the local response to tax limitation measures do local governments manipulate voters to increase revenues abstract this paper provides evidence that some cities subject to a statewide tax limit manipulate their mix of productive and administrative services in an attempt to get voters to override the statewide limit when a statewide limit reduces a city s budget one manipulative response is to cut service inputs for example teachers or uniformed police officers by a relatively large amount while cutting administrative inputs by a relatively small amount this approach reveals a relatively large trade off between public and private goods and the severe consequences from a tax limit may encourage local voters to override the statewide limit we provide evidence that cities with local override options tend to adopt this approach manipulation is most prevalent among cities run by city managers as opposed to strong mayors

how important is regional vs global scope an examination of u s multinationals beginning with rugman and verbeke j int bus stud 35 1 3 18 2004 several international business ib scholars have proposed that most large multinationals are not global but regional this argument has recently been challenged for both its conceptualization and its implementation we aim to contribute to this debate by revisiting the definitions of regional and global by leveraging data from the u s bureau of economic analysis that is new to this literature and by analyzing multinationals scope in terms of both sales and production we find that u s multinationals are significantly more global than has previously been acknowledged in the ib literature

sources of intra industry wage dispersion how much do employers matter observed human capital explains less than half of wage variation in bls industry wage surveys establishment based wage differentials controlling for occupation account for 20 70 percent of intra industry wage variation this corresponds to a standard deviation in wages of 14 percent of the mean almost as large as interindustry wage variation investigation suggests that establishment wage differentials are not random variations or returns to usual measures of human capital

factor mobility and income redistribution in a federation abstract jurisdictions in a federation redistribute income by taxing capital and providing transfers to labor capital and labor move to earn higher returns net of taxes or gross of transfer benefits between jurisdictions in determining its redistributive policy the government for each jurisdiction thus takes into account the effects of its policy on the movement of factors from and to the jurisdiction hence the extent of redistribution depends on the mobility of factors the mobility of capital or labor leads to less redistribution than under autarky however mobility of both capital and labor may lead to more redistribution than if only capital moves as a consequence increased mobility of factors is not necessarily harmful to redistribution

centralized versus decentralized provision of local public goods a political economy approach abstract this paper takes a fresh look at the trade off between centralized and decentralized provision of local public goods it argues that the sharing of the costs of local public spending in a centralized system will create a conflict of interest between citizens in different jurisdictions when spending decisions are made by a legislature of locally elected representatives this conflict of interest will play out in the legislature depending on precisely how the legislature behaves the result may be excessive public spending or allocations of public goods characterized by uncertainty and misallocation across districts the extent of the conflict of interest between districts is affected by spillovers and differences in tastes for public spending thus the relative performance of centralized and decentralized systems depends upon spillovers and differences in tastes for public spending but for different reasons than suggested in the existing literature

some macro data on the regionalisation globalisation debate a comment on the rugman verbeke analysis this paper critiques an earlier contribution by rugman and verbeke 2004 and it does so by considering the global distribution of foreign direct investment fdi it also adds several new dimensions to the regionalisation globalisation debate noticeably by i the incorporation of inward multinational enterprise mne activity ii evaluating changes in the geography of fdi between 1990 and 2003 and iii the introduction of the concept of revealed investment comparative advantage rica of countries and regions while broadly supporting the findings of rugman and verbeke our paper shows that much of the explanation for the regional concentration of fdi and mne activity reflects that of the gross domestic product gdp and trade of the countries concerned rather than any distinctive strategy on the part of investing firms

a multisector model of efficiency wages the pattern of effort and wages is derived in a multisector efficiency wage model firms choose effort endogenously easily monitored or low turnover jobs have high effort and may have low wages in equilibrium empirical wage differentials from a measure of supervision are smaller than observed industry differentials that have been attributed to efficiency wage models and are closer to those predicted by the model workers can search for and avail of on the job offers if sectors grow at different rates or the unemployment rate changes the pattern of wage differentials is unaffected

the implications of competition among jurisdictions does tiebout need politics the paper investigates whether compensation among local jurisdiction is by itself sufficient to ensure efficient provision of local public goods jurisdictions have fixed boundaries and each has an entrenched government with the power to tax and supply the public good residents can move costlessly among jurisdictions it is shown that competition among numerous jurisdictions is not sificient to guarantee public sector efficiency though residents can vote with their feet land is immobile hence governments can unsurp some land rents for their own ends increasing the number of jurisdictions limits but cannot completely eliminate the ability to exercise discretionary governmental power

liabilities of regional foreignness and the use of firm level versus country level data a response to dunning et al 2007 we are pleased that dunning et al have provided macro country level data demonstrating the increased internationalization of many nations over the past decade we also appreciate their findings lending support to our perspective on the regional nature of world business our work was based solely on micro firm level data both country level data and firm level data have methodological problems which we attempt to reconcile in this commentary we also address the broader conceptual issues of how to interpret country level vs firm level data

does tax competition tame the leviathan abstract we study the impact of tax competition on equilibrium taxes and welfare focusing on the jurisdictional fragmentation of federations in a representative agent model of fiscal federalism fragmentation among jurisdictions with benevolent tax setting authorities unambiguously reduces welfare if however tax setting authorities pursue revenue maximization fragmentation by pushing down equilibrium tax rates may under certain conditions increase citizen welfare we exploit the highly decentralized and heterogeneous swiss fiscal system as a laboratory for the estimation of these effects while for purely direct democratic jurisdictions which we associate with relatively benevolent tax setting we find that tax rates increase in fragmentation fragmentation has a moderating effect on the tax rates of jurisdictions with some degree of delegated government our results thereby support the view that tax competition can be second best welfare improving by constraining the scope for public sector revenue maximization

