more shock than therapy market transition employment and income in russia 1991 1995 sixteen predictions from market transition theory are assessed using survey data on employment earnings and income in russia during the first five years of market reform although the private sector has grown self employment is still rare incomes are down and unemployment is up a distended income distribution reflects unprecedented income inequality distinctive features of late soviet era stratification persist low returns to education a gender gap in earnings and low earnings among professionals the russian market transition offers more opportunity in trade consumer services and speculation and less in manufacturing than do other emerging makets this corresponds to merchat capitalism and contradicts the predictions of market transition theory everything the communists told us about communism was a lie everything they told us about capitalism turns out to be true popular russian joke circa 1996

modeling and forecasting electricity prices with input output hidden markov models in competitive electricity markets in addition to the uncertainty of exogenous variables such as energy demand water inflows and availability of generation units and fuel costs participants are faced with the uncertainty of their competitors behavior the analysis of electricity price time series reflects a switching nature related to discrete changes in competitors strategies which can be represented by a set of dynamic models sequenced together by a markov chain an input output hidden markov model iohmm is proposed for analyzing and forecasting electricity spot prices the model provides both good predictions in terms of accuracy as well as dynamic information about the market in this way different market states are identified and characterized by their more relevant explanatory variables moreover a conditional probability transition matrix governs the probabilities of remaining in the same state or changing to another whenever a new market session is opened the model has been successfully applied to real clearing prices in the spanish electricity market

r d profitability the role of risk and knightian uncertainty this paper provides the first empirical attempt of linking firms profits and investment in r d revisiting knight s risk uncertainty and profit hart schaffner marx boston 1921 distinction between uncertainty and risk along with the risky profit maximising scenario identifying a second off setting unpredictable bias that leads to heterogeneous returns to r d investments is crucial to fully understand the drivers of corporate profits consistently with the knightian theory that relates risk to profitability we model the impact of risk and uncertainty on profits and provide a first empirical attempt to model the effect of ambiguity a particular type of uncertainty on r d returns

risk market sensitivity and diversification much can be learned about the risk character of a portfolio by measuring its market sensitivity and diversification the author explains the meaning of these two key measures and shows how to calculate their values using corresponding measures for the individual securities in the portfolio

construction of an efficient portfolio of power purchase decisions based on risk diversification tradeoff abstract we present a methodology based on the tradeoff between risk and diversification in order to evaluate a purchase portfolio of energy where the assets refer to purchasing strategies of a retailer generator of electricity in three markets spot regulated and non regulated markets we use two measures of diversification i entropy based on factors constructed by principal components analysis and ii entropy based on asset risk in each case weights for each strategy are estimated by using the interior point method for which monthly forecasts of returns are calculated a year ahead for each market spot prices are modeled using an arima model and bilateral contracts are modeled using growth rates we compare risk diversified portfolios with mean variance portfolio although diversification does not necessarily mean a lower risk we show that the mean variance portfolio s risk is not always lower than the risk diversified approaches also we show that diversification converges to one for the highest risk portfolio but this does not happen in the case of entropy based on factors because one asset can participate in more than one principal component clearly the mean variance approach is unable to perform a diversified allocation these results are useful for retailer generators who want combine the criteria of risk and diversification

between markets and politics organizational responses to reform in china in china s economic transition firms diversify assets through investments in the rapidly expanding service sector in response to organizational uncertainty using data from a random sample of firms in shanghai the author shows that there are two situations that cause this uncertainty economic instability where weak firms struggle to survive in the rapidly changing market system and administrative instability where large firms that were the most protected are now being forced to handle the responsibilities that were previously handled by the state the result is that both types of firm seek stability by spreading out risk through investment in low risk fast return markets revealing much about the economic reforms the overall strategy of a firm reflects at any given point in time important organizational facts any decision to fundamentally alter the deployment of internal resources represents a major structural change these kinds of changes do not occur often when they do they provide us wit

how valuable is patent protection estimates by technology field i present evidence on the private value of patent rights in france for different technology fields and nationalities of ownership using nonparametric techniques and a parametric model of patent renewal i find that the distribution of the value of patent rights is highly skewed that patent protection is a significant but not the major source of private returns to r d and that these characteristics vary across technology fields i compute the r d cash subsidy that is equivalent to the value of patent rights measure the variations in value of time technology fields and nationalities and show that these differences are correlated with patent grant rates

