opening the grey box social communities knowledge and culture in acquisitions international acquisitions are today the most important foreign direct investment vehicle and the ensuing integration processes are notoriously fraught with problems we situate discuss and develop the main results of an early study in the knowledge based view tradition the award winning bresman birkinshaw and nobel 1999 article to enhance and develop the central contributions regarding social communities knowledge and culture we use the metaphor of unpacking the grey box we argue that heavy socialization is a rational learning strategy even if the acquirer aims at appropriating the target s technology or wishes to impose its dominant logic

holistic ethnography studying the impact of multiple national identities on post acquisition organizations ethnographic research in international business studies focuses mainly on small group case studies ignoring other genres of ethnography and limiting its role i argue based on a study of bmw mini that holistic ethnography allows multiple perspectives on the organization making it particularly useful for studying cross border acquisitions i analyze cross cultural relationships in the organization the interaction of manager and worker perspectives and the expression of national identities within the firm as its culture is negotiated allowing for greater understanding of the conflicts that in its managers view affected the integration of the acquired subsidiary

the making of a construct lessons from 30 years of the kogut and singh cultural distance index the 30 year anniversary of kogut and singh s 1988 groundbreaking study that introduced the concept of cultural distance and its accompanying measure provides the opportunity to take stock of what makes for a good construct we organize our discussion around the issues of concept algorithm and data to clarify and gauge their contribution before highlighting the impact of their work more generally many of the challenges raised by critical observers focus on one of these three dimensions as there is value in looking systematically at the construct from concept to data we set out the argument of the index and discuss the validity of selected lines of criticism we identify a number of emergent and future directions for the conceptualization and measurement of cultural distance to facilitate the continuing advancement of work on international business

national cultural distance and cross border acquisition performance previous theoretical research has argued that national cultural distance hinders cross border acquisition performance by increasing the costs of integration this article tests the alternative hypothesis that national cultural distance enhances cross border acquisition performance by providing access to the target s and or the acquirer s diverse set of routines and repertoires embedded in national culture using a multi dimensional measure of national cultural distance and controlling for other effects we examine a sample of 52 cross border acquisitions that took place between 1987 and 1992 and find a positive association between national cultural distance and cross border acquisition performance

global demographic trends and social security reform how sustainable are the current social security systems in the developed economies given the projected demographic trends the most recent literature has answered this question through dynamic general equilibrium models in a closed economy framework this paper provides a new quantitative benchmark of analysis for this question represented by a two region model south and north of the world economy where capital flows across regions the timing and the extent of the demographic transition and the associated economic forces shaping capital accumulation and equilibrium factor prices are very different in the two regions thus the projected paths of interest rate and wage rate in the north diverge substantially between closed and open economy we perform a wide range of policy experiments under both scenarios our main conclusion is that if one is interested in quantifying the path of the fiscal variables e g the value of the payroll tax needed to keep the social security system viable or to finance a transition towards a fully funded system then these two benchmarks yield similar results however if the focus is on quantifying the path of factor prices aggregate variables and ultimately welfare then the two approaches can diverge significantly

developing acquired foreign subsidiaries the experience of mnes in transition economies drawing on subsidiary evolution and dynamic capabilities research i test how development and growth of subsidiaries recently acquired in transition economies are affected by multinational enterprise mne and target capabilities these subsidiaries often lack important resources their cross border transfer enhancement and exploitation are problematic however data on 170 acquisitions in central and eastern europe confirmed the importance of the pre acquisition experiences of both target and mne for subsidiary growth although cultural differences moderated the predicted effects notably

witchcraft beliefs as a cultural legacy of the atlantic slave trade evidence from two continents abstract this paper argues that the historical slave trade contributed to the propagation of persistent witchcraft beliefs on both sides of the atlantic ocean and establishes two key empirical patterns first it shows that in sub saharan africa representatives of ethnic groups which were more heavily exposed to the atlantic slave trade in the past are more likely to believe in witchcraft today thus establishing a link between historical trauma and contemporary culture second exploring the role of the slave trade in cultural transmission across continents this paper finds that afro descendants in modern latin america are substantially more likely to believe in witchcraft relative to other ancestral groups moreover accounting for ancestry and other relevant factors people residing in regions historically more reliant on african slave labor are also more likely to be witchcraft believers these findings support ethnographic narratives on the connection between slave trade slavery and the entrenchment of witchcraft beliefs and shed light on the nature of these beliefs and related practices as a cultural framework for interpreting misfortune and a mechanism of enslavement in local communities

