mncs and sustainable business practice the case of the colombian and peruvian petroleum industries abstract multinational corporations mncs play an increasingly important role in the economic development strategies of many less developed countries ldcs at the same time the sustainable development of ldcs requires economic growth to be accompanied by environmental protection and greater social equity this paper contributes to the literature concerned with mncs contribution to the sustainable development of ldcs the concept of sustainable business practice sbp is proposed as relevant to understanding mncs contribution and an analytical framework incorporating the content context and process of sbp is used to examine what sbp might consist of as well as those conditions important for its widespread adoption results from a study examining the colombian and peruvian petroleum industries show that despite important contributions by mncs to sustainable development sbp is not yet widespread the study also shows the importance of external institutional pressures principally in the form of local legislation for mncs contribution to the sustainable development of ldcs finally the paper shows how the process of change toward more sbp is closely linked to the external context in which mncs operate the characteristics of their internal context and the internal and external processes linking these contexts

interfirm relationships and informal credit in vietnam trading relations in vietnam s emerging private sector are shaped by two market frictions the difficulty of locating trading partners and the absence of legal enforcement of contracts examining relational contracting we find that a firm trusts its customer enough to offer credit when the customer finds it hard to locate an alternative supplier a longer duration of trading relationship is associated with larger credit as is prior information gathering customers identified through business networks receive more credit these network effects are enduring suggesting that networks are used to sanction defaulting customers

the impact of trade credit on customer switching behaviour evidence from the tanzanian rice market abstract we use primary survey data to analyse the relationship between trade credit and customer switching in the context of trade transactions between wholesalers and retailers in the tanzanian rice market results reveal a negative relation of trade credit and customer switching that is trade credit acts as a switching barrier retailers are reluctant to move to another supplier if they depend on trade credit as a source of external finance this interpretation fits with the underdeveloped financial markets in tanzania in which access to external finance is poor among rice retailers

does competition encourage credit provision evidence from african trade credit relationships previous work has claimed that monopoly power facilitates the provision of credit because monopolists are better able to enforce payment here we argue that if relationship specific investments are required by borrowers to establish creditworthiness monopoly power may reduce credit provision because holdup problems ex post will deter borrowers from investing in establishing creditworthiness empirically we examine the relationship between monopoly power and credit provision using data on the supply relationships of firms in five african countries consistent with the up front investment story we find that monopoly power is negatively associated with credit provision and that this correlation is stronger in older supplier relationships because the data include several observations per firm we are able to utilize firm fixed effects thus netting out unobserved firm characteristics that may have been driving results in earlier studies

oil extraction and poverty reduction in the niger delta a critical examination of partnership initiatives the combination of corporate community conflicts and oil transnational corporations tncs rhetoric about being socially responsible has meant that the issue of community development and poverty reduction have recently moved from the periphery to the heart of strategic business thinking within the nigerian oil industry as a result oil tncs have increasingly responded to this challenge by adopting partnership strategies as a means to contribute to poverty reductions in their host communities as well as secure their social licence to operate this paper critically examines the strengths and weaknesses of the different community development partnership cdps initiatives employed by shell exxon mobil and total to contribute to poverty reduction within their host communities in the niger delta nigeria drawing on empirical data and critical analysis the paper argues that while the cdp initiatives by spdc mpn and epnl have the potential to contribute to community development the failure to integrate negative injunction duties into existing partnerships means that the partnerships make no difference to how oil tncs conduct their core business operation consequently cdps have had limited positive impact on poverty reduction in the niger delta the paper concludes by examining the implications of the emerging issues for partnership and poverty reduction

formal institutions and social capital in value chains the case of the ethiopian commodity exchange we explore whether the creation of the ethiopian commodity exchange ecx and its formal monitoring and enforcement institutions has affected social capital and trust in the ethiopian segment of the sesame value chain consistent with a simple theoretical marketing model our panel data suggest this is indeed the case trade in sesame is increasingly governed by formal rather than informal institutions and in response traders have broadened their trading network rely more frequently on traders with whom they do not have social relations and have reduced the provision of credit that cements personalized relationships they also have lower levels of trust in the intentions and capabilities of their trading partners and attach less weight to trust

trade credit and credit rationing asymmetric information between banks and firms can preclude financing of valuable projects trade credit alleviates this problem by incorporating in the lending relation the private information held by suppliers about their customers incentive compatibility conditions prevent collusion between two of the agents e g the buyer and the seller against the third e g the bank consistent with the empirical findings of petersen and rajan 1995 firms without relationships with banks resort more to trade credit and sellers with greater ability to generate cash lows provide more trade credit finally small firms react to monetary contractions by using trade credit consistent with the empirical results of nilsen 1994 article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