institutional environment public private hybrid forms and entrepreneurial reinvestment in a transition economy abstract many less developed and especially transition economies have had high levels of entrepreneurial reinvestment for relatively long periods despite the absence of developed government institutions to resolve this puzzle this study proposes that many entrepreneurial firms in these economies have been actively engaged in political activities through which organizational arrangements are created to co opt government agencies into their organizational structures to manipulate and even control unfavorable institutional environments it empirically evaluates the role of one such organizational arrangement public private hybrid forms in china s gradual reform period it suggests that through protecting property rights and facilitating access to key resources and opportunities public private hybrid forms may act as a substitute for deficient market and legal institutions thus facilitating entrepreneurial reinvestment the findings from a national sample of chinese entrepreneurial firms support our propositions in general entrepreneurial firms adopting public private hybrid forms enjoy higher entrepreneurial reinvestment rates than pure private firms during gradual reform and this may be the case because such forms help to both protect private property rights and access key resources and opportunities in addition the association between the forms and reinvestment rate is found higher under less developed government institutions

uncertainty determinants of firm investment abstract we investigate the impact of measures of uncertainty on firms capital investment behavior using a panel of u s firms increases in firm specific and capm based measures have a significant negative effect on investment spending while market based uncertainty has a positive impact

an equilibrium model of investment under uncertainty this paper analyzes the optimal investment decisions of heterogeneous rms in a competitive uncertain environment we characterize rms optimal investment strategy explicitly and derive a closed form solution for rm value we show that in the strategic equilibrium real option premia are signi cant as a result rms delay investment choosing optimally not to undertake some positive npv projects the model predicts that rm returns vary over the business cycle with returns negatively skewed during expansions but positively skewed in recessions

china s transition and its implications for international business this paper focuses on institutional change as the central and most consequential contextual aspect of china s transition identification of key characteristics of china s emergent institutions leads to propositions on their relevance for international business practice china s transition also raises issues for theory development including the way that transition is modeled the need to draw upon multiple perspectives and the concomitants of a contextual approach

the impact of order and mode of market entry on profitability and market share market share performance and profitability of overseas business activities has long been an important issue in international business in this study we explore the impact of order and mode of market entry into an overseas market we find that early entrants have significantly higher market shares and profitability than late followers we also find that equity joint ventures have a higher profitability than either wholly owned operations or contractual joint ventures a significant interaction exists between order and mode of market entry as expected firm efficiency and size affect the performance of firms these results are based on the business activities of a sample of 14 466 foreign firms in china in 1995

dynamics of china s provincial level specialization in strategic emerging industries this paper examines the dynamics of technological specialization in strategic emerging industries seis within each of mainland china s 31 provinces and the likely effectiveness based on the experiences of taiwan and south korea of the provinces strategies for developing these industries grounded in economic decentralization theories the empirical method employed includes analyzing the scores on an sei specialization promotion index per each province alongside several analytics of invention patent data from each province in the seven seis newly designated by the central level government as of 2010 the data is quantitatively analyzed according to four groups of indicators based on the following specialization relevant concepts comparative advantages and technological capabilities economy size and income technological uncertainty and lifecycles and latecomer entry into complex technologies where knowledge is most cumulative the analysis finds that china s system of economic decentralization has partially worked to ensure provincial industrial policymaking is effective whereby a notable number of provinces are seemingly pursuing sei development strategies in terms of sei selection and promotion that may enable catch up however paradoxically at the same time the system appears to sometimes facilitate provincial sei development strategies that are quite risky or even likely ineffective

the soviet transition from socialism to capitalism worker control and economic bargaining in the wood industry analyses oftlze transition from state socialisnz to capitalism pically focus on political impedimerlrs and underesritnate tlle economic obsracles to economic rransformatior1 based or1 a c ase srudy c f the soviet o o d indusrr y we argue tlzur there hill he no economic tr ansition so long as enterprises rerain two hisroric features nanzely anarchy in pr oduction and barqainit g in exrernal r elarions far jtom consrituting a re olution tlze witllerirlg away of the party srate has esaggerared rlle parhologies of rhe old econotnic order barrer has hecome nzo1 e inzpor tant conglonzerates ha1 e strengrhened their monopoly and wrkers 1la1 e greater conrr ol of tlze shop floor if there is a nzolbemenr to sar d a nzar ket economy at all it is to sar da jb1 m ofmerchant capitalisnz rlzut deepens economic under de elol nzet t and lz arts tlze rise of nzodern bourgeois capiralism

strategic growth options we provide a strategic rationale for growth options under uncertainty and imperfect competition in a market with strategic competition investment confers a greater capability to take advantage of future growth opportunities this strategic advantage leads to the capture of a greater share of the market either by dissuading entry or by inducing competitors to make room for the stronger competitor as a result of this strategic effect payoffs are in a rough sense more convex than in the case of no investment in a growth option when the strategic advantage is strong increased uncertainty encourages investment in growth options higher uncertainty means more opportunity rather than simply larger risk if the strategic effect is weak the reverse is true on the other hand an increase in systematic risk discourages the acquisition of growth options our results contradict the view that volatility is a strong disincentive for investment

