efficient and durable decision rules with incomplete information we compare six concepts of efficiency for economies with incomplete information depending on the stage at which individuals welfare is evaluated and on whether incentive constraints are recognized an example is shown in which an incentive efficient decision rule may be unanimously rejected by the individuals in the economy we define durable decision rules which can resist such unanimous rejection and show that efficient durable decision rules exist

competition and social influence the diffusion of the sixth generation processor in the global computer industry1 when is a social actor most strongly influenced by its peers this article addresses this question by clarifying when computer firms were most strongly affected by the choices of their structurally equivalent rivals to adopt a well known technology intel s sixth generation processor the core hypothesis is that the effect of adoptions by structurally equivalent firms increases with the competitive pressure that a focal firm faces in its market position the results show that a chosen firm is most strongly influenced by comparable others when it faces scale based competition and is diversified the implications of this study are twofold a social actor s sensitivity to the conduct of others may depend not only on its place in a hierarchy but also on the nature of its ties to an external audience and a contingent theory of social influence may be necessary to characterize diffusion processes correctly particularly when external and time varying nonnetwork factors have significant effects

the performance implications of strategic fit of relational norm governance strategies in global supply chain relationships the search for strategic fit has become a core concept in normative models of strategy formation the issue of strategic fit is becoming increasingly important in global supply chain relationships as managers and academics examine the effectiveness of culturally founded relational governance strategies across multiple supply chain relationships this study empirically examines the performance implications of strategic fit of relational norm governance strategies in global supply chain relationships between us firms and their primary japanese and us partners the performance implications of fitting relational norm governance strategies i e information exchange flexibility and solidarity across culturally diverse partners are tested results indicate that firm performance is enhanced when the relational norms of information exchange and solidarity are fit to culturally founded norm expectations across culturally diverse relationships simultaneously implications for theory and practice are discussed

price volatility in the carbon market in china abstract china is the world s largest developing country and a carbon dioxide emitter a functional carbon market can effectively reduce carbon emissions this paper uses the markov chain monte carlo stochastic volatility model and the wavelet multi resolution model to analyze the volatility of price returns and the dynamic characteristics of price fluctuations in the carbon pilot markets in hubei shanghai and shenzhen the price movements in these markets are compared to the emissions trading system of the european union eu ets the results show that there is a volatility clustering in the price of carbon trading in hubei shanghai shenzhen and the eu ets china s carbon pilot markets have a deficiency in terms of volatility stability as does the eu ets from a long term perspective china s carbon market lacks a detailed development plan which is vital because the construction of the market system is not yet optimal from a short term view china s carbon market is not active and the participants attitude toward risk is extremely sensitive

decision specific experience in foreign ownership and establishment strategies evidence from japanese firms in this paper we examine the importance of decision specific experience for a multinational firm s foreign ownership structure and establishment mode decisions a unique procedure to measure the decision specific experience construct is developed based on data for the period 1969 1991 we find strong empirical evidence from experiences of japanese firms to support the hypotheses that firms tend to select ownership structures and establishment modes based on their experiences with similar ownership structures and establishment modes in the past

comparing policies to confront permit over allocation abstract instability in cap and trade markets particularly with respect to permit price collapses has been an area of concern for regulators to that end several policies including hybrid price quantity mechanisms and the newly introduced market stability reserve msr systems have been introduced and even implemented in some cases i develop a stochastic dynamic model of a cap and trade system parameterized to values relevant to the european union s emission trading system eu ets to analyze the performance of these policies aimed at adding stability to the system or at least at reducing perceived over allocations of permits results suggest that adaptive allocation mechanisms such as a price collar or msr can reduce permit over allocations and permit price volatility in a more cost effective manner than simply reducing scheduled permit allocations however it is also found that the performance of these adaptive allocation policies and in particular the msr are greatly affected by assumed discount rates and policy parameters

reprint of price and quantity collars for stabilizing emission allowance prices laboratory experiments on the eu ets market stability reserve abstract we report on laboratory experiments with financially motivated participants comparing alternative proposals for managing the time path of emission allowance prices in the face of random firm specific and market level structural shocks market outcome measures such as social surplus and price variability are improved by the use of a price collar auction reserve price and soft price cap comparable performance enhancements are not observed with the implementation of a quantity collar that adjusts auction quantities in response to privately held inventories of unused allowances in some specifications the quantity collar performed worse than no stabilization policy at all the experiment implemented a specific set of structural elements and extrapolation to other settings should be done with caution nevertheless an examination of the observed behavioral patterns and deviations from optimal behavior suggests that a price collar has an important although perhaps not exclusive role to play in constructing an effective market stability policy

a symmetric safety valve abstract how to set policy in the presence of uncertainty has been central in debates over climate policy concern about costs has motivated the proposal for a cap and trade program for carbon dioxide with a safety valve that would mitigate against spikes in the cost of emission reductions by introducing additional emission allowances into the market when marginal costs rise above the specified allowance price level we find two significant problems both stemming from the asymmetry of an instrument that mitigates only against a price increase one is that most important examples of price volatility in cap and trade programs have occurred not when prices spiked but instead when allowance prices collapsed second a single sided safety valve may have unintended consequences for investment we illustrate that a symmetric safety valve provides environmental and welfare improvements relative to the conventional one sided approach

supply of renewable energy sources and the cost of eu climate policy abstract what are the excess costs of a separate 20 target for renewable energy as a part of the eu climate policy for 2020 we answer this question using a computable general equilibrium model worldscan which has been extended with a bottom up module of the electricity sector the model set up makes it possible to base the calibration directly on available estimates of costs and capacity potentials for renewable energy sources in our base case simulation the costs of eu climate policy with the renewables target are 6 higher than those of a policy without this target the uncertainty in this estimate is considerable however and depends on our assumptions about the availability of low cost renewable energy the initial cost level the steepness of the supply curves and share of renewable energy in the baseline within the range we explore the excess costs vary from zero when the target is not a binding constraint to 32 when the cost progression and the initial cost disadvantage for renewable energy are high and its initial share is low