cooperation in community interaction without information flows we study cooperative behaviour in communities where the flow of information regarding past conduct is limited or missing players are initially randomly matched with no knowledge of each other s past actions they endogenously decide whether or not to continue the repeated relationship there is incomplete information regarding player types a subset of the population is myopic while the remainder have discount factors that permit cooperation in principle we define social equilibrium in such communities such equilibria are characterized by an initial testing phase followed by cooperation if the test is successful it is precisely the presence of myopic types that permit cooperation by raising barriers to entry into new relationships we examine the implications of increased patience which takes two forms an increase in the number of non myopic types and an increase in the discount factor of non myopic types these two notions turn out to have strikingly different implications for the degree of cooperation that can be sustained

multinational oil companies and the adoption of sustainable development a resource based and institutional theory interpretation of adoption heterogeneity sustainable development is often framed as a social issue to which corporations should pay attention because it offers both opportunities and challenges through the use of institutional theory and the resource based view of the firm we shed some light on why more than 20 years after sustainable development was first introduced we see neither the adoption of this business model as dominant nor its converse that is the total abandonment of the model as unworkable and unprofitable we focus on multinational corporations mncs because they were among the organizations first called to take action in order to illustrate the institutional pressures mncs face and their strategic response to these pressures we analysed four major oil and gas multinationals subject to similar sustainable development pressures climate change biodiversity renewable energy development and social investment we argue that normative and coercive isomorphism does not occur at the global level because sustainable development is largely a stakeholder driven rather than a broad social pressure that is host country interpretation of sustainable development pressures varies across an mnc s subsidiary network based on the analysis of the four major mncs annual reports from 2000 to 2005 we argue that mimetic isomorphism may occur but since it implies the use of complex and intangible resources mimetic processes are slow rare and discretionary

competition and inter firm credit theory and evidence from firm level data in indonesia abstract using firm level data we investigate the relationship between trade credit and suppliers market structure and find a shaped relationship between competition and trade credit with a discontinuous increase in credit provision between monopoly and duopoly this big jump arises because monopolists are more likely to not offer any trade credit than firms in competitive environments our model exploits the fundamentally different nature between cash and trade credit sales arguing that firms are unable to commit ex ante to a trade credit price we show that monopolists will often sell only on cash while credit is always provided in competitive environments

ethnicity and credit in african manufacturing abstract this paper investigates whether market interaction can by itself perpetuate the lack of ethnic diversity that is observed in the business communities of many developing countries using case study data on manufacturing firms in kenya and zimbabwe we find no evidence that blacks or women are disadvantaged in the attribution of bank credit once we control for firm size and other observable characteristics in contrast an ethnic and gender bias is noticeable in the attribution of supplier credit although we cannot rule out the presence of discrimination the bulk of the evidence indicates that network effects play an important role in explaining this bias

the role of soft information in a dynamic contract setting evidence from the home equity credit market credit underwriting is a dynamic process involving multiple interactions between borrower and lender during this process lenders have the opportunity to obtain hard and soft information from the borrower we analyze more than 108 000 home equity loans and lines of credit applications to study the role of soft and hard information during underwriting our data set allows us to distinguish lender actions that are based strictly on hard information from decisions that involve the collection of soft information our analysis confirms the importance of soft information and suggests that its use can be effective in reducing overall portfolio credit losses ex post

competition and relational contracts in the rwanda coffee chain how does competition affect market outcomes when formal contracts are not enforceable and parties resort to relational contracts difficulties with measuring relational contracts and dealing with the endogeneity of competition have frustrated attempts to answer this question we make progress by studying relational contracts between upstream farmers and downstream mills in rwanda s coffee industry first we identify salient dimensions of their relational contracts and measure them through an original survey of mills and farmers second we take advantage of an engineering model for the optimal placement of mills to construct an instrument that isolates geographically determined variation in competition conditional on the suitability for mills placement within the catchment area we find that mills surrounded by more suitable areas i face more competition from other mills ii use fewer relational contracts with farmers and iii exhibit worse performance an additional competing mill also iv reduces the aggregate quantity of coffee supplied to mills by farmers and v makes farmers worse off competition hampers relational contracts directly by increasing farmers temptation to default on the relational contract and indirectly by reducing mill s profits