patent protection in the shadow of infringement simulation estimations of patent value empirical estimates of the private value of patent protection are derived for four technology areas computers textiles combustion engines and pharmaceuticals using new patent data for west germany 1953 1988 patentees must pay renewal fees to keep their patents in force as well as legal expenses in order to enforce them a dynamic stochastic discrete choice model of optimal renewal decisions is developed incorporating both learning and depreciation as well as the potential need to prosecute infringement the evolution of the distribution of returns over the life of a group of patents is calculated for each technology using a minimum distance simulation estimator results indicate that the aggregate value of protection generated per year is on the order of 10 of related r d expenditure

persistent heterogeneity of r d intensities within sectors evidence and policy implications abstract do firms in the same sector converge towards the same r d intensities previous research has often assumed this to be true a closer examination using microdata from the eu industrial r d investment scoreboard for the years 2000 2015 shows considerable heterogeneity in r d intensities among firms in the same sector and that this heterogeneity persists over time statistical tests of convergence show that the variation in r d intensities does not decrease over time i e no convergence although firms with an r d intensity below the industry average do seem to catch up with the leaders i e evidence of convergence overall firms in the same industry do not converge to a common r d intensity policy implications are discussed

a real options perspective on sequential acquisitions in china we examine how firms in an emerging market address their information disadvantage in takeovers one strategy is to complete the acquisition sequentially rather than as a one time deal in contrast to firms in developed economies that enjoy relatively easy access to information emerging market firms face differential access to information on target firms owing to institutional weaknesses and constraints in those markets sequential acquisitions are conceptualized as a real option based strategy whereby the sequential acquirer resolves valuation uncertainty through information gathering and learning after making a toehold purchase the value of a sequential acquisition strategy increases for firms that are at an information disadvantage statistical analysis based on 272 completed acquisitions of chinese listed firms between 1995 and 2003 shows that the sequential method is more likely to be chosen over a single transaction mode when the acquirer is a private firm or when the acquirer is diversifying into a new business area thus we offer a new way of viewing real option strategies in emerging economies by treating sequential acquisitions as information and learning mechanisms as opposed to tools for hedging

organization and management in the midst of societal transformation the people s republic of china twenty five years of economic reform has propelled china to the center of the world s economic stage based on current trends in the foreseeable future china is likely to become the largest economy in the world china s dramatic growth may be envied by other developing economies but for management scholars it presents an exciting intellectual puzzle in this paper we describe the empirical context of china today review contemporary research on chinese management and organizations and describe the nine papers in this special issue oforganization science the papers provide a close examination of how massive corporate transformation in china has influenced interfirm relationships affected opportunity structures and social processes and modified individual behaviors within firms we identify the many paradoxes in this intellectual terrain and present a guide to the challenging research agenda ahead we recommend that scholars of organizations think deeply about china as a context and consider china as an empirical setting where the boundaries of existing knowledge on organizations can be extended

the equal weight tilt in managed portfolios active portfolios can be more concentrated or more diversified than the market portfolio in the latter case the result is likely to be a tilt toward equal weights which has been shown to have a systematic impact on portfolio returns to capture this tilt we use the difference between returns on equal weighted and value weighted portfolios for the relevant universe we call this difference equal minus value or emv despite emv s simplicity its ability to explain mutual fund returns compares very favorably with that of the most popular performance evaluation factors we therefore argue that emv should be used in performance evaluation of broad market equity portfolios

pro market institutions and global strategy the pendulum of pro market reforms and reversals we review the literature analyzing the impact of pro market institutions on firms global strategy we propose that the ideological tension between whether the government or the market should drive economic development results in a pendulum of pro market reforms and reversals that drive changes in firm strategy and performance much progress has been made in the analyses of pro market reforms and their impact on firms international strategies and performance however there is a need to further learn about four areas 1 the concept of pro market institutions in particular the variety of institutional dimensions the measures and the influence of informal institutions on firm strategies 2 the drivers of changes in pro market institutions especially firms influences and the co evolution of firm strategies and institutional changes 3 the implications of changes in pro market reforms for the interactions among integration diversification and internationalization strategies the causality chains connecting institutions and strategies and the reconfiguration of activities globally and 4 the non traditional moderators that alter the impact of pro market institutional dynamics on firms strategies such as country level political systems industry level competitor reactions and individual level managerial capabilities and perceptions