geography industrial organization and agglomeration this paper makes two contributions to the empirical literature on agglomeration economies first the paper uses a unique and rich database in conjunction with mapping software to measure the geographic extent of agglomerative externalities previous papers have been forced to assume that agglomeration economies are club goods that operate at a metropolitan scale second the paper tests for the existence of organizational agglomeration economies of the kind studied qualitatively by saxenian 1994 this is a potentially important source of increasing returns that previous empirical work has not considered results indicate that localization economies attenuate rapidly and that industrial organization affects the benefits of agglomeration

foreign entry cultural barriers and learning this paper examines the longevity of foreign entries hypotheses are developed on the mode start ups vs acquisitions and ownership structure wholly owned vs joint ventures in relation to cultural distance the hypotheses are tested within a framework of organizational learning using data on 225 entries that 13 dutch firms carried out from 1966 onwards results show that the presence of cultural barriers punctuates an organization s learning cultural distance is a prominent factor in foreign entry whenever this involves another firm requiring the firm to engage in double layered acculturation we also identify locational paths of learning the longevity of acquisitions is positively influenced by prior entries of the firm in the same country similarly the longevity of foreign entries in which the firm has a majority stake improves whenever the expanding firm engaged in prior entries in the same country and in other countries in the same cultural block

bargain hunting or star gazing investors preferences for stock mutual funds investors who wish to purchase shares in mutual funds balance many types of information from a variety of sources when making their fund selection this research examines how investors choose a mutual fund within a given class of funds among the major findings are that investors pay a great deal of attention to past performance and vastly overweight loads relative to expense ratios when evaluating a fund s overall fee structure i also find that investors with a greater knowledge of basic finance are less likely not more likely to make reasonable fund choices

linking numerical and analytical models of carbon leakage carbon leakage describes the economywide response in carbon emission levels caused by abatement in one part of the economy most quantitative studies of carbon leakage predict that 10 30 percent of unilateral abatement efforts will be offset by emission increases a positive net leakage effect elsewhere in the world economy this is the subject of intense policy focus in international climate policy debates because countries contemplating new policies to reduce domestic emissions worry that their efforts will be rendered costly and ineffective in a recent theoretical study fullerton karney and baylis 2012 henceforth fkb identify a new potential source of carbon leakage effects which they refer to as the abatement resource effect are the intuition for this effect is that when stricter carbon regulation comes into effect in one part of the economy it may draw basic factors of production away from other carbon intensive activities the authors show that if this effect is strong enough an economy may exhibit negative net leakage in response to the policy change that is emissions levels outside of the abating part of the economy may fall as these resources are drawn away and the scale of their operations shrinks fkb identify the key parameters responsible for producing the net leakage effect in their model intuitively it depends on a substitution parameter that governs the ease with which the economy can shift out of the use of carbon ser vices and into other resources within the regulated sector or region a technique effect and on a substitution parameter which governs the ease with which the economy can shift out of

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

a comparison of the dynamics of industrial clustering in computing and biotechnology abstract this paper compares the dynamics of the process by which industrial clusters emerged in the us computing and biotechnology industries it examines whether new companies are attracted by industry strength in particular sectors or by the strength of the science base at particular locations in biotechnology it also compares the growth of incumbent firms in the two industries and asks whether growth is boosted by being within a cluster the paper finds that within computing there are some important cross sectoral effects on entry while in biotechnology these cross sectoral effects are more limited in biotechnology the science base plays an important role in promoting entry the growth of incumbent firms in both industries is promoted by strength in the company s own sector and cross sectoral effects and the role of the science base are negligible

impact of renewables deployment on the co2 price and the co2 emissions in the european electricity sector abstract as of 2005 electricity generators in europe operate under the european union emission trading system eu ets at the same time european member states have launched support mechanisms to stimulate the deployment of renewable electricity sources res e res e injections displace co 2 emissions within the sectors operating under the eu ets and they reduce the demand for european union allowances euas thereby reducing the eua price this paper presents the results of an ex post analysis to quantify the impact of res e deployment on the eua price and co 2 emissions in the western and southern european electricity sector during the period from 2007 to 2010 following from an operational partial equilibrium model of the electricity sector this study shows that the co 2 displacement from the electricity sector to other ets sectors due to res e deployment can be up to more than 10 of historical co 2 emissions in the electricity sector the eua price decrease caused by res e deployment turns out to be likely significant

the internationalization of entrepreneurship our article that has been awarded the 2004 journal of international business studies decade award toward a theory of international new ventures represents an integration of international business entrepreneurship and strategic management scholarship this retrospective article explains the intellectual and personal origins of the work in addition it highlights the definitions of international new ventures and international entrepreneurship finally in response to recent concerns about the importance of international business scholarship the research discussed here stands as an example of the successful exportation of international business scholarship into adjacent disciplines

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

creating value through mutual commitment to business network relationships a structural model of business relationship development in a business network context is formulated and tested on delta from the european international marketing and purchasing imp project the e

identity claims and diffusion of sustainability report evidence from korean listed companies 2003 2010 this study integrates theories of diffusion and social identity to conceptualize the diffusion of sustainability report sr as a result of a firm s identification with its reference groups specifically we first hypothesize four different sources of external stakeholder pressures driving the diffusion next we argue that the source of external stakeholder pressures has a differential effect on the adoption of sr for firms that claim their identity on sustainability management for firms with organizational identity claims in group stakeholder pressure will amplify whereas out group stakeholder pressure will dampen the adoption we test our theory using an event history analysis of 675 publicly traded firms in korea during the period of 2003 2010 the results show that all four sources of external pressure serve as mechanisms through which sr spread in korea more importantly we find support for the moderating role of organizational identity claims in the effect of external pressures we discuss how organizational identity matters in the diffusion of corporate social initiatives along with implications for policy makers