stickiness and the adaptation of organizational practices in cross border knowledge transfers the reuse of organizational practices in multiple locations is a fundamental way in which mncs leverage knowledge to seek competitive advantage scholars approaching the issue of adaptation from both a market and an institutional perspective argue that in order to achieve fit with the local environment some degree of adaptation is advisable and the need for adaptation increases as the institutional distance between source and recipient locations increases however arguments to date have examined the effect of adaptation primarily on a subsidiary s long term performance a necessary precursor is to understand the effect of adaptation on the transfer process itself as transfer difficulty or stickiness may preclude the reuse of an organizational practice in the first place in this paper we explore how the adaptation of organizational practices affects the stickiness of cross border transfers we use structural equation modeling to analyze data from 122 internal transfers of best practice contrary to expectation we find that adaptation significantly increases rather than decreases the stickiness of cross border knowledge transfer

legitimacy and multi level institutional environments implications for foreign subsidiary ownership structure in this study we examine from an institutional perspective the legitimacy rationale behind the choice of subsidiary ownership structure among multinational corporations mncs we suggest that when under a strong pressure to conform at the host country and local industry levels of their institutional environment mncs are likely to take a lower ownership stake in exchange for external legitimacy in the host country or local industry that their foreign subsidiaries are entering we also suggest that mncs are likely to take a higher ownership stake in response to strong internal pressure to sustain their internal legitimacy at the corporate level of their institutional environment we also propose that mncs are more likely to exchange ownership for legitimacy in local industries than in host countries and in local markets with a high level of political instability than in those with a low level of political instability these propositions are generally supported by our analysis of 4451 subsidiaries established by 898 japanese mncs that operated in 39 countries across 52 industries two digit sic between 1988 and 1999

explaining divergence in the long term effects of precolonial centralization on access to public infrastructure services in nigeria abstract although the literature has discussed the benefits of precolonial centralization for development in africa the findings and the mechanisms provided do not explain the heterogeneity in access to public services of formerly centralized regions using new survey data from nigeria a significant negative association between precolonial centralization and access to certain public services is observed while the mechanisms driving these patterns are complex i use historical evidence to suggest that the negative association may be partly driven by centralized regions whose leaders failed to comply with the autocratic federal regime and whose jurisdictions may have been subsequently punished by underinvestment in these services with impacts lasting until today the results are robust to extensive controls and multiple empirical tests to differentiate among alternative explanations for the finding

secession with natural resources we look at the formation of new indian states in 2001 to uncover the effects of political secession on the comparative economic performance of natural resource rich and natural resource poor areas resource rich constituencies fared comparatively worse within new states that inherited a relatively larger proportion of natural resources we argue that these patterns reflect how political reorganisation affected the quality of state governance of natural resources we describe a model of collusion between state politicians and resource rent recipients that can account for the relationships we see in the data between natural resource abundance and post breakup local outcomes

mars venus marriages culture and cross border m a using a sample of over 800 cross border acquisitions during 1991 2004 we find that contrary to general perception cross border acquisitions perform better in the long run if the acquirer and the target come from countries that are culturally more disparate we use mainly the hofstede measure of cultural dimensions to measure cultural distance but also examine alternative proxies the positive relationship of performance to cultural distance persists after controlling for several deal specific variables and country level fixed effects and is robust to alternative specifications of long term performance cash and friendly acquisitions tend to perform better in the long run there is also some evidence of synergies when acquirers are from stronger economies relative to the targets

towards a more balanced treatment of culture in international business studies the need for positive cross cultural scholarship the results of a content analysis of 1141 articles published in the journal of international business studies over a 24 year time period 1989 2012 reveal that a pervasive tendency exists in the international business ib literature towards emphasizing the adverse outcomes associated with cultural differences more than the positive effects we argue that this imbalance is not an accurate reflection of the reality of cross cultural contact in ib and that it has hindered our understanding of the processes and conditions that help organizations leverage the benefits of cultural differences in a wide range of contexts we offer several explanations for the predominance of the negative over the positive in theory and research on culture in ib and using a positive organizational scholarship lens couched in the context of march s 1991 exploration vs exploitation organizational learning framework highlight a complementary perspective namely the idea that cultural differences can be an asset not just a liability in a range of ib contexts we conclude by offering an integrative framework within which both positive and negative effects of cultural differences can be understood and provide a road map for future research on culture in ib