uncertainty and the dynamics of r d uncertainty varies strongly over time rising by 50 to 100 in recessions and by up to 200 after major economic and political shocks this paper shows that higher uncertainty reduces the responsiveness of r d to changes in business conditions a caution effect making it more persistent over time thus uncertainty will play a critical role in shaping the dynamics of r d through the business cycle and its response to technology policy i also show that if firms are increasing their level of r d then the effect of uncertainty will be negative while if firms are reducing r d then the effect of uncertainty will be positive

reform in eastern europe how can the new governments of eastern europe succeed in moving from centrally planned to freemarket economies this incisive report identifies and describes the major policy choices to be made and discusses what will work and what will not reform in eastern europe provides a comprehensive easily read statement of reform policy that stands in the mainstream of modern western economics based on their experience with stabilization policies in other countries the authors show how eastern europe can reduce unemployment during the painful adjustment process create effective and socially acceptable mechanisms to subject enterprises to market discipline and replace barter trade under cmea with market based international trade

long term global market correlations the correlation structure of the world equity markets varied considerably over the past 150 years and was high during periods of economic integration we decompose diversification benefits into two parts one component due to variation in the average correlation across markets and a another component due to the variation in the investment opportunity set from this we infer that periods of globalization have both benefits and drawbacks for international investors globalization expands the opportunity set but as a result the benefits from diversification rely increasingly on investment in emerging markets

patent protection market uncertainty and r d investment the real options investment theory shows that greater uncertainty about market revenues reduces current r d investment by increasing the value of waiting this paper presents empirical evidence that patent protection mitigates the effect market uncertainty on r d investment

stochastic portfolio theory and stock market equilibrium harry markowitz 1952 1956 1959 developed a theory of portfolio selection based on the optimization of a quadratic function subject to linear constraints his work led to the development of a single period equilibrium model the sharpelintner capital asset pricing model capm see sharpe 1964 lintner 1965a 1965b r c merton 1973 extended the capm to a continuous time model using lognormal diffusion processes to represent stock price series and showed that the original conclusions continued to hold virtually without change in this continuous time model it became possible to observe the dynamic interaction between investors behavior and the behavior of the stocks in fact rosenberg and ohlson 1976 showed that his interaction led to internal inconsistencies in the continuous time capm in this paper we analyze long term portfolio performance compatible with equilibrium constraints on global portfolio structure we present a portfolio theory which is based on markowitz s theory but which emphasizes the long term performance of the portfolios in continuous time the concept of excess growth is introduced a quantity which measures the relative performance of a portfolio compared to that of its component stocks the equilibrium model we present does not consider questions dealing with optimal strategies for investors and specifically avoids all normative issues rather it provides constraints on global portfolio structure based on the principle that excess growth is conserved that the total excess growth in the market at any instant is zero these constraints generate a distribution of portfolios in the market similar to the energy distribution in thermodynamic equilibrium this approach provides an alternative to classical supply demand equilibrium we adopt some standard conventions here but most of the results in the paper will carry over to more general settings the assumptions we make are 1 each stock price follows a lognormal diffusion process with constant drift and variance parameters the covariance parameters between stocks are constant stock portfolios can be represented as ito integrals in the various stock price processes 2 there are no transaction costs taxes or problems with the indivisibility of assets 3 the number of shares of each corporation remains constant

estimating the performance effects of business groups in emerging markets business groups confederations of legally independent firms are ubiquitous in emerging economies yet very little is known about their effects on the performance of affiliated firms we conceive of business groups as responses to market failures and high transaction costs in doing so we develop hypotheses about the effects of group affiliation on firm profitability affiliation could either boost or depress firm profitability and members of a group are likely to earn rates of return similar to other members of the same group using a unique data set compiled largely from local sources we test for these effects in 14 emerging markets argentina brazil chile india indonesia israel mexico peru the philippines south africa south korea taiwan thailand and turkey we find evidence that business groups indeed affect the broad patterns of economic performance in 12 of the markets we examine group affiliation appears to have as profound an effect on profitability as does industry membership yet strategy scholars have a much clearer grasp of industries than of groups moreover membership in a group raises the profitability of the average group member in several of the markets we examine this runs contrary to the wisdom conventional in advanced economies that unrelated diversification depresses profitability overall our findings suggest that the roots of sustained differences in profitability may vary across institutional contexts conclusions drawn in one context may well not apply to another copyright 2001 john wiley sons ltd

hmm filtering and parameter estimation of an electricity spot price model abstract in this paper we develop a model for electricity spot price dynamics the spot price is assumed to follow an exponential ornstein uhlenbeck ou process with an added compound poisson process in this way the model allows for mean reversion and possible jumps all parameters are modulated by a hidden markov chain in discrete time they are able to switch between different economic regimes representing the interaction of various factors through the application of reference probability technique adaptive filters are derived which in turn provide optimal estimates for the state of the markov chain and related quantities of the observation process the em algorithm is applied to find optimal estimates of the model parameters in terms of the recursive filters we implement this self calibrating model on a deseasonalised series of daily spot electricity prices from the nordic exchange nord pool on the basis of one step ahead forecasts we found that the model is able to capture the empirical characteristics of nord pool spot prices