eu climate policy up to 2020 an economic impact assessment in its fight against climate change the eu is committed to reducing its overall greenhouse gas emissions to at least 20 below 1990 levels by 2020 to meet this commitment the eu builds on segmented market regulation with an eu wide cap and trade system for emissions from energy intensive installations ets sectors and additional measures by each eu member state covering emission sources outside the cap and trade system the non ets sector furthermore the eu has launched additional policy measures such as renewable energy subsidies in order to promote compliance with the climate policy target basic economic reasoning suggests that emission market segmentation and overlapping regulation can create substantial excess costs if we focus only on the climate policy target in this paper we evaluate the economic impacts of eu climate policy based on numerical simulations with a computable general equilibrium model of international trade and energy use our results highlight the importance of initial market distortions and imperfections as well as alternative baseline projections for the appropriate assessment of eu compliance cost

production functions for climate policy modeling an empirical analysis abstract quantitative models for climate policy modeling differ in the production structure used and in the sizes of the elasticities of substitution the empirical foundation for both is generally lacking this paper estimates the parameters of 2 level ces production functions with capital labour and energy as inputs and is the first to systematically compare all nesting structures using industry level data from 12 oecd countries we find that the nesting structure where capital and labour are combined first fits the data best but for most countries and industries we cannot reject that all three inputs can be put into one single nest these two nesting structures are used by most climate models however while several climate policy models use a cobb douglas function for part of the production function we reject elasticities equal to one in favour of considerably smaller values finally we find evidence for factor specific technological change with lower elasticities and with factor specific technological change some climate policy models may find a bigger effect of endogenous technological change on mitigating the costs of climate policy

corporate reorganization and the geography of services evidence from the motor vehicle aftermarket in the west midlands region of the uk marshall j n 1989 corporate reorganization and the geography of services evidence from the motor vehicle aftermarket in the west midlands region of the uk reg studies 23 139 150 research suggests that a corporate complex of administrative managerial and technical staff in the hinterland of capital cities underpins the spatial centralization of service activities in the economy there have been important changes in corporate structures during the last decade firms have reduced their in house provision of some services resorting to external contractors instead divisional and middle management activities have been rationalized and more autonomy delegated to lower levels in the corporate hierarchy using new technology firms have also expanded the range and quality of services provided in house this paper explores the geographical implications of these and other changes in business organization a case study of the motor vehicle aftermarket in the west midlands region of the uk suggests that sim

media legitimation effects in the market for initial public offerings in this study we argue that media provided information affects investors impressions of newly public firms in 225 initial public offerings ipos the volume of mediaprovided information had a negative diminishing relationship with underpricing and a positive diminishing relationship with stock turnover on the first day of trading the relationship between the tenor of media provided information and underpricing increases at a nonlinear rate and decreases similarly for turnover findings provide important evidence that publicly available information not only reflects ipos legitimacy but also adds to their legitimacy and influences investor behavior in the last 20 years an increasing amount of research on markets has been conducted from a social constructionist perspective emphasizing how social structures enhance the flow of useful and credible information that market participants use to reduce the uncertainty of market exchanges e g aldrich fiol 1994 zuckerman 1999 further recent organizational research has begun to stress the influence of information intermediaries such as financial analysts and the media on mar

solving theoretical and empirical conundrums in international strategy research linking foreign entry mode choices and performance several theoretical and empirical developments in the literature on foreign entry mode and performance and on international strategy more generally were influenced or prefigured by brouthers 2002 jibs decade award winning paper regarding theory brouthers is an archetype of the integration of transaction cost and institutional perspectives i argue that it is also relevant to the growing literature that aims at synthesizing these and other perspectives methodologically brouthers 2002 contributed several uniquely direct and rich measures furthermore it not only displayed awareness of endogeneity specifically self selection issues but also was among the pioneers in the comparative analysis of governance choices for a given firm or transaction i elaborate on the promising if challenging use of such what if imputation to identify the impact of more or less well aligned choices overall i argue that such methodological advances cannot be decoupled from the conceptual advances that enable them and which they reinforce

branch plants and the evolving spatial division of labour a study of material linkage change in the northern region of england phelps n a 1993 branch plants and the evolving spatial division of labour a study of material linkage change in the northern region of england reg studies 27 87 101 recent literature has suggested that manufacturing industry including that in peripheral regions is becoming more locally embedded as a result of processes of externalization and localized linkage formation this paper explores the hypothesis that branch plants have in terms of spatial patterns of material linkages become more locally embedded as a result of recent industrial restructuring evidence from a survey of manufacturing establishments in the northern region of england is used to explore hypotheses regarding the contribution of new greenfield investments and in situ restructuring to aggregate changes in spatial patterns of linkages the results suggests that despite processes of externalization northern region branch plants continue to be poorly integrated into the regional economy consequently it is argued that the cont

relocation of headquarters and international taxation about 6 of multinationals relocated their headquarters to another country in the 1997 2007 period this paper presents empirical evidence on the role of taxes in these relocation decisions it considers a sample of 140 multinationals that relocated their headquarters over the past decade and compares them to a control group of 1943 multinationals that did not relocate it is found that the additional tax due in the home country upon repatriation of foreign profits has a positive effect on the probability of relocation the empirical results suggest that an increase in the repatriation tax by 10 percentage points would raise the share of relocating multinationals by 2 2 percentage points equivalent to an increase in the number of relocations by more than one third furthermore the presence of controlled foreign corporation legislation also has a positive effect on the number of relocations

industry specific firm growth and agglomeration duschl m scholl t brenner t luxen d and raschke f industry specific firm growth and agglomeration regional studies this paper analyses the industry specific relationship between industrial clustering and firm growth micro geographically defined agglomeration measures based on travel time distances and a flexible log logistic decay function framework are used to study the spatial impacts of related economic and knowledge generating activities in 23 industries it is found that firms growth prospects tend to be generally hampered by the agglomeration of own industry employment whereas the impact of proximate scientific activities systematically depends on the kind and age of industry furthermore the optimal specifications of decay function that measures agglomeration effects considerably vary between both the industrsssies and the variables

managerial cognition and the mimetic adoption of market positions what you see is what you do managers planning to abandon a market position need to find a promising alternative and face a choice of inventing a new market position or entering an existing one the great uncertainty on the consequences of different actions leads them to rely on other organizations for information on how to compete making adoption of existing market positions likely their wish to avoid direct rivalry and maximize growth leads them to seek out information on new market positions with few incumbents as a result recently innovated market positions are mimetically adopted by organizations that can easily observe previous adoptions and see them as relevant to their market situations increasing the market differentiation this theory is tested and supported by analysis of the spread of new radio formats in the united states 1998 john wiley sons ltd