liability of country foreignness and liability of regional foreignness their effects on geographic diversification and firm performance the costs of inter and intra regional diversification have been widely discussed in the existing international business literature but the findings are mixed explanations for the mixed findings have important managerial implications because business managers have to estimate accurately the costs of doing business within and across regions before they make their internationalization decisions to explain the existing mixed findings this study differentiates between liabilities of foreignness at the country and regional levels and explores the joint effects of liability of country foreignness lcf and liability of regional foreignness lrf on the performance of internationalizing firms using data from 167 canadian firms we find that lcf may not necessarily be negatively correlated with intra regional diversification but lrf is positively correlated with inter regional diversification lcf moderates the relationship between lrf and inter regional diversification and also mediates the relationship between intra regional diversification and firm performance lrf mediates the relationship between inter regional diversification and firm performance missing one or more of these variables may result in different cost estimates identification of the relationships between these variables helps to improve the accuracy of estimating the costs of doing business aboard

vertical irmbalance in the fiscal systems of federal states a theory of vertical fiscal imbalance in federal states vfi is developed which distinguishes between long run and short run imbalances and between normative and positive interpretations of the concept the analysis is carried out in the context of a simple three sector model where the allocation of national output among sectors results from interaction of a public choice process with an overall resource constraint the paper proposes welfare theoretic definitions of long run and short run vfi in addition it uses the concept as part of a positive analysis in order to reassess broad trends in canadian fiscal history

can wage increases pay for themselves tests with a production function efficiency wage theories predict that companies that pay high wages will have higher productivity from high work effort low turnover and other efficiency enhancing effects this paper uses the pims line of business data set to test whether high wage businesses are more productive relative wages were measured by managers assessments of their relative compensation holding worker quality constant a positive relation was found between changes in relative wages and changes in total factor productivity the elasticity of output with respect to wages was of the magnitude predicted by efficiency wage theories also consistent with efficiency wage theories the relationship between changes in wages and changes in productivity was weaker at businesses with high unionization results from two additional data sets imply that high wages are not merely measuring high human capital copyright 1992 by royal economic society

reassessing home regionalisation alan rugman and co authors argue that globalisation and with it global strategy is a myth this contention rests on a taxonomy of the world s largest firms based on their sales showing an overwhelming share of home regional firms we question the rationales underpinning their classification scheme when retesting the data using different schema we find that the original results are far from robust with a significant share of firms attaining bi regional or global status further longitudinal analysis shows that large firms increasingly are extending their sales beyond the home region our results defy regionalisation theory in its current form and we call for refinements through further research

explaining the effect of rapid internationalization on horizontal foreign divestment in the retail sector an extended penrosean perspective we adopt a penrosean perspective to study the effect of rapid international expansion on the subsequent divestment of international operations we draw on regional strategy theory and differentiate penrosean managerial resources by their geographical fungibility to argue that the effect of rapid international expansion on the divestment of international operations varies with the regional patterns of firms international expansion and international experience we test our hypotheses using two stage least squares 2sls estimation on data that capture the international expansion and divestment of retailers over the period 2003 2012

competition and monopoly power in local government an extension of caplan 2001 caplan 2001 shows that because land is asource of immobile wealth localgovernments can use the property tax toavoid competitive pressures of the tieboutmodel allowing them to deviate fromcitizens preferences in this comment ishow that the property tax is not the onlytax local governments can use to avoidcompetitive pressure most taxes placed onproperty owners allow local governments toextract some rents despite perfect citizenmobility

how does regional institutional complexity affect mne internationalization international business research is only beginning to develop theory and evidence highlighting the importance of supranational regional institutions to explain firm internationalization in this context we offer new theory and evidence regarding the effect of a region s institutional complexity on foreign direct investment decisions by multinational enterprises mnes we define a region s institutional complexity using two components regional institutional diversity and number of countries we explore the unique relationships of both components with mnes decisions to internationalize into countries within the region drawing on semiglobalization and regionalization research and institutional theory we posit an inverted u shaped relationship between a region s institutional diversity and mne internationalization extremely low or high regional institutional diversity has negative effects on internationalization but moderate diversity has a positive effect on internationalization larger numbers of countries within the region reduces mne internationalization in a linear fashion we find support for these predicted relationships in multilevel analyses of 698 japanese mnes operating in 49 countries within 9 regions regional institutional complexity is both a challenge and an opportunity for mnes seeking advantages through the aggregation and arbitrage of individual country factors

a perspective on regional and global strategies of multinational enterprises multinational enterprises mnes are the key drivers of globalization as they foster increased economic interdependence among national markets the ultimate test to assess whether these mnes are global themselves is their actual penetration level of markets across the globe especially in the broad triad markets of nafta the european union and asia yet data on the activities of the 500 largest mnes reveal that very few are successful globally for 320 of the 380 firms for which geographic sales data are available an average of 80 3 of total sales are in their home region of the triad this means that many of the world s largest firms are not global but regionally based in terms of breadth and depth of market coverage globalization in terms of a balanced geographic distribution of sales across the triad thus reflects a special and rather unusual outcome of doing international business ib the regional concentration of sales has important implications for various strands of mainstream ib research as well as for the broader managerial debate on the design of optimal strategies and governance structures for mnes journal of international business studies 2004 35 3 18 doi 10 1057 palgrave jibs 8400073