a garch forecasting model to predict day ahead electricity prices price forecasting is becoming increasingly relevant to producers and consumers in the new competitive electric power markets both for spot markets and long term contracts price forecasts are necessary to develop bidding strategies or negotiation skills in order to maximize profits this paper provides an approach to predict next day electricity prices based on the generalized autoregressive conditional heteroskedastic garch methodology that is already being used to analyze time series data in general a detailed explanation of garch models is presented and empirical results from the mainland spain and california deregulated electricity markets are discussed

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

the economic policy uncertainty and firm investment in australia this paper examines the impact of economic policy uncertainty epu on the australian firm investment activity we find a significant positive relationship between the epu and the firm investment o

2 the institutional structure of production 1 prize lecture to the memory of alfred nobel december 9 1991 this abstract was borrowed from another version of this item

property rights and stratification in socialist redistributive economies in socialist economies work organizations differ widely in the compensation they provide employees despite the absence of key product and labor market processes thought to ex plain such inequalities in market economies existing theories of stratification in socialist economies focus on the power and privilege of elites but inequalities among organizations are not created by political particularism or elite power in this paper i sketch elements of an institutional theory of stratification anchored in a conception of property rights the right to derive income from productive assets two aspects of property rights guide the analysis 1 the dispersion of property rights across a hierarchy of governmentjurisdictions and 2 the exercise of these rights by government jurisdictions as they extract revenues primarily through taxation extraction of revenues from a work organization varies with the budgetary resources of a government jurisdiction and the dependence of that jurisdiction on the out puts of the organization variation in revenue extraction in turn creates inequalities among work organizations in their abilities to provide benefits to employees an analysis of survey data on the provision of housing and benefits by work organizations in the large industrial city of tianjin china provides provisional support for these ideas s tudents of communist states have had little reason to dispute lenski s 1966 claim that the distribution of rewards in a society is a func tion of the distribution of power p 63 as ex emplified in szelenyi s wedding of elite theory to institutional economics this idea has been de veloped primarily in terms of the power of class es or occupational groups szelenyi 1978 be gan with the observation that planned economies operate according to redistributive rather than market principles however the process of re

decoding urban land governance state reconstruction in contemporary chinese cities in the rapidly growing literature on urban development in china many authors have emphasised the salient features of economic decentralisation and the increasingly significant role of the local state however such arguments neglect a counter trend in which the central state has deterritorialised and rehierarchised some key functions using the case of land governance this paper argues that facing the complication of changing urban conditions there is a resurgence of the state s regulatory power the decentralisation of economic governance is now counter balanced by the rise of state strategies to control the articulation of scales through which a more centrally consolidated power can be achieved the central government still serves as an important level of economic regulation in this sense new interpretations of commoditised urban transformation especially commoditised production of the built environment should be understood by underscoring the interplay between trends of decentralisation and terr

the isomorphism of local development policy a case study of the formation and transformation of national development zones in post mao jiangsu china it is often the case although it has not been well documented that local governments aiming for economic growth tend to formulate and implement very similar or even identical policies this phe

chinese industrial reform accomplishments prospects and implications why has china grown so fast when conditions thought to be necessary for growth were absent nowhere is this dissonance greater than in china s industrial sector which has recorded big gains in output employment and exports in the absence of privatization effective bankruptcy legislation and other policy innovations widely seen as prerequisites for successful reform this essay reviews the accomplishments of chinese industry since the start of reform in 1978 focusing on the internal dynamics of the development process considers the future of partial reform and discusses the implications of china s industrial reform experience

dynamism capital structure and performance in a sub saharan economy extending the institutional difference hypothesis extant research examining the capital structure performance relationship has been undertaken primarily in developed economies these studies integrate agency theory considerations with the contingency perspective and suggest a positive interaction between sector dynamism equity and performance our study extends this research stream by examining the capital structure performance link in a sub saharan economy an underresearched but economically emerging region using logic undergirding a substantial stream of institutional theory based studies that we term the institutional difference hypothesis we argue that the implications of the capital structure performance relationship are contingent on the extent of national level institutional underdevelopment taking into account institutional differences between developed economies and those in the sub saharan region we hypothesize a negative interaction between sector dynamism equity and firm performance in sub sahara using longitudinal data from ghanaia