carbon pricing in the eu evaluation of different eu ets reform options abstract this paper studies various options to support allowance prices in the eu emissions trading system ets such as adjusting the cap an auction reserve price and fixed and variable carbon taxes in addition to the eu ets we use a dynamic computable general equilibrium model that explicitly allows for allowance banking and for a detailed cost effectiveness analysis at the eu member state level we find that tightening the cap provides an ad hoc solution to the fundamental issue of the robustness of the effective carbon price while introducing a price component to the ets brings structural carbon price support in times of negative demand shocks for emission allowances these price based policies still benefit from the intertemporal flexibility through the banking provision in the eu ets by re allocating emissions over time with stronger emission reductions in early years and emission increases in later years a higher emission price has a larger negative impact on the new member states economies than on other member states furthermore introducing a carbon tax in addition to the eu ets decreases the price of allowances resulting in welfare gains for net buyers of allowances while net sellers are worse off

in search of excellence fads success stories and adaptive emulation1 the faddishness of the business community is often noted and lamented but not well understood by standard models of innovation and diffusion we combine arguments about organizational cognition and institutional mimicry to develop a model of adaptive emulation where firms respond to perceived failure by imitating their most successful peers computational experiments show that this process generates empirically plausible cascades of adoption even if innovations are entirely worthless faddish cycles are most robust across alternative treatments of managerial decision making where innovations have modest positive effects on outcomes these results have broad implications for the faddishness of a business community increasingly marked by media driven accounts of success and for the properties of organizational practices that are hot one day and cold the next

economic behavior in institutional environments the corporate merger wave of the 1980s over the last 100 years the united states has experienced four waves of corporate merger activity the first occurred at the turn of the century then again in the 1920s the 1960s and the 1980s most research on merger waves has focused on individual mergers within a wave our research focuses on the wave itself we develop a theoretical model that centers on the actors who promote the mergers and on those changes in the political and economic environments that provide the resources these actors need to act specifically we argue that a permissive state combined with increased access to capital market funds encourages fringe players to initiate the innovations that enable them to execute mergers merger waves occur when these actors become increasingly successful and their innovations are imitated throughout the business community we provide empirical support for the model using data from the 1980 s merger wave

refraining from imitation professional resistance and limited diffusion in a financial market why do some practices not spread although this is an important question for both diffusion theorists and those interested in institutional change we know surprisingly little about the limitations on diffusion because most diffusion studies sample on successful diffusion i address the question of why some practices fail to spread by introducing the concept of a deviance discount a deviance discount is a systematic downgrading of the observed adoption performance of controversial practices which limits the contagion of such practices i test and find qualitative and quantitative support for my thesis in the product introduction behavior of swedish mutual fund firms my findings hold implications for diffusion theory and theories of endogenous institutional change

cross border relocations of headquarters in europe this paper analyzes the relocations of both corporate and regional headquarters hq in a multi country setting on the basis of a dataset of 52 cross border hq relocations in europe during 1996 2006 we document an increasing trend toward relocation push and pull factors affecting hq location choice and catalyzing factors that affect the relocation decision high taxes and a high employment rate represent push factors that we find to increase the likelihood of hq relocation in particular at the mean rate of corporate tax a one percentage point increase in tax translates into a 6 8 increase in hq relocation likelihood in contrast central location and low taxes represent pull factors that increase the attractiveness of the hq location in terms of catalyzing factors we find that export oriented companies and regional hq have a higher tendency to relocate as a whole we extend the existing research by putting forward a conceptual framework of hq relocation decisions and by providing novel empirical evidence on the hq relocation phenomenon our findings contribute to an improved understanding of the determinants of corporate hq relocation decisions and provide important tax policy considerations for public policy decision makers in individual european countries and in the european commission

cost effective unilateral climate policy design size matters given the bleak prospects for a global agreement on mitigating climate change pressure for unilateral abatement is increasing a major challenge is emissions leakage border carbon adjustments and output based allocation of emissions allowances can increase effectiveness of unilateral action but introduce distortions of their own we assess antileakage measures as a function of abatement coalition size we first develop a partial equilibrium analytical framework to see how these instruments affect emissions within and outside the coalition we then employ a computable general equilibrium model of international trade and energy use to assess the strategies as the coalition grows we find that full border adjustments rank first in global cost effectiveness followed by import tariffs and output based rebates the differences across measures and their overall appeal decline as the abatement coalition grows in terms of cost the coalition countries prefer border carbon adjustments countries outside the coalition prefer output based rebates

regulation by prices quantities or both a review of instrument choice choosing appropriate policy instruments is an important part of successful regulation once objectives are agreed and suitable targets adopted policy makers can employ command and control regulation and or economic instruments and choose between fixing a price or a quantity this paper examines the relative advantages of price quantity and hybrid instruments according to their efficiency under uncertainty the trade off between credible commitment and flexibility implementation international considerations and political economy various illustrations of the theory are provided with two detailed applications to climate change and transport policy specifically congestion and safety pricing