performance effects of added cultural distance in the path of international expansion the case of german multinational enterprises this paper contributes to the debate on the performance impact of added cultural distance in the multinational enterprise s mne s expansion path our research focuses on the ability of mnes to handle complexity associated with added cultural distance in international expansion and on the effect this may have on profitability we hypothesise that firms that make expansion moves involving a high level of added cultural distance per unit of time and those that expand in culturally distant countries in an irregular fashion that is with a higher variability will be less profitable we test these hypothesised relationships using detailed data on 2404 expansion moves undertaken by our panel of 91 german mnes whose expansion paths we tracked during periods ranging between 5 and 20 years

leviathan and competition among jurisdictions the case of benefit taxation abstract this paper shows that interjurisdictional competition for mobile factors of production forces the government to raise the efficiency of the public sector and thus helps to tame leviathan governments however this result is derived under some restrictive assumptions concerning the kind of tax policy used by the government in the case of benefit taxes e g user charges a leviathan may be tamed by interjurisdictional competition whereas this is not necessarily true in the case of lum sum taxes

the globalization of swedish mnes empirical evidence and theoretical explanations we define globalization as the geographical dispersion of multinational enterprises mnes value chain in combination with increased inter regional coordination and use detailed firm level data to show that 12 of sweden s 17 largest manufacturing companies indeed are global by developing a globalization process model we theoretically argue in contrast to much of the existing literature that globalization may evolve to a more general phenomenon the globalization process is tortuous as mnes have to develop dynamic capabilities which make them gradually more competitive and able to cope with varying institutional contexts empirical testing on globalization of mnes originating from other home countries is suggested

regional decentralization and fiscal incentives federalism chinese style abstract aligning the interests of local governments with market development is an important issue for developing and transition economies using a panel data set from china we investigate the relationship between provincial government s fiscal incentives and provincial market development we report three empirical findings first we find that during the period of fiscal contracting system the discrepancy between ex ante contracts and ex post implementation was relatively small suggesting that the fiscal contracts were credible second we find a much higher correlation about four times between the provincial government s budgetary revenue and its expenditure during 1980s and 1990s as compared to 1970s demonstrating that provincial governments faced much stronger ex post fiscal incentives after reform third we find that stronger ex ante fiscal incentives measured by the contractual marginal retention rate of the provincial government in its budgetary revenue are associated with faster development of the non state sector as well as more reforms in the state sector in the provincial economy this holds even when we control for the conventional measure of fiscal decentralization finally we compare federalism chinese style to federalism russian style

multidivisional vs metanational governance of the multinational enterprise the effective and efficient management of diversified business firms that supply multiple products and operate in multiple dynamic markets especially large multinational enterprises mnes builds upon a number of specific governance principles these governance principles allow the alignment of environmental characteristics strategy and organization given the rising need to learn from the world doz et al in their influential harvard business school press book entitled from global to metanational have proposed a new set of governance principles described under the metanational umbrella concept this paper revisits the metanational using a comparative institutional perspective here we contrast multidivisional and metanational governance principles a comparative institutional analysis suggests that the metanational s application potential in terms of actually improving the effectiveness and efficiency of mne governance may be subject to more qualification than suggested by doz et al senior mne management must therefore reflect carefully before substituting metanational governance principles for the more conventional multidivisional ones with established contributions to managerial effectiveness and efficiency

a three stage theory of international expansion the link between multinationality and performance in the service sector it is generally assumed that the performance of a firm improves with greater multinationality yet recent empirical studies have shown both a u shaped relationship which suggests an initially negative effect of international expansion on performance before the positive returns of international expansion are realized and an inverted u shaped relationship which suggests that international expansion beyond an optimal level is again detrimental to performance and results in a negative slope this paper proposes a new unified three stage theory of international expansion that incorporates both concepts in a sigmoid hypothesis it then tests this on data from 11 service industries highlighting the difference between knowledge based and capital intensive service sectors

property taxation congestion and local public goods abstract the residential property tax has been viewed as a congestion fee even if it distorts housing decisions this paper shows that the rule for a competitive jurisdiction s optimal public good supply may be written in a form in which no such role appears congestion costs enter the cost side of this rule in the same way that they enter when only a land tax is available the new rule is reconciled with an alternative rule in the literature which contains no congestion costs

on the welfare effects of tax limitation much recent literature has been devoted to providing theoretical and empirical analysis of the proposition that government is too large far less attention has been paid to the issue of whether tax and expenditure limitations such as those in effect in many us states are an appropriate remedy to excessive government size this paper uses conventional tools of welfare economics to analyze the welfare effects of tax limitations in an economy made up of many local governments the conclusions are mixed where government charges monopoly prices tax limitation will reduce welfare where government provides outputs that exceed those that would be competitively supplied tax limitation may improve welfare

regionalization of r d activities dis economies of interdependence and inventive performance abstract this paper examines the impact of the extent of the regionalization of mnes r d activities on their inventive performance by joining the regionalization theory with the recombinant view of invention we challenge the implicit assumption that all foreign knowledge seeking activities will necessarily offer new knowledge to the firm we introduce the dis economies of interdependence defined as the dis advantages that the firm derives due to the interdependence among countries within a region as a new theoretical mechanism explaining the benefits and costs of regionalization our analysis of global pharmaceutical firms shows that an inverted u shaped relationship exists between the number of regions in which a firm has r d activities and its inventive performance our results also indicate that a firm s recombinant capability moderates the inverted u shaped relationship in such a way that when a firm s recombinant capability is high it reaches its turning point in a larger number of regions and the inverted u shaped relationship is flatter these results underscore that recombinant capability significantly influences the firm s ability to derive benefits and reduce costs from the regionalization of its r d activities our findings suggest that it is through the consideration of the dis economies of interdependence that offers the essential reasoning needed to unwind the inferred assumption that all foreign knowledge seeking activities will offer access to new knowledge

