof however the literature has not adequately considered how firms can overcome lof under conditions of institutional complexity when fundamental differences in firms home and host country values beliefs and rules may make isomorphic behaviors impossible or undesirable in this article we use the emerging research on institutional logics and institutional entrepreneurship to address this important issue by examining case studies of eight foreign mining mnes experiencing lof in sub saharan africa based upon our qualitative analysis we find that mnes can overcome lof by co creating new institutional logics rather than conforming to existing ones yet our data show that this is a difficult process one that may not be capable of being done unilaterally by the mne instead we find that local employees embedded in both sets of competing institutional logics acted as key intermediaries who facilitated institutional entrepreneurship moreover we found that firms implementation strategy matters as well in some cases institutional entrepreneurship mitigated lof in others friction returned to varying degrees

increasing returns and the foundations of unemployment theory current approaches to macroeconomic theory divide roughly into two basic schools of thought one approach typically associated with rational expectations views the economy as basically at or near walrasian market clearing equilibrium in which case it becomes very difficult to explain away convincingly the undeniable persistence at times of involuntary unemployment another approach views the underemployed economy as being in a state of temporary fixed price disequilibrium in which case aside from having to repress suspicions that the essence of effective demand failure might not have to do with prices fixed at wrong values there is a lot of rationalising to be done about why profitable adjustments are so slow this paper argues that something like an internally consistent theory of steady state involuntary unemployment is possible and even plausible the cornerstone of this third approach is increasing returns to scale which blocks unemployed agents from breaking out of a low level equilibrium trap unless there is overall coordination or stimulation a simple model is presented which contains the basic ideas

a missing link in family firms internationalization research family structures hennart majocchi and forlani propose and validate a new explanation of family firms internationalization heterogeneity shedding light on the role of a family firm s global niche business model this type of family firm can avoid the dominant internationalization problems usually depicted in the literature on family firms internationalization starting from the same diagnosis on extant research we explore another perspective to explain this heterogeneity the structure of the family institution we examine the relationships of family structures developed by emmanuel todd in social anthropology to family firms internationalization we explain how todd s typology of family structures can influence the new mechanisms proposed by hennart and colleagues for family firms in europe with a global niche business internationalization finally using these family structures we also reexamine two analyses on family firms internationalization therefore we introduce a new perspective for research on family firms internationalization that is based on context and has critical importance for understanding family firms strategies this new perspective has significance for international business research on family firms

firm dynamics and markup variations implications for sunspot equilibria and endogenous economic fluctuations this paper analyzes how the interaction between firms entry and exit decisions and variations in competition gives rise to self fulfilling expectation driven fluctuations in aggregate economic activity and in measured total factor productivity tfp the analysis is based on a dynamic general equilibrium model in which net business formation is endogenously procyclical and leads to endogenous countercyclical variations in markups this interaction leads to indeterminacy in which economic fluctuations occur as a result of self fulfilling shifts in the beliefs of rational forward looking agents when calibrated with empirically plausible parameter values and driven solely by self fulfilling shocks to expectations the model can quantitatively account for the main empirical regularities characterizing postwar u s business cycles and for 65 of the fluctuations in measured tfp

conceptualizing and measuring distance in international business research recurring questions and best practice guidelines distance is a central concept in international business research yet there is debate about the construct as well as its operationalization in this editorial we address three of the most important recurring questions posed by authors editors and reviewers by examining the theory methods and data of distance research we discuss 1 how to theorize on distance and 2 what method and 3 what data to use when constructing a distance index we develop practical recommendations grounded in theory illustrating and supporting them by calculating cross country distance indices for all available country pairs and two of the most used distance indices cultural and institutional we show that whereas a specific method to calculate distance may matter to some extent the choice for a specific cultural or institutional framework to measure cultural or institutional distance has a major impact on country pair distances overall this editorial highlights the importance of matching data and method to the theoretical argument

search frictions real rigidities and inflation dynamics the standard new keynesian model suffers from the so called macro micro pricing conflict in order to match the dynamics of inflation implied by macroeconomic data the model needs to assume an average duration of price contracts which is much longer than what is observed in micro data here i show how departing from the standard model s assumption of a perfectly competitive labor market can help resolve the pricing conflict i do so by assuming search frictions in the labor market in this framework labor becomes firm specific and marginal cost curves become upward sloping this mechanism reduces the slope of the new keynesian phillips curve given a frequency of price adjustment conversely given an estimate of this slope my model implies shorter price durations than the standard model for a plausible calibration and for different slope values my model consistently delivers price durations that are roughly half of those implied by the standard model

the impact of cyclical demand movements on collusive behavior recent work by rotemberg and saloner 1986 investigates the effect of the business cycle on optimal collusive pricing by specifying that demand is subject to i i d shocks an implication of the i i d assumption is that firms expectations on future demand are unrelated to the current level of demand we put forth a model that allows for both the level of current demand and firms expectations on future demand to change over time thus it captures two important properties of the business cycle our analysis reveals that while the gain to deviating from a collusive agreement is greatest during booms firms find it most difficult to collude during recessions as the forgone profits from inducing a price war are relatively low an implication of this effect for pricing behavior is that at the same level of demand price is lower when demand is declining than when demand is rising consistent with previous theoretical work we find that firms price countercyclically for a range of values for the discount factor however numerical simulations reveal a greater tendency for firms to price countercyclically during recessions than during booms

modes of foreign entry a transaction cost analysis and propositions a frontier issue in international marketing is the appropriate choice of entry mode in foreign markets the objective of this paper is to offer a transaction cost framework for investigating the entry mode decision this framework provides 1 a theoretical basis for systematically interrelating the literature into propositions 2 propositions about interactions which resolve the apparently contradictory arguments advanced to date specifically the paper illustrates the feasibility of clustering 17 entry modes into the degree of control the mode provides the entrant proposes that the most appropriate i e most efficient entry mode is a function of the tradeoff between control and the cost of resource commitment advances testable propositions delimiting the circumstances under which each mode maximizes long term efficiency

the uppsala internationalization process model revisited from liability of foreignness to liability of outsidership the uppsala internationalization process model is revisited in the light of changes in business practices and theoretical advances that have been made since 1977 now the business environment is viewed as a web of relationships a network rather than as a neoclassical market with many independent suppliers and customers outsidership in relation to the relevant network more than psychic distance is the root of uncertainty the change mechanisms in the revised model are essentially the same as those in the original version although we add trust building and knowledge creation the latter to recognize the fact that new knowledge is developed in relationships

an investigation into the power of insiders in wage determination abstract this paper is concerned with the role of insider forces in wage determination various union and non union models of wage behaviour are considered and they imply that wages are a convex combination of internal and external factors certain union models also imply a degree of hysteresis data on fourteen british production industries reveal that i insider forces are important ii their importance is directly related to both union power and the degree of monopoly in the product market iii the state of the aggregate labour market is also important and iv hysteresis effects arising from insider power are only significant in a small minority of sectors