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

when market information constitutes fields sensemaking of markets in the commercial music industry in this paper we outline a key mechanism through which organizational fields are constituted we suggest that in competitive fields the market serves as a magnet around which groups of actors consolidate and that cognition of markets occurs through the creation distribution and interpretation of a web of information about the market to illustrate our theory we present a case study of thebillboard music chart from the commercial music industry to show that changes in either scope methodology or political tone with which market information is presented can provide a major jolt to the participants understanding of their field

how much does ownership really matter equity and trust relations in joint venture relationships in this paper i reaffirm the role of trust in interfirm relations and make an appeal for more cross disciplinary work to further our insights into the functioning of important phenomena of interest such as international joint ventures i also pose a couple of fundamental questions 1 is ownership over rated that is should we and our scholarship be so consumed with issues of ownership 2 is trust under rated in what way might we and our scholarship change if we assumed trust rather than opportunism in what way might it change firms attitudes and behavior towards their partnership relations

collusion in a three tier hierarchy credible beliefs and pure self interest abstract the assumption of a purely self interested supervisor in the principal supervisor agent framework gives rise to the possibility of supervisor agent collusion in this paper i show that equilibrium refinement assumptions on type belief updating during side contract negotiations can guarantee that collusion occurs even if the principal is allowed to manipulate the incentives in the contract he offers the only way to prevent collusion is to ignore the supervisor thus the role of a purely self interested supervisor in this case is questioned lastly i discuss some plausible alternatives and explanations of the assumption of pure self interest

a model of intertemporal emission trading banking and borrowing abstract this paper provides a general treatment of emission trading banking and borrowing in an intertemporal continuous time model using optimal control theory the decentralized behavior of firms is shown to lead to the least cost solution attainable under joint cost minimization explicit solutions for the time paths of emissions and permit prices are derived when firms are allowed to both bank and borrow and when firms are only allowed to bank emission permits the policy implications of emission banking and borrowing are discussed

combining price and quantity controls to mitigate global climate change abstract uncertainty about compliance costs causes otherwise equivalent price and quantity controls to behave differently and leads to divergent welfare consequences although most of the debate on global climate change policy has focused on quantity controls due to their political appeal this paper argues that price controls are more efficient simulations based on a stochastic computable general equilibrium model indicate that the expected welfare gain from the optimal price policy is five times higher than the expected gain from the optimal quantity policy an alternative hybrid policy combines both the political appeal of quantity controls with the efficiency of prices using an initial distribution of tradeable permits to set a quantitative target but allowing additional permits to be purchased at a fixed trigger price even sub optimal hybrid policies offer dramatic efficiency improvements over otherwise standard quantity controls for example a 50 trigger price per ton of carbon converts the 3 trillion expected loss associated with a simple 1990 emission target to a 150 billion gain these results suggest that a hybrid policy is an attractive alternative to either a pure price or quantity system

causes of the eu ets price drop recession cdm renewable policies or a bit of everything new evidence the price of eu allowances euas in the eu emissions trading scheme eu ets fell from almost 30 tco2 in mid 2008 to less than 5 tco2 in mid 2013 the sharp and persistent price decline has sparked intense debates both in academia and among policy makers about the decisive allowance price drivers in this paper we examine whether and to what extent the eua price drop can be justified by three commonly identified explanatory factors the economic recession renewable policies and the use of international credits capitalizing on marginal abatement cost theory and a broadly extended data set we find that only variations in economic activity and the growth of wind and solar electricity production are robustly explaining eua price dynamics contrary to simulation based analyses our results point to moderate interaction effects between the overlapping eu ets and renewable policies the bottom line however is that 90 of the variations of eua price changes remains unexplained by the abatement related fundamentals together our findings do not support the widely held view that negative demand shocks are the main cause of the weak carbon price signal in view of the new evidence we evaluate the eu ets reform options which are currently discussed

hybrid carbon incentive mechanisms and political acceptability this paper analyses how hybrid systems of carbon taxes and tradeable permits optimize some conflicting dimensions of political acceptability related to the design of these instruments pure systems like taxes without exemptions or auctioned tradeable permits cause problems for political acceptability in open economies due to high overall costs abatement cost plus payments on the tax or auctions for current polluters unfortunately pure systems based on grandfathering of emission rights across the board do not provide a feasible alternative because of monitoring and enforcement problems in contrast consciously designed hybrid systems employ grandfathering of emission rights together with either carbon taxes or auctioned carbon permits in order to overcome acceptability problems of pure systems while leaving incentives to reduce emissions at the margin untouched moreover monitoring and enforcement costs of the hybrid systems are less due to the lower number of participating agents compared with the pure systems while opportunities for cost or burden sharing exist as well

the changing corporate head office and its spatial implications aksoy a and marshall n 1992 the changing corporate head office and its spatial implications reg studies 26 149 162 a substantial body of literature suggests that during the 1980s large firms reorganized in response to volatility in product markets and in a search for new competitive advantage using evidence from a survey of twenty large firm head offices in great britain this paper examines the extent of large firm reorganization and its impact on regional economies it shows that associated with corporate restructuring employment in large firm head offices has declined substantially headquarters functions have been delegated to operating companies and contracting out has increased in a review of the geographical consequences of these changes which goes beyond the discussion of high tech complexes and industrial districts the paper suggests that reorganization is modifying rather than transforming patterns of spatial development in britain corporate restructuring is encouraging the dec

soft and hard price collars in a cap and trade system a comparative analysis we use a stochastic dynamic framework to compare price collars price ceilings and floors in a cap and trade system with uncertainty in the level of baseline emissions and costs we consider soft collars which provide limited volume of additional emission allowances a reserve at the price ceiling and hard collars which provide an unlimited supply of additional allowances thereby preventing allowance prices from exceeding the price ceiling conversely allowances are removed from the market if prices fall to the floor we find that increasing the size of the reserve strictly lowers expected net present values of compliance costs however there is a diminishing effect as the allowance reserve is expanded most of the expected cost savings are achieved with a modest reserve consequently a rather limited soft price collar could provide considerable assurance about cost while preventing the possibility that emissions could spiral out of control

are investors rational choices among index funds s p 500 index funds represent one of the simplest vehicles for examining rational behavior they hold virtually the same securities yet their returns differ by more than 2 percent per year although the relative returns of alternative s p 500 funds are easily predictable the relationship between cash flows and performance is weaker than rational behavior would lead us to expect we show that selecting funds based on low expenses or high past returns outperforms the portfolio of index funds selected by investors our results exemplify the fact that in a market where arbitrage is not possible dominated products can prosper

spatial organization of firms the decision to split production and administration the research in this paper was conducted while the authors were special sworn status researchers of the us census bureau at the boston census research data center brdc research results and conclusions expressed are those of the authors and do not necessarily reflect the views of the census bureau the federal reserve bank of chicago or the federal reserve system this paper has been screened to insure that no confidential data are revealed support for this research from nsf award no 0111803 and 0427889 is gratefully acknowledged for helpful comments and discussions the authors thank robert porter editor thomas hubbard two anonymous referees and participants in seminars at the 2003 aea and rsai meetings the federal reserve bank of chicago and the center for economic studies all errors are ours