domestic alliance networks and regional strategies of mnes a structural embeddedness perspective we draw on a social network perspective to explain multinational enterprises mnes propensity to distribute their operations unevenly across various regions of the world we focus on how the positioning of mnes in their domestic network of strategic alliances affects their geographic scope i e whether they concentrate on their home region or expand beyond it we theorize that embeddedness in alliance networks constitutes a double edged sword to the geographic scope of mnes strong embeddedness in domestic alliance networks drives the development of location bound firm specific advantages fsas which may narrow down mnes geographic scope in contrast moderate embeddedness leads to more non location bound fsas which reduce liability of foreignness and hence motivate mnes to widen their geographical scope we thus predict a non linear relationship between domestic alliance network embeddedness and mne geographic scope furthermore the impact of the domestic alliance network on mne geographic scope hinges on the organizational ability to efficiently and effectively absorb resources stemming from the network we test our hypotheses using fdi data from 302 us mnes in the information and communication technology industry for the period of 2001 2008 and generally find robust support for the hypothesized relationships

should land and capital be taxed at a uniform rate if jurisdictions are allowed to tax land and capital separately they tax only land because capital taxation distorts the allocation of mobile capital to exploit absentee owners however jurisdictions tax land beyond the efficient level as absentee ownership increases throughout the economy land taxation results in greater inefficiency to alleviate the inefficiency of overtaxing land the higher level government intervenes to require jurisdictions to tax both capital and land at a uniform rate because the desire to attract capital lowers the tax rate uniform taxation of land and capital or property taxation thus may be more efficient than separate taxation jel classification h21 h71 est ce que la terre et le capital devraient etre taxes d une maniere uniforme si on permettait aux diverses juridictions de taxer capital et terre separement elles taxeraient seulement la terre parce que la fiscalite imposee au capital cree des distorsions dans l allocation du capital mobile mais pour exploiter les proprietaires absents les diverses juridictions imposent un fardeau fiscal sur la terre qui va au dela de ce que l efficacite commande a proportion que la propriete absente se developpe dans l economie la fiscalite imposee a la terre devient source de plus en plus grande inefficacite pour reduire cette inefficacite attribuable a la sur taxation de la terre le niveau senior de gouvernement intervient pour forcer les juridictions juniors a taxer capital et terre au meme taux parce que le desir d attirer le capital reduit le taux de taxation il se peut donc que la taxation uniforme de la terre et du capital ou de la taxation sur la propriete soit plus efficace que des taux d imposition differents

home region focus and performance of family firms the role of family vs non family leaders do family firms benefit more from a regional or a global geographic scope we suggest it depends on their family leadership type family vs non family leadership we offer a nuanced view of agency and stewardship theories to hypothesize that family leaders are most beneficial when pursuing a regional strategy i e high home region focus hrf whereas non family leaders are more advantageous when pursing a global strategy i e low hrf utilizing a sample of 202 western european firms from 1996 to 2006 we find support for this central hypothesis thus family leadership influences the degree to which family firms benefit from hrf

measuring the degree of internationalization of a firm in spite of both positivistic and instrumental research the reliability of measuring the degree of internationalization of a firm remains speculative we collected data on nine attributes of seventy four american manufacturing mncs alpha factor and frequency analyses revealed a linear combination of five variables with a reliability coefficient of 79 as a measure of the degree of internationalization of a firm we discuss the statistical and conceptual properties of the scale and their implications for content and construct validity

the flypaper effect and competition in the local market for public goods in this paper we explore how the ability of bureaucrats to extract resources from their community may be limited by competition in the local market for public goods specifically we examine intergovernmental aid as a resource bureaucrats seek to control intergovernmental aid has been found to be more stimulative of local government expenditures than predicted by neo classical economic theory in this research the flypaper effect is used as an indicator of the ability of bureaucrats to control local resources in excess of local demand and preferences we empirically relate variation in the flypaper effect to the extent of competition in the local market for public goods competition does not consistently limit the flypaper effect the implications of this finding for theories of competition in the local market for public goods are then discussed

mobility and redistribution the ability of individuals to move freely from one jurisdiction to another is generally seen as a constraint on the amount of redistribution that each jurisdiction within a system of governments can undertake in this paper we look at this proposition by developing a positive analysis of income redistribution by local governments in a federal system we ask how much redistribution occurs when only local governments can have tax transfer instruments individuals can move freely among jurisdictions and voters in each jurisdiction are fully aware of the migration effects of redistributive policies local redistribution is shown to induce sorting of the population with the poorest households located in the communities that provide the most redistribution while the threat of out migration affects the potential for redistribution our results suggest that significant local redistribution is nonetheless feasible numerical computations indicate that the proportion of residents who are renters is a major factor affecting the local choice of level of redistribution

budget reform and the theory of fiscal federalism institute of university of ii business and california i economic research berkeley center for real estate and urban economics working paper series working paper 85 io8 budget reform and the theory of fiscal federalism by john m quigley and danlel l rubinfeld these papers are preliminary in nature their purpose 39 to stimulate discussion comm therefore they are n be cited or quoted in publication without th s permission of the aut graduate school of business administration