governing china s transition to the market institutional incentives politicians choices and unintended outcomes this essay reviews two books that seek to account for china s success in making economic reforms and sustaining rapid growth one perspective explains china s reformist approach in terms of politicians making choices under certain institutional rules the other sees an economic logic of market transition and emphasizes policymakers limited abilities in governing the economy the essay assesses the merits of these competing claims it calls for better specification of the causal linkages between institutional rules and politicians choices and concludes that both the dynamics and dilemmas of china s political economy are explained in terms of increasing market competition finally the essay evaluates the argument that decentralization leads to market segmentation and points to the chinese government s evolving role in dealing with the economy

the development of china s solar photovoltaic industry why industrial policy failed this article studies china s central local government relations in the formation and implementation of an industry policy in china the central government is responsible for policy formation and the local governments are responsible for policy implementation where local governments are allowed ample flexibility in the ways to achieve the policy mandate this arrangement is conducive to local competition but there is no built in mechanism in the system to regulate such competition the system is defective in the execution of an industrial policy in that it fails to discipline the recipients of policy favours and to make efficient exit selections because local competition involves policy resources as well as economic resources the outcome of competition is not necessarily consistent with the comparative advantage of the region the more that policy is emphasised in industrial development the more that competition tends to favour large and rich cities after a certain period of hands off local competition the timing of which is unpredictable but will come when the industry runs into troubles the central government holds the ultimate power to determine the winners the central government typically picks the large and strong firms as the winners which are crowned as a national team and became eligible for further policy support this institutional set up produces a rapidly growing industry which often results in over capacity but not necessarily a competitive industry i use the case of china s solar photovoltaic industry to illustrate these points

what do we know about investment under uncertainty recent theoretical developments relating to investment under uncertainty have highlighted the importance of irreversibility for the timing of investment expenditures and their expected returns this has subsequently stimulated a growing empirical literature which examines uncertainty and threshold effects on investment behaviour this paper presents a review of this literature a variety of methods have been used to investigate the empirical implication of irreversibility in investment the majority focusing on the relationship between investment flows and proxy measures of uncertainty a general conclusion is that increased uncertainty at both aggregate and disaggregate levels leads to lower investment rates this suggests that there is an irreversibility effect under which greater uncertainty raises the value of the call option to delay a commitment to investment this effect appears to dominate any positive impact on investment arising from the fact that greater uncertability under certain circumstances increases the marginal profitability of capital the methods used raise a number of issues which call into question the reliability of the findings and these are addressed in the paper however if such irreversibility effects are present then their omission from traditional investment models casts doubt on the efficacy of such specifications jel classification d81 d92 e22

a social institutional approach to identifying generation cohorts in china with a comparison with american consumers identifying distinctive target segments is a fundamental challenge faced by international marketers this paper describes an approach to understanding consumer market structures in an important international market china and to segmenting chinese consumers by integrating insights from generational cohort and social institutional theories we conduct two empirical studies to verify how china s recent momentous ideological events could give rise to and affect the life experiences of different generation cohorts in the country the results of study 1 support the conceptual framework and establish three distinct cohorts in china red guards modern realists and global materialists study 2 builds on the findings of study 1 it links cohort differences to differences in consumer values materialism and choice behaviors foreign vs local brands and then compares them with parallel consumers in the united states this paper outlines and tests an approach to segmentation that can help international firms identify distinct segments in and design effective marketing strategies for china

china s changing urban governance in the transition towards a more market oriented economy china s changing urban development processes and urban landscapes in the transition towards a more market oriented economy have received extensive research attention in recent years relatively the governing of chinese cities is still underresearched this article aims to analyse the forces released both inside and outside the formal socialist state system and the impacts on phenomenal restructuring of urban governance especially at local levels marketisation has created new elements beyond the reach of state work units that represent the state s hierarchical control the pillars of the socialist governing structure the party state the work units system and household registration are shaken by these forces the changes in the organisation of people capital production materials infrastructure and space fundamentally demand new urban governance territorial organisations such as the municipality urban districts street office and residents committees are reinvented and consolidated to restore a governable society the devolution towards the base level and the reinvention of local communities reflect the state s attempt to reconsolidate its power to create a governable society as well as to cope with practical pressures such as the provision of social assistance to poor and aged residents re employment of laid off workers and the management of floating immigrants the combination of new market elements and decentralised state apparatus has given rise to the entrepreneurial endeavour of china s governance this research highlights the micro foundation of the new urban governance in addition to the globalisation capital mobility city competitiveness thesis