induced innovation and energy prices this paper uses u s patent data from 1970 to 1994 to study the impact of energy prices on energy efficient innovations theories of technological change have focused both on demand side factors which spur innovative activity by increasing the value of new innovations and supply side factors such as scientific advancements that make new innovations possible data on demand side factors are easily obtained but data on supply side factors that influence innovation are not readily available this paper uses patent citations as a measure of the usefulness of the existing base of scientific knowledge citations to previous patents are used to construct productivity estimates which measure the usefulness of the existing stock of knowledge to inventors in a given energy field for any given year these estimates are then combined with data on demand side factors to estimate a model of induced innovation in energy technologies the results indicate that both energy prices and the supply of knowledge have strongly significant positive effects on innovation the paper concludes with a discussion of the implication of this work for environmental policy

the politics of government decision making a theory of regulatory capture the paper develops an agency theoretic approach to interest group politics and shows the following 1 the organizational response to the possibility of regulatory agency politics is to reduce the stakes interest groups have in regulation 2 the threat of producer protection leads to low powered incentive schemes for regulated firms 3 consumer politics may induce uniform pricing by a multiproduct firm 4 an interest group has more power when its interest lies in inefficient rather than efficient regulation where inefficiency is measured by the degree of informational asymmetry between the regulated industry and the political principal congress

business cycles and emission trading with banking abstract we propose an emission cap adjustment policy for an emission trading system ets that allows banking of allowances for later use and faces business cycle uncertainty the forward looking banking decisions cause a commitment problem with respect to regulator s next period allowance supply decision we tackle the commitment problem by focusing on the markov equilibrium of the policy the equilibrium policy has a surprisingly simple structure combining features from both price and quantity instruments the regulator s ability to choose a new cap for each period does not render banking obsolete but on the contrary makes banking an integral part of the equilibrium policy using data from the eu ets to calibrate the model we solve the markov equilibrium policy for the case of carbon emissions regulation and compare markov policies with and without the possibility to bank allowances a counterfactual analysis of the eu ets during the period of 2009 2013 shows that the optimal markov policy would have led to a steadier allowance price level and a stricter emission regulation than what was actually observed in the eu ets

a carbon price floor in the reformed eu ets design matters abstract despite the reform of the european emissions trading system eu ets discussions about complementing it with a carbon price floor cpf are ongoing this paper analyzes the effect of a european cpf in the reformed eu ets using a hotelling model of the eu ets amended by the market stability reserve msr and the cancellation mechanism two cpf designs are compared 1 a buyback program and 2 a top up tax the buyback program sets a minimum price for the allowances from the implementation year onwards after the announcement firms anticipate the cpf which immediately increases the carbon price to the discounted cpf level therefore firms emit less and bank more allowances leading to more intake into the msr and more cancellation of allowances the top up tax imposes a tax on emissions which enhances the market price of allowances to the cpf level from the implementation year onwards firms increase their short run emissions in anticipation of the upcoming tax only after the implementation year firms start to lower their emissions thus the effect on aggregate cancellation is ambiguous despite being equivalent in a static setting the design choice for the cpf matters in a dynamic context such as the eu ets

network linkages and location choice in foreign direct investment this paper shows that network linkage is an important determinant of location choice in foreign direct investment fdi network linkages are divided into internal intra firm and external inter firm linkages external linkages are further separated into strategic and relational linkages we found that taiwanese firms are keen on making external linkages but are indifferent to or incapable of making internal linkages through fdi strategic linkages motivate taiwanese fdi in the united states while relational linkages facilitate taiwanese fdi in southeast asia and china small firms are more sensitive to relational linkages than large firms in their choice of fdi location

the interplay between hq legitimation and subsidiary legitimacy judgments in hq relocation a social psychological approach this paper marks a departure from the focus on external stakeholders in much research on legitimacy and multinational corporations adopting a social psychological approach to study how mncs build internal legitimacy for controversial decisions with their subsidiaries we explore this through a longitudinal real time qualitative case study of a regional office relocation since office relocations represent rare yet significant strategic decisions we analyze the interplay between the legitimation strategies of senior managers and subsidiary legitimacy judgments based in instrumental relational and moral considerations and how the relationship between the two develops over time from this analysis we derive inductively a process model that reveals the dynamics of building internal legitimacy with subsidiaries and how an mnc moves on even in the absence of full legitimacy when dealing with controversial mnc decisions the model highlights two important dynamics the first is a dynamic between legitimation strategies and legitimacy judgments and how this is influenced by local subsidiary contexts the second is a temporal dynamic in how both the legitimation strategies and legitimacy judgments evolve over time our model contributes to research on legitimacy in mncs what we know about tensions that characterize mnc subunit relationships and research on headquarters relocation

growth beyond gibrat firm growth processes and strategies firm growth studies have been focused on the question of whether firm growth is independent of firm size this shadow of gibrat s law has drawn attention to the randomness in firm growth however it has also clouded relevant research avenues that enquire into the role of firm growth processes and strategies this paper takes stock of the current state of the art of firm growth studies in small business economics and makes a plea for more specific research approaches that highlight the nature of the firm organization and growth paths this rejuvenation of firm growth studies comprises a search for necessary mechanisms and contingent conditions for the growth of firms

analysis of carbon tax efficiency in energy industries of selected eu countries abstract a carbon tax is one of economic policy instruments of environmental protection supposed to contribute to the reduction of greenhouse gas ghg emissions a functional carbon tax aims at incorporating costs for elimination of environmental harm into the pricing decisions in terms of global climate change the carbon tax is usually imposed on the production distribution or consumption of carbon content fossil fuels the main aim of the study is to evaluate the carbon tax environmental effectiveness in the energy industries of selected eu countries namely sweden finland denmark ireland and slovenia to achieve the principal research objective the multiple panel regression method for the selected variables was used the synergy of other environmental policy tools being taken into account control variables employed were emission allowance price household final consumption expenditure corporate investments solid fuel consumption and renewable energy consumption the analysis results suggest that the carbon tax in the energy industry is environmentally efficient an increased tax rate allowing to reduce ghg production which is statistically significantly affected by the consumption of fossil fuels based on the estimated partial regression coefficient 0 01158 raising the carbon tax by one euro per tonne can cut annual per capita emissions by 11 58 kg