extending the theory of the multinational enterprise internalization and strategic management perspectives this paper assesses the continued relevance of buckley and casson s 1976 book on the future of the multinational enterprise mne against a background of increasing criticism of transaction cost related scholarly work we demonstrate that the schism that can currently be observed in the field between international business and international management is misguided as the transaction cost internalization school may offer useful insights to both management scholars and managers for this to occur however it is necessary first to extend the empirical scope of transaction cost based reasoning to include the functioning of differentiated network mnes the paper suggests that buckley and casson s book still represents a beacon of clarity and a superb starting point for the study of the mne even if the complexity of this governance structure has grown far beyond what any international business scholar or even international management scholar could have predicted 25 years ago

born global or born regional evidence from an exploratory study in the costa rican software industry this paper provides empirical evidence about born global firms in the software industry of a small developing country with an open economy costa rica the paper is based on data collected through interviews with ceos or founders of 40 costa rican software companies findings show that there are few born global firms among costa rican software providers we find that most companies followed a gradual approach to internationalization and they did not export immediately upon birth a careful analysis of firms that exported soon after they were born reveals that most firms are actually born regional

economic competition and political competition an empirical note this paper has examined the proposition that more concentrated or consolidated metropolitan areas will produce public goods less efficiently than if there were a greater degree of interjurisdictional competition the empirical evidence garnered in section 3 suggests that interjurisdictional competition does tend to reduce the cost of providing local public services and consequently local government expenditure levels

local regional or global quantifying mne geographic scope this paper proposes a multidimensional index of regional and global orientation that can be used in confirmatory studies with econometric methodologies unlike extant measures the index is objectively scaled and controls for home country orientation and market size differences the index is shown to be consistent with models of internationalization that incorporate different assumptions about investment choice and global competition preliminary results show that large multinationals follow home region oriented internationalization paths although much of the regional effect reported by previous studies in fact reflects strong home country biases

chinese multinationals fast internationalization financial performance advantage in one region disadvantage in another our study reveals the financial performance implications of the speed at which chinese multinational enterprises cmnes expand into intra regional versus inter regional host countries in doing so we propose a framework that integrates internationalization speed and home regionalization literatures using data from 767 publicly listed cmnes from the years 2002 to 2014 we discover that the faster the intra regional internationalization the better the firm s financial performance whereas faster inter regional internationalization demonstrates a poorer financial performance we also find that fast mover cmnes technological and marketing resources are valuable in intra regional host countries but vulnerable in inter regional host countries we discuss the implications of these findings for studies of the uppsala internationalization process model and regional mnes

international diversification and firm performance the s curve hypothesis a proposed theoretical framework for the study of multinationality and performance includes both benefits and costs of geographic expansion over different phases of internationalization data on 1 489 japanese firms over 12 years show a consistent horizontal x s shaped x relationship between multinationality and performance further firms investing more heavily in intangible assets such as technology and advertising achieved greater profitability gains from growth in foreign direct investment our framework and findings highlight complexity and temporal dynamics

host country environment and subsidiary competence extending the diamond network model we extend the centers of excellence concept to address the diversity and multidimensionality of subsidiary competence using rugman and verbeke s diamond network model we hypothesize the contingencies influencing the links between host country environments and subsidiary competence configuration and provide evidence from more than 2000 subsidiaries in seven european countries our results provide new insights into how multinational enterprises can overcome unbalanced national diamonds by acquiring complementary capabilities across borders

does market oriented institutional change in an emerging economy make business group affiliated multinationals perform better an institution based view viewing market oriented institutional change as a two staged process we propose that the effects of market oriented institutional change on two organizational forms business group affiliated and independent firms are different depending on the stage of institutional change specifically we examine how the two distinct periods of market oriented institutional change that is institutional friction and institutional convergence affect business group affiliated firms and independent firms in their abilities to profit from international diversification using data on 140 korean manufacturing multinational firms from 1993 to 2003 we find that emerging economy firms face an international diversification discount a negative relationship between international diversification and firm performance we also find that business group affiliation affects the international diversification discount differently during the two periods of market oriented institutional change particularly when firm performance is measured by the market to book value mbv the moderating effect of business group affiliation on the relationship between international diversification and mbv is negative during the institutional frictions period but becomes positive during the institutional convergence period in the later stage of institutional change our findings warn against viewing market oriented institutional change as a discrete event highlighting the importance of recognizing the qualitatively distinctive nature of different periods of market oriented institutional change in future research

traversing cultural boundaries in ib the complex relationships between explicit country and implicit cultural group boundaries at multiple levels international business ib scholars continue to struggle to theorize the relationship between country and cultural group boundaries to progress we first consider functional institutional and critical event explanations for cultural characteristics and boundaries second we contrast theories of explicit global structure based on countries with theories based on implicit cultural groups third we consider the implications of explicit country based and implicit culture group based theorizing for the relationship between explicit country boundaries and implicit cultural group boundaries we do so at three levels that are roughly analogous in country based and culture group based theorizing country ethnic group country cluster civilization and within country region subcultural group political science and other fields that help to understand the relationship between countries and cultural groups but that seldom appear in ib discussions of culture are emphasized one main conclusion is that countries remain linked to cultures because of continuing political reasons for cultural groups to seek to be governed by co ethnics political considerations other than cultural identity however also continue to promote important discontinuities between country and cultural group boundaries we suggest that ib scholars and scholarly ib associations should reconsider their traditional way of defining the ib field because of our advancing understanding of the complex mix of correspondence and discontinuity between country and cultural group boundaries

pigou tiebout property taxation and the underprovision of local public goods abstract pigou s proposition that the use of distorting taxes rather than neutral head taxes reduces public service levels is examined in this paper a simple model with a national system of competing local governments is utilized to demonstrate that the use of a distorting property tax on mobile capital decreases the level of residential public services the case where public services are an intermediate producer good is also considered