capital structure in transition the transformation of financial strategies in china s emerging economy during economic transition firms must dramatically reduce their financial dependence on the state and begin to borrow from nonstate capital sources this paper draws on institutional and resource dependence theories to examine this fundamental transformation of firm capital structure during china s transition i propose that managers borrowed from external sources even when internal funds were available because retained earnings were considered state assets firms used retained earnings to signal financial health but borrowed externally to reduce dependence on the state uncertainty during transformation produced interfirm imitation of borrowing strategies particularly imitation of local and high status others i argue that the dynamics of market development shaped firm borrowing strategies and that these strategies are best viewed as trajectories over time analysis of survey data on the 1980 1989 capital structure of formerly state owned firms provides support for these arguments and highlights the importance of institutional context in understanding corporate borrowing and strategic decision making

exchange structures in transition lending and trade relations in chinese business groups the networks of interfirm relations that developed in business groups during economic transition are central to china s reform and are becoming an important part of the country s emergent economic structure using a recent and original data set that includes direct observations of economic choices made by firms the process by which these interfirm lending and trade ties emerged and evolved in the early stages of reform is explored initially information from sources external to the network dominated the formation and direction of exchange relations firms turned to their prior connections took advantage of market position and drew on bureaucratic power to develop alliances over time internal influences gained importance and managers increasingly drew on internal nontrade relations and other indicators inside the business group to identify lending and trade partners the results demonstrate the central but changing role that social relations and environmental cues played in the creation of economic structure during china s transition this study also contributes to an understanding of the processes of organizational adaptation to a major economic transition and interfirm alliance formation more generally the findings reveal that firms select exchange partners of known reputation and solicit relations that reduce uncertainty even when there is a cost involved

investment and demand uncertainty this paper investigates the effects of uncertainty on the investment decisions of a sample of italian manufacturing firms using information on the subjective probability distribution of future demand for firms products according to the entrepreneurs the results support the view that uncertainty weakens the response of investment to demand thus slowing down capital accumulation consistent with the predictions of the theory there is considerable heterogeneity in the effect of uncertainty on investment it is stronger for firms that cannot easily reverse investment decisions and for those with substantial market power we show that the negative effect of uncertainty on investment cannot be explained by uncertainty proxying for liquidity constraints

engineering growth business group structure and firm performance in china s transition economy business groups have received increasing attention from academics interested in interorganizational relations and their impact on firms as part of industrial reform the chinese government began in the mid 1980s to encourage firms to form business groups with structural characteristics that promised to enhance financial performance and productivity using 1988 90 panel data on china s 40 largest business groups and their 535 member firms the study finds that the presence and predominance of interlocking directorates and finance companies in business groups improved the financial performance and productivity of the groups member firms in addition firms in groups with nonhierarchical organizational structures performed better than firms in hierarchical groups suggesting that complete integration into a hierarchical organization is not an optimal strategy

patents as options some estimates of the value of holding european patent stocks in many countries holders of patents must pay an annual renewal fee in order to keep their patents in force this paper uses data on the proportion of patents renewed and the renewal fees faced by post world war ii cohorts of patents in france the united kingdom and germany in conjunction with a model of patent holders renewal decisions to estimate the returns earned from holding patents in these countries since patents are often applied for at a nearly stage in the innovation process the model allows agents to be uncertain about the sequence of returns that will be earned if the patent is kept inforce formally then the paper presents and solves a discrete choice optimal stochastic control model derives the implications of the model on aggregate behaviour and then estimates the parameters of the model from aggregate data the estimates enable a detailed description of the evolution of the distribution of returns earned from holding patents over their life spans and calculations of both the annual returns earned from holding the patents still in force or the patent stocks in the alternative countries and the distribution of the discounted value of returns earned from holding the patents in a cohort this abstract was borrowed from another version of this item

the structure of ownership and the theory of the firm the separation of ownership from control produces a condition where the interests of owner and of ultimate manager may and often do diverge and where many of the checks which formerly operated to limit the use of power disappear in creating these new relationships the quasi public corporation may fairly be said to work a revolution it has divided ownership into nominal ownership and the power formerly joined to it thereby the corporation has changed the nature of profit seeking enterprise 1

local governments as industrial firms an organizational analysis of china s transitional economy despite widespread skepticism about government ownership in transitional economies china s rapid industrial growth has been led by public enterprises kornai s theory of soft budbet constraints born of the failure of earlier hungarian reforms fosters such skepticism but it assumes as fixed organizational characteristics that in fact vary widely across government jurisdictions local governments with smaller industrial bases have clearer financial incentives and constraints fewer nonfinancial interests in enterprises and a greater capacity to monitor them in china s vast public sector the fastest growth in output and productivity has occurred where government ownership rights are clearest and most easily enforced which enables officials to manage public industry as a diversified market oriented firm