the influence of the management team s international experience on the internationalization behaviors of smes why are some small and medium sized enterprises smes more successful in selling outside their domestic markets than are other smes in the same industry although the traditional explanation is that firms can gain valuable knowledge and resources as they become older and larger small and young firms are not necessarily disadvantaged if they develop other mechanisms to acquire the requisite knowledge and resources we examine the role of the management team s international experience as such a mechanism for the internationalization of canadian software product firms we show that internationally experienced management teams have a greater propensity to develop foreign strategic partners and to delay less in obtaining foreign sales after start up and that these behaviors are associated with a higher degree of internationalization

the eu 20 20 2020 targets an overview of the emf22 assessment three computable general equilibrium models are used to estimate the economic implications of a stylized version of eu climate policy if implemented at the lowest possible cost the 20 emissions reduction would lead to a welfare loss of 0 5 2 0 by 2020 second best policies increase costs a policy with two carbon prices one for the ets one for the non ets could increase costs by up to 50 a policy with 28 carbon prices one for the ets one each for each member state could increase costs by another 40 the renewables standard could raise the costs of emissions reduction by 90 overall the inefficiencies in policy lead to a cost that is 100 125 too high the models differ greatly in the detail of their results the ets non ets split may have a negligible impact on welfare while the renewables standard may even improve welfare the models agree however that the distortions introduced by total eu package imply a substantial welfare loss over and above the costs needed to meet the climate target the marginal total and excess costs reported here are notably higher than those in the impact assessment of the european commission

revisiting multinational firms tolerance for joint ventures a trust based approach in spite of the increasing popularity of international joint ventures managers express a high level of dissatisfaction with them this paper argues that overemphasis on the outcome has resulted in a neglect of the social processes underlying the outcome the paper elaborates upon the rationale for a cooperative approach towards interorganizational collaborative relationships based on trust and discusses it in the context of joint ventures this is then applied towards understanding multinational ownership preferences and tolerance for joint ventures it is argued that trust centered logic is largely consistent with approaches that emphasize the issue of ownership and deepens and enriches the insights provided by the latter a shift in focus from ownership to relational dynamics is encouraged

design choices in privatized social security systems learning from the swedish experience in the 2000 u s presidential campaign george w bush advocated a partial privatization of the social security system according to his plan a portion of the payroll tax would be designated for individual savings accounts at the same time as this issue was being debated in the united states sweden was in the process of launching a system that is very similar to president bush s proposal although bush s plan did not get much attention in the early years of his administration the proposal may resurface either in the united states or in other countries if so important lessons can be learned from the swedish experience in particular the swedish plan adopted an interesting mix of design choices that can now be evaluated based on three years of post implementation experience although there is a large literature in economics on the design of social security systems most of that literature is concerned with macroeconomic considerations such as funding in contrast there has been much less attention devoted to the details of how plans might be designed in part because these details do not seem important from a standard economic perspective in this paper we reverse this usual pattern and focus our attention on the design aspects of the swedish plan we find that although most of the design choices are those that might be approved by most economists in some cases these choices produced undesirable consequences

models of the multinational enterprise flexibility is identified as the hallmark of recent modelling of the multinational enterprise the focus on flexibility is a response to the rationalization and restructuring of international business which has occurred since the end of the golden age of western economic growth flexibility has been south in factor markets intermediate product markets and markets for final products it has been sought by both governments and firms flexible firms are attracted to locations with flexible host governments this article contrasts the modern research agenda based on flexibility with the more traditional research agenda which predominates in the literature reviewed by caves 1996

social network effects on the extent of innovation diffusion a computer simulation of innovation diffusion no longer focus exclusively on explaining the rate at which innovations diffuse or the sequence in which they are adopted they also focus on explaining why certain innovations diffuse extensively be coming de facto standards whereas others do so partially or not at all many of these theories specify a bandwagon process a positive feedback loop in which increases in the number of adopters create stronger bandwagon pressures and stronger bandwagon pressures in turn cause increases in the number of adopters factors affecting if and how many times this feedback loop cycles explain if and how many potential adopters jump on a bandwagon we argue that one important factor has not yet been incorporated into theories explaining bandwagons extent the structure of social net works through which potential adopters of innovations find out information about these innovations which can cause them to adopt these innovations we advance a theory of how the structure of social networks affects bandwagons extent we propose that both the number of network links as well as small seemingly insignificant idiosyncracies of their structures can have very large effects on the extent of an innovation s diffusion among members of a social network

on the internationalization process of firms a critical analysis even though international marketing has been challenged because of theoretical and methodological shortcomings very few researchers have actually attempted to analyze the weaknesses based on principles of theory evaluation in this article the author examines two types of models addressing the individual firm s internationalization process a theory evaluation is performed based on the explanation and the falsification criteria in order to improve the internationalization models some measures are proposed

experiential knowledge and costs in the internationalization process using a behavioral approach this study identifies and delineates components of experiential knowledge in the internationalization process three hypotheses are developed and tested they center around the lack of knowledge in the areas of foreign business foreign institutions and firm internationalization as well as the effect that this lack of knowledge has on managers perceived cost in the internationalization process with the help of a lisrel based structural model the three hypotheses are tested on a sample of 362 service firms the analysis shows that lack of internationalization knowledge has a strong impact on the lack of both business and institutionalization but there is no direct effect of lack of internationalization knowledge on perceived cost of internationalization

the gains from pension reform we classify social security pension systems in three dimensions actuarial versus non actuarial funded versus unfunded and defined benefit versus defined contribution systems recent pension reforms are discussed in terms of these dimensions shifting to a more actuarial system reduces labor market distortions although limiting the scope for redistribution shifting to a funded system may increase saving redistribute income to future generations and distort contermporary labor supply a partial shift to a funded system helps individuals diversify their pension assets a shift from a defined benefit to a defined contribution system means that income risk will be shifted from workers to pensioners