the concept of weak sustainability abstract this paper surveys the links between growth theory with exhaustible resources and the concept of weak sustainability it examines the underlying assumptions behind this concept and questions the usefulness of the weak sustainability index as an indicator of sustainable development

the great recession lessons from microeconomic data crises and sharp economic downturns while undesirable provide economists with a unique opportunity to test and hone economic theory indeed some of the most influential advance ments in economic thought including milton friedman s monetarist tradition john maynard keynes fiscal theory and irving fisher s debtdeflation hypothesis emerged from analysis of the great depression the current economic malaise which we refer to as the great recession provides another watershed moment to reevaluate our core economic beliefs however in contrast to our peers in previous crises we are fortunate to have access to large scale microeconomic datasets and advancements in computational capacity these advantages allow for a more rigorous analysis of the current recession and therefore a more informed understanding of its origins propagation and consequences our purpose is to highlight how a micro level analysis of the great recession provides us with important clues to understand the origins of the crisis the link between credit and asset prices the feedback effect from asset prices to the real economy and the role of household leverage in explaining the downturn we hope that our discussion also serves as an example of the useful ness of incorporating microeconomic data and techniques in answering traditional macroeco nomic questions i what were the origins of the credit cycle credit demand or credit supply

the influence of contract prices and relationships on appraisal bias abstract a new measure is introduced to analyze the mechanism and extent of appraisal bias of residential property the primary source of bias identified is in the weights appraisers assign to selected comparable transactions after adjusting for observable attributes this unequal weighting results in an additional 23 of appraised values being at least equal to contract price appraisers were also more likely to bias appraised values for the properties associated with loan officers and real estate brokers they worked with more frequently these findings offer insights into how appraisers confirmed ever increasing prices leading in to the housing market crash and subsequent great recession

trade credit and supplier competition abstract this paper examines how competition among suppliers affects their willingness to provide trade credit financing trade credit extended by a supplier to a cash constrained retailer allows the latter to increase cash purchases from its other suppliers leading to a free rider problem a supplier that represents a smaller share of the retailer s purchases internalizes a smaller part of the benefit from increased spending by the retailer and as a result extends less trade credit relative to its sales in consequence retailers with dispersed suppliers obtain less trade credit than those whose suppliers are more concentrated the free rider problem is especially detrimental to a trade creditor when the free riding suppliers are its product market competitors leading to a negative relation between product substitutability among suppliers to a given retailer and trade credit that the former provide to the latter we test the model using both simulated and real data the estimated relations are consistent with the model s predictions and are statistically and economically significant

negative equity and foreclosure theory and evidence abstract recent declines in housing prices have focused attention on the relationship between negative housing equity and mortgage default theory implies that negative equity is a necessary condition for default but not a sufficient one this often misunderstood result is clearly illustrated in a dataset of massachusetts homeowners during the early 1990s fewer than 10 percent of borrowers likely to have had negative equity at the end of 1991 experienced a foreclosure during the following three years an econometric model of default estimated on two decades of massachusetts housing data also predicts low default rates for current negative equity borrowers we develop a simple theoretical model to interpret these empirical findings and to assess potential foreclosure reduction policies our results imply that lenders and policymakers face an information problem in trying to help borrowers with negative equity because it is hard to determine which owners really need help in order to stay in their homes

what triggers mortgage default this paper assesses the relative importance of two key drivers of mortgage default negative equity and illiquidity to do so the authors combine loan level mortgage data with detailed credit bureau information about the borrower s broader balance sheet this gives them a direct way to measure illiquid borrowers those with high credit card utilization rates the authors find that both negative equity and illiquidity are significantly associated with mortgage default with comparably sized marginal effects moreover these two factors interact with each other the effect of illiquidity on default generally increases with high combined loan to value ratios cltv though it is significant even for low cltv county level unemployment shocks are also associated with higher default risk though less so than high utilization and strongly interact with cltv in addition having a second mortgage implies significantly higher default risk particularly for borrowers who have a first mortgage ltv approaching 100 percent this abstract was borrowed from another version of this item

trade credit in zimbabwean manufacturing abstract credit from suppliers is an important but often neglected source of finance for manufacturing firms zimbabwe is no exception unlike credit from financial institutions trade credit does not rely on formal collateral but on trust and reputation contract enforcement is flexible network effects and statistical discrimination affect the screening of trade credit applicants black entrepreneurs are disadvantaged by their lack of business contacts and by the difficulty of distinguishing themselves from the mass of financially insecure and short lived african owned businesses in zimbabwe a vicious circle is created between weak financial base unreliability as a debtor and inability to gain access to credit