investments of uncertain cost abstract this paper examines irreversible investment decisions when projects take time to complete and are subject to two types of cost uncertainty the first is technical uncertainty i e uncertainty over the physical difficulty of completing a project which is only resolved as the investment proceeds the second is input cost uncertainty i e uncertainty over the prices of construction inputs or over government regulations affecting construction costs which is external to the firm these two types of uncertainty have very different effects on the investment decision a simple investment rule is derived that maximizes firm value and is used to analyze the decision to start or continue building a nuclear power plant during the 1980s

leaders managers and the organization of township and village enterprises in china abstract the managerial contractual form in china s township and village enterprise tve sector has evolved rapidly during the past 10 years our paper uses descriptive data and a theoretical model to demonstrate that these changes may be occurring in response to the rapid development of markets in transitional rural china we econometrically test the model s main hypotheses showing that the driving force behind the movement from a leader run fixed wage contract to a fixed payment contract with better incentives for the manager is the relative value of non marketed inputs owned by local leaders and firm managers firm technical structure and local market setting also plays a role in the determination of firm contractual form

elite opportunity in transitional economies command economies gave communist era elites administrative control and material privilege but severely restricted money income and private wealth markets and privatization have injected new value into public assets and create unprecedented opportunities for elite insiders these opportunities depend on the extent of regime change and barriers to asset appropriation regime change varies from the survival of the entire party hierarchy to its rapid collapse and defeat in competitive elections barriers to asset appropriation vary with the extent pace and form of privatization and the concentration and liquidity of assets different combinations of such circumstances jointly affect the extent to which prior elites obtain ownership or control of privatized assets use political office to extract larger incomes move into salaried elite occupations or fall out of the elite altogether regime change and barriers to asset appropriation affect change at the national level but outcomes vary across economic sectors because of characteristics of organizations elite positions and assets this elementary theory serves to integrate varied findings from recent research on central europe china and russia and yields predictions for other regions

r d determinants accounting for the differences between research and development the determinants of r d are an important topic of innovation studies the classical schumpeterian hypotheses about the influence of size and market power have been complemented with the role played by industry determinants such as demand pull technological opportunity and appropriability in determining r d investments however r d has always been considered as a whole even though research and development activities differ in many aspects we take advantage of a new panel database of innovative spanish firms pitec to distinguish between research and development efforts of firms we analyze the differentiated role played by traditional r d determinants in driving research and development results show that demand pull and appropriability have a higher effect on development while technological opportunity is more influential for research differences are statistically significant important in magnitude and robust to the use of different indicators for demand pull technological opportunity and appropriability and to several robustness checks

market culture and authority a comparative analysis of management and organization in the far east three frameworks purport to explain industrial arrangements and practices a market approach that emphasizes economic characteristics a cultural approach that sees organization as the expression of patterned values and an authority approach that explains organization as a historically developed structure of domination the efficacy of each approach is tested in explaining the organizational structures of three rapidly growing east asian economies japan south korea and taiwan the paper argues through comparative analysis that organizational growth is best explained by market and cultural factors but that authority patterns and legitimation strategies best explain organizational structure

an exogeneity test for a simultaneous equation tobit model with an application to labor supply a test of weak exogeneity in the simultaneous equation tobit model is proposed and illustrated using a female labour supply model estimated using cross section data the test statistic can be simply output from any standard tobit maximum likelihood package and is asymptotically efficient the procedure provides consistent estimators for the simultaneous tobit model whose asymptotic covariance matrix is a simple extension of the usual tobit formula we also provide the lagrange multiplier test of weak exogeneity this abstract was borrowed from another version of this item

the impact of cash flow volatility on discretionary investment and the costs of debt and equity financing abstract we show that higher cash flow volatility is associated with lower average levels of investment in capital expenditures r d and advertising this association suggests that firms do not use external capital markets to fully cover cash flow shortfalls but rather permanently forgo investment cash flow volatility also is associated with higher costs of accessing external capital moreover these higher costs as measured by some proxies imply a greater sensitivity of investment to cash flow volatility thus cash flow volatility not only increases the likelihood that a firm will need to access capital markets it also increases the costs of doing so

diversification returns and asset contributions 1992 diversification returns and asset contributions financial analysts journal vol 48 no 3 pp 26 32

learning to compete in a transition economy experience environment and performance does organizational learning as measured by experience in a host country affect international expansion performance if so does such a relationship between experience and performance hold over time how do the environmental forces in the host country affect such a relationship focusing on organizational learning by multinational enterprises mnes operating in a transition economy this study answers these three critical questions by exploring the relationships among experience environment and performance at the subsidiary level based on a recent survey of 108 mne subunits operating in china we find that the intensity and diversity of host country experience is an important predictor of subunit performance while the positive effect of the intensity of experience on performance diminishes over time the impact of the diversity of experience on performance remains unchanged moreover for mnes experiencing greater environmental dynamism complexity and hostility there is a stronger positive relationship between experience and performance