the productivity of schools and other local public goods producers abstract i construct an agency model of local public goods producers in which households make tiebout choices among jurisdictions in a world of imperfect information and costly residential mobility i examine producers effort and rent under local property tax finance and centralized finance i show that if there are a sufficient number of jurisdictions conventional local property tax finance can attain about as much productivity as a social planner with centralized finance can even if the social planner is armed with more information than a real social planner could plausibly have the key insight is that decentralized tiebout choices make some information the social planner would need verifiable and other information unnecessary

municipal residency laws and local public budgets prior research has shown that residency laws increase the productivity of municipal employees which tends to reduce per unit operating cost however this gain in efficiency appears to have been lost when one considers that public employee groups tend to be high demanders who have a greater tendency to vote in local elections and to support expenditure increases bennett and orzechowski 1983 our results tend to provide additional evidence to support the findings of previous studies that public employee groups tend to exert a disproportionate impact on local budgetary decisions

a note on the transnational solution and the transaction cost theory of multinational strategic management this article assesses the extent to which the results of bartlett and ghoshal s 1989 work can be incorporated in what has now become one of the core explanations of multinational strategic management i e the transaction cost based theory of international production we demonstrate that the transaction cost approach fully incorporates the empirical findings of bartlett and ghoshal s work to do so requires that we make a new distinction between location bound and non location bound firm specific advantages in addition three possible uses of country specific advantages by multinational enterprises need to be identified while the transnational solution as proposed by bartlett and ghoshal is not itself a new theory of multinational strategic management it is compatible with the transaction cost based model of multinational strategic management

between anarchy and leviathan a note on the design of federal states abstract recent research suggests a rationale for the autonomy retained by federal states lower and intermediate level governments by encouraging interjurisdictional competition federal structures constrain the pursuit by public officials of private objectives inconsistent with the public weal but using federal structures to achieve this end has a cost the more decentralized a nation s public sector the more likely that some of the externalities generated by the provision of public goods and services will be ignored this note investigates the balance between the costs and benefits of decentralization that must be struck by a federal state s designers

does better nutrition raise farm productivity household level data from sierra leone are used to test whether higher caloric intake enhances family farm labor productivity this is the notion behind the efficiency wages hypothesis which has found only weak empirical support a farm production function is estimated accounting for the simultaneity in input and calorie choice instruments include prices household demographic characteristics and farm assets the latter two sets of instruments are later dropped to explore the robustness of the results to different specifications of exogeneity the exercise shows a highly significant effect of caloric intake on labor productivity providing solid support for the nutrition productivity hypothesis the marginal effect on productivity falls drastically as calorie consumption rises but remains positive at moderately high levels of intake one result is a fall in the effective price of food a decline that is larger for households that consumer fewer calories

majority choice of tax systems in single and multi jurisdictional economies abstract we examine majority choice of tax instruments in an economy with heterogeneous households in our framework majority voting equilibrium exists despite the multidimensional policy choice set we examine single and multi jurisdictional economies we identify five competing incentives that influence choice of tax instruments equilibria generally entail a mixture of tax types with multiple jurisdictions strong reliance on head taxation in rich communities arises to deter poorer households from immigrating in spite of local incentives to use alternative tax instruments to redistribute wealth if relocation costs preclude inter community mobility the equilibrium tax system is fundamentally affected with redistribution incentives then dominating choice of instruments and tax rates limiting or eliminating head taxation fundamentally alters stratification public good provision levels and tax systems

municipal annexation and local monopoly power we have found that the fiscal power of a city can be increased by extension of its borders within a land area that is homogeneous with respect to earning opportunities even when numerous rival jurisdictions exist in the area we hypothesized that extending municipal boundaries will have a positive effect on discretionary outlays and on expenditures per capita the evidence presented supports these hypotheses furthermore municipal wages appear to be significantly increased in cities experiencing annexation growth therefore we would expect to find that municipal employees are more inclined to favor annexation than the rest of the electorate from a policy standpoint this study suggests that significant perverse effects on fiscal efficiency may follow adoption of legal reforms that facilitate the ability of municipalities to extend their borders or that restrict the formation of new municipalities

the theory and practice of regional strategy a response to osegowitsch and sammartino we are grateful to osegowitsch and sammartino for their critical analysis of our work on the regional and global strategies of multinational enterprises mnes in this response we demonstrate that changing the quantitative thresholds for classifying mnes as global vs non global has no bearing on our earlier conclusions first very few global firms exist second scholarly reflection on regional vs global mne strategy requires substantive extensions of extant international business theory

the tiebout model bring back the entrepreneurs several recent papers in the literature have reformulltlated the nature of equilibrium in ifiebout mo lels by alssliuim ing an exogenous number of communities inflexible commullity l ou alaries anti in pirticular inactive lantlowners and developers ihis paper argues that these assumptions are unwarranted and resul1t iin in eterminate solutions and incorrect analyses determinate lon1g run1 solutions require equilibrium in intercommui land markets which in turn require giving lantlowners and or entrepreneurial leveloelers an active role in the models the role of politics in these models and its juxtaposition with entrepreneurial activities are also analyzed

local government structure and urban residential location the large research literature on the tiebout model has developed with little attention paid to the urban economic structure in which local government functions this paper attempts to examine the theoretical consequences of local jurisdictions functioning within a conventional monocentric urban model it also discusses a mathematical formulation of a two jurisdiction linear city in which the local service level and local property tax rate might be used as strategic variables in a game theory sense it is concluded that for this to happen the local service level has to have more than one element which is intuitively appealing some references are developed to current british local government and possible changes