the network dynamics of international new ventures this study uses multi site case research to advance a set of propositions regarding the network dynamics of early stage international new ventures the investigative approach builds on arguments that network theory and analysis are fundamental to international entrepreneurship in the spirit of cross disciplinary research perspectives from the entrepreneurship literature are embraced to help inform our understanding of international new venture networks

the role of headquarters subsidiary geographic distance in strategic decisions by spatially disaggregated headquarters various studies have explored how headquarters hq subsidiary geographic distance affects hq decisions about subsidiaries arguing that such distance causes some strategic options to be selected over others to limit ex post communication costs these studies have implicitly assumed that a multinational s hq is spatially concentrated even though multinationals have increasingly disaggregated their hq internationally we examine how such hq disaggregation changes the role that hq subsidiary geographic distance plays in hq decisions about subsidiaries we argue that hq disaggregation yields multiple hq subsidiary geographic distances all of which are a likely source of ex post communication costs and hence are likely to co determine hq decisions about subsidiaries we discuss several approaches for dealing with these multiple distances and recommend that the first best approach be adopted by future studies to avoid the biased geographic distance effects possibly present in prior studies

escape from the usa government debt to gdp ratio country tax competitiveness and us oecd cross border m as statutory tax rates of a country do not reflect a country s true tax competitiveness we propose and show that government debt to gdp ratio govdebt of a country is a better proxy for its tax competitiveness using a comprehensive sample of 1 884 completed cross border acquisition transactions from the u s to other oecd countries we document that the u s target country govdebt difference is significantly and positively related to both deal announcement return and post deal tax saving of the acquirer the govdebt difference is also significantly and positively related to u s target country deal flow the findings remain robust when we control for the potential endogeneity of govdebt difference our findings strongly suggest that tax avoidance is an important driver of u s oecd cross border deal flow and it increases shareholder wealth for u s acquirers

building capabilities for international operations through networks a study of indian firms in this study we seek to explain how firms from emerging markets build capabilities to operate in international markets through learning from parental networks the building of these capabilities is of particular interest as firms from emerging markets may not necessarily possess the monopolistic advantages commonly referred to in ib literature which allow a firm to succeed in international markets using lagged cross sectional regression models on a sample of 794 indian firms we found that firms draw on the international experience of their parental and foreign networks to build such capabilities findings also indicate that network scope is beneficial for increasing exposure to international markets only in the case of networks that are either small or medium sized additionally we found that firms lacking market power in their home market benefit through foreign partnerships when internationalizing operations

information costs and location of fdis within the host country empirical evidence from italy the literature on foreign direct investments fdis has analysed the location strategies of multinational enterprises across national borders but there have been few studies of location decisions by foreign investors within the borders of a single country the paper argues that the driving factors of these location choices have differing influences on indigenous and foreign investors specifically foreign investors suffer from a condition of adverse asymmetry in information costs compared to insiders thus foreign investors decisions on the location of their activities within a host country mainly reflect a rational responses to the existence of information costs

creative tension the significance of ben oviatt s and patricia mcdougall s article toward a theory of international new ventures the article by oviatt and mcdougall threw the spotlight on international entrepreneurs on international new ventures and on their importance in the globalising world economy recognising the rich theoretical implications of this phenomenon they mounted a challenge to received internationalisation process theories and established a new and exciting research theme that of international entrepreneurship this article reviews the impact of their contribution and discusses new research themes raised by their challenge to the process theories of internationalisation

the transition to flexible specialisation in the us film industry external economice the division of labour and the crossing of industrial divides there is increasing evidence that mass production methods are losing their dominance in the advanced industrial economies and that various forms of flexible production organization are on the rise the transition from mass production organization to flexible specialization is analyzed in detail through a case study of the film industry where it is shown that a system of production once based on product standardization high levels of vertical integration and stable oligopolistic market structures has after a period of vertical disintegration given way to a production system based on a deep division of labor between firms and high levels of flexibility in both product design and output levels the transition may be the result of increasing external economies of scale stemming from the development of the industry s social division of labor copyright 1989 by oxford university press

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

firm growth in industrial clusters of the united kingdom this article examines how firm growth is influenced by the strength of the industrial cluster in which the firm is located it presents econometric estimates of firm growth for 56 two digit industries in the uk in about half of these industries there is a positive and statistically significant association between firm growth and own sector employment significant associations between firm growth and other sector employment are less common but where these arise they are generally negative we find that a weak rule of thumb applies in most industries own sector effects are positive or insignificant while other sector effects are negative or insignificant cluster effects are strongest in manufacturing manufacturing related and infrastructure but weaker in services

rationality vs ignorance the role of mne headquarters in subsidiaries innovation processes it has been recognized that innovation processes in multinational enterprises mnes are largely context specific local activities carried out at the subsidiary level e g andersson forsgren holm 2007 asakawa 2001 birkinshaw hood 1998 doz prahalad 1981 ghoshal bartlett 1988 hedlund 1986 rugman verbeke 2001 as a consequence the ability of corporate headquarters hq to influence these widely dispersed processes has become a major issue in contemporary research on mnes what is the role of hq in these processes to what extent can it participate in and play an active role in specific innovation processes what are the performance implications when it gets involved these questions which have not yet established answers warrant further research in addition studies aimed at finding the answers have not yet debated the validity of alternative perspectives related to the knowledge asymmetry between the potential participants in innovation processes

industrial dynamics and economic geography capasso m stam e and cefis e industrial dynamics and economic geography regional studies how do industries emerge and evolve over space in this special issue the fields of industrial dynamics and economic geography are brought together in order to achieve a richer and more fundamental understanding of the organization of industries over time and space than each of these fields could do separately firm heterogeneity at the micro level and industry composition of a region at the macro level provide important elements in the explanation of industry emergence and evolution over space history and space matter in the evolution of industries this special issue shows how and why