the impact of congestion on local public good production abstract this paper models local public goods production where allocation of the publicly provided input occurs simultaneously with production of the final service output the framework models local public goods as developed in club theory where congestion is an increasing function of population central to identification of the model is that the quantities of the input police are differentiated from the produced output safety estimation is across neighborhoods within a single city the results show there is a very low elasticity of congestion on average but safety in some neighborhoods in more congested than private goods

on the political economy of land value capitalization and local public sector rent seeking in a tiebout model abstract the political economy of capitalization in a tiebout model when there is a rent seeking local public sector is examined a new approach to test for the effects of successful local public worker rent seeking on property values is suggested and initial results are presented we find evidence that potential residents are compensated through lower property prices in cities where local public employees earn substantially higher wages than similar local public employees earn on average in other cities finally we expand upon how landowners public workers and renters can use the regulatory process to capture a share of the short run rents associated with a tiebout disequilibrium

globalization and location choice an analysis of us multinational firms in 1980 and 2000 in this paper we examine foreign location choices of the top 100 us multinational corporations mncs in 1980 and 2000 we first ask whether there has been a change in mnc foreign location choice in this two decade period second we explore the underlying reasons of location change by focusing on country level factors accounting for firm industry and regional level explanations our findings suggest first that the extent of mncs activities around the globe is more extensive than assumed by regionalists arguments and well beyond ohmae s triad but still less widespread than claimed by the globalists the two main traditions within the globalization regionalization debate second we uncover an interesting de location pattern in this period third we develop an integrative framework where both economic and institutional cultural arguments are shown to influence mncs foreign location choice in different ways we conclude with a discussion of our findings and provide suggestions for future research

government organization and power i introduction economists have systematically examined the economics of government finance and long ago established that the means of financing government creates inefficiencies in the market for instance see baumol and bradford 1970 and diamond and mirrlees 1971a 1971b what may be less well examined and understood is that apart from the distortions that arise from the means of government finance government officials can have an incentive to provide a combination of services and taxes that are nonoptimal as in niskanen 1997 the ability of government to exercise coercive and pricing power creates these incentives a growing number of articles explore the effect of government power on its size for example anderson and tollison 1988 and rogers and rogers 1995 examine the implications of pricing power for government size in his work on bureaucracy niskanen 1971 considered the implications of coercive power for government size olson 1991 mcguire and olson 1996 niskanen 1997 and mcguire 2001 examine the implications of the joint exercise of coercive and pricing powers by an autocratic government to our knowledge however no previous work explicitly distinguishes between the coercive and pricing powers of government and none systematically examines all the possible combinations of coercive and pricing powers in the present analysis we develop a simple theoretical framework that allows us to examine on an integrated basis the exercise of government power the framework abstracts from any distortions in the means of government finance and separates government power into two dimensions pure coercive power and pure pricing power pure coercive power is the ability of a government to compel consumers to accept more of the public good than they desire at each tax price through fiat coercive power typically arises when citizens are unable to exit a jurisdiction costlessly and the government is able to push citizens beyond what they would accept in a voluntary relationship pure pricing power is the government s ability to restrict output along a given demand curve and earn rents by doing so pricing power typically arises when the government has limited competition and faces a downward sloping demand curve for its services we consider four polar combinations of coercive and pricing power in comparison to the social optimum lindahl democracy monopoly niskanen bureaucracy and autocracy as shown in figure 1 the government in lindahl democracy exercises neither coercive nor pricing power a monopoly government is able to restrict its output and exercise pricing power to earn rents in a traditional monopolistic fashion but it cannot engage price discrimination or expropriation to obtain any remaining consumer surplus from its citizens a niskanen bureaucracy can exact all of the surplus that consumers obtain from the public goods it provides but it must use the surplus in the production of public goods it cannot exercise pricing power and restrict output to obtain rents as a monopoly would an autocracy exercises both coercive and pricing power in practice democratic governments are likely to have both coercive and pricing powers rather than to conform to the lindahl ideal our analytical framework allows us to clarify and reconcile the differences between some of the previous contributions to the literature on government power and size in democracy a government can simultaneously use its coercive power to grow too large and its pricing power to restrict its output and earn rents furthermore government size or rents alone may be poor indicators of the extent to which government fails to achieve optimality in its provision of services government power may be used to generate rents provide too much government service or a combination of both ii social optimum consider a jurisdiction or economy with n identical individuals and two goods a purely public good and a purely private good

how to make the metropolitan area work neither big government nor laissez faire we study how political boundaries and tax competition among jurisdictions interact with the labor and land markets to determine the economic structure and performance of metropolitan areas contrary to general belief institutional fragmentation and cross border commuting need not be welfare decreasing but the size of the central city matters for welfare under tax competition the central business district is too small tax competition also prevents public policy enhancing global productivity to produce their full impact although our results support the idea of decentralizing the supply of local public services by independent jurisdictions they also highlight the need of coordinating tax policies

bargaining between benevolent jurisdictions or when delegation induces inefficiencies this paper considers the problem of bargaining between benevolent jurisdictions about local public goods and head taxes it is shown that delegation to benevolent jurisdictions will in general induce distortions away from efficiency where efficiency means an efficient provision of local public goods and an efficient distribution of consumers this distortion is caused by 1 the divergence between social and jurisdictional objectives and 2 the impossibility for jurisdictions to realize side payments without modifying either the provision of local public goods or the distribution of consumers

the regional dimension of mnes foreign subsidiary localization this paper examines the regional effect of mnes foreign subsidiary localization we hypothesize that the number of subsequent foreign subsidiaries in a country is in part determined by a firm s prior foreign subsidiary activity at the regional level we test our hypotheses using data on 1076 japanese mnes that created 3466 foreign subsidiaries 1837 wholly owned fdis and 1629 joint ventures over the period 1996 2001 we use a multilevel negative binomial approach with three levels of analysis localization decisions in a country 49 countries in a region six regions and at the headquarters level in this way we test the regional effects controlling for country and corporate dimensions we also run separate models to differentiate wholly owned and joint venture localization decisions our results strongly support the semi globalization perspective in that the regional level effects are significant and different from the country level effects for all foreign subsidiaries for wholly owned subsidiaries and for jointly owned subsidiaries japanese mnes adopt a regional perspective that complements their decisions at the country and firm levels they seek regional agglomeration benefits and make arbitrage decisions between countries in the same region

tax competition rent seeking and fiscal decentralization abstract the present paper provides a basis for evaluating fiscal decentralization of expenditure and tax responsibilities by encompassing the literature on tax competition and rent seeking both tax and rent seeking competitions are conceived of as being wasteful and self defeating we find that rent seeking activities account for political distortions which may be mitigated in the process of fiscal decentralization while tax competition results in economic distortions associated with decentralization welfare evaluation should be based on the balance of the political gain and the economic cost

location and the multinational enterprise in the early development of the international business field the focus of attention moved from the country level to the firm level and interest in location issues declined more recently firm based research has itself become increasingly concerned with the study of firm location interactions when examining two way knowledge flows or spillovers between multinational enterprises mnes and other actors in specific locations the diversity or heterogeneity of firms matters as does the diversity of locational environments the localization of knowledge sources depends on mne group level strategies for growth and organizational decentralization on subsidiary level evolution towards local competence creating efforts and on the development of suitable business networks within locations mnes now have a greater potential to benefit from a synergistic locational portfolio of complementary sources of knowledge the locational composition of the international network for knowledge sourcing of a given mne depends upon the extent of institutional compatibility between the locations in which the mne is active this compatibility between locations in turn affects the capacity of the mne to become an insider in local business systems and to influence the local institutional environment

do formula based intergovernmental transfer mechanisms eliminate politically motivated targeting evidence from ghana abstract various countries have adopted formulas for determining intergovernmental transfers as a strategy to limit the role of political considerations in resource allocation in this paper we investigate a formula based system of allocating resources from a central government to local governments to determine whether the political characteristics of recipient areas have any bearing on their allocation specifically we study the sharing of resources of the district assemblies common fund dacf in ghana amongst the country s district governments over the period 1994 to 2005 we find evidence that the mechanism does not eliminate politically motivated targeting of the grants per capita dacf grants were higher in districts where vote margins in the previous presidential election were lower suggesting that swing districts were targeted we find evidence that dacf formula indicators and their weighting were chosen and amended to produce politically desired patterns of transfers

empirical tests of efficiency wage models two digit manufacturing industry level production functions are used to test efficiency wage propositions conclusive tests require functional forms which allow differences in elasticities of substitution between observable human capital wage premia and other inputs results demonstrate that unexplained industry wage premia and higher unemployment rates raise productivity wage premia and the human capital wage component cannot be aggregated into a single human capital index nevertheless 88 of the productivity effect associated with industry wages can be tied to observable human capital in the industry with only 12 associated with the wage premium

local government inefficiency and the tiebout hypothesis does competition among municipalities limit local government inefficiency the tiebout hypothesis has in the past thirty years come to refer to a number of different propositions about local public service provision first there is the point initially stressed by tiebout 15 that the mobility of consumer voters results in a market type of solution to public service provision in which people s demands for public services are revealed as they sort themselves among localities according to their tastes for public services second also discussed by tiebout is the proposition that local public services will tend toward efficient provision finally there is the claim that the mobility of consumers and the competition among the localities for these consumers make politics relatively unimportant in determining local public service provision the bulk of the empirical work on the tiebout hypothesis has attempted to determine if as tiebout suggested local public services are efficiently provided the most common approach has been to estimate the effects of public service provision and tax policy on property values and determine if a balanced budget change in the tax rate changes property values if not then property values are being maximized with respect to public services and public services therefore are efficiently provided studies using this technique include those by oates brueckner and sonstelie and portney 11 1 2 13 these empirical studies while providing evidence about whether or not public services are provided efficiently do not suggest the reasons why local public services are or are not efficiently provided are the limits on inefficiency in the local public sector attributable to local politics or are they the result of the constraints imposed on local governments because of the mobility of residents and capital evidence that local public services are efficiently provided cannot be considered support for the contention that the mobility of people and capital are the factors responsible for this efficiency romer and rosenthal 12 for example provides evidence from

zoom in zoom out geographic scale and multinational activity ib scholars have long studied the multinational enterprise mne and now recognize that its ability to capture value stems from its control of bottleneck assets in contrast economic geographers and regional scientists have largely focused their attention on the locations within which economic and business systems operate in this article we draw on both these literatures we emphasize that the mne s integration of upstream and downstream strategic considerations to maximize its control of bottleneck assets implies an optimal geographic footprint this optimal footprint is typically asymmetric with a spatial scale that varies dramatically across the different activities of the value chain upstream innovation processes are likely to be based on highly local considerations like the availability of specialized resources and collocation advantages in contrast downstream sales and marketing processes are likely to driven by imperatives of high volume and global reach further in the current fast clockspeed business environment the location and nature of bottleneck assets are likely to change rapidly and unpredictably making organizational flexibility a crucial mne capability

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