closing knowledge gaps in foreign markets knowledge and learning are ascribed pivotal roles in firms internationalization processes perceived market uncertainties namely knowledge gaps related to business environments in foreign markets may curb firms inclinations to commit resources to these markets this study explores whether knowledge gaps tend to increase or decrease with time when operating in the foreign market and it discusses which learning components narrow or widen the perceived knowledge gap a theoretical model is developed based on the internationalization process view and the more recent organizational learning perspective including such concepts as overconfidence and absorptive capacity the theoretical model is tested on a set of primary data covering danish and swedish firms and their foreign market operations the results suggest a more subtle relationship between experience and perceived knowledge gaps than the mechanical relationship portrayed by the internationalization process view a relationship in which absorptive capacity and in particular overconfidence play important roles

the wages of dishonesty the supply of cheating under high powered incentives we use a novel design to identify how dishonesty changes through a broad reward range that at the high end exceeds participants average daily wages using a sample of online indian workers who earn bonuses based on six simultaneous coin flips we show that the relationship between dishonesty and financial rewards depends on the incentive range we find two novel effects as incentives exceed those used in most prior research first dishonesty increases and reaches its maximum as rewards increase from 0 50 to 3 per reported head and as earnings reach 15 indicating that rewards can indeed motivate more cheating when large enough more importantly we show that dishonesty declines at the highest reward levels up to 5 per head as individuals appear to engage in lower magnitudes of dishonesty we detail how our results could be explained by a reference dependent utility with internal costs of dishonesty that are convex in the magnitude of the lie and show survey and simulation based evidence that support this explanation

what goes around comes around effects of offshore outsourcing on the export performance of firms we examine the effect of offshore outsourcing on the export performance of firms building on the theories of international business the resource based view and transaction cost economics we argue that offshore outsourcing helps firms directly or indirectly to export more it may reduce their production costs and enhance their flexibility it may also provide them with new resources and market knowledge however the impact of offshore outsourcing depends on the resources and capabilities of firms to manage a network of foreign suppliers and to absorb foreign knowledge using a database of around 2000 manufacturing mnes in france in 1999 we find that offshore outsourcing increases export performance the effects being stronger in the export markets where firms import intermediate goods we also show that the firm size the organization of intra firm imports and the export experience moderate the effects of offshore outsourcing positively these findings have implications for firms and policymakers journal of international business studies 2011 42 334 344 doi 10 1057 jibs 2010 26

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

multinationals and corporate social responsibility in host countries does distance matter prior studies have found that foreign affiliates of multinational enterprises mnes suffer from liability of foreignness lof foreign affiliates may be able to improve their social legitimacy and overcome lof by demonstrating social commitment to host country constituents through corporate social responsibility csr if lof is positively related to the distance between the home and host countries and csr activities confer social legitimacy benefits on foreign affiliates we should expect csr activities and distance to be positively related however we argue that despite this potential motivation foreign affiliates from more distant home countries are in fact less likely to engage in host country csr our argument focuses on the ways in which distance affects the mne s willingness and ability to engage in csr abroad we also predict that host country csr reputation negatively moderates this relationship using community reinvestment act data for foreign bank affiliates from 32 countries in the united states over 1990 2007 we find strong support for our hypotheses the paper enriches our understanding of csr practices in mnes and of when and how mnes try to overcome legitimacy issues in host countries

do country level institutional frameworks and interfirm governance arrangements substitute or complement in international business relationships interfirm relationships among partners from institutionally distant environments are subject to governance difficulties owing to the paucity of shared cognitive and regulatory frameworks we examine the potential of formal contracting and relational governance developed at the partnership level to overcome the formal and informal institutional gap at the country level empirical results from a sample of 184 international partnerships of large us firms support an overall substitutive relationship between informal institutional frameworks and interorganizational relational arrangements whereby the performance benefits of relational governance are reinforced at higher degrees of informal institutional distance contrastingly formal institutional frameworks and contractual governance are found to have a complementary relationship with performance gains from formal contracting undermined at higher degrees of formal distance

the institutional foundations of religious politics evidence from indonesia this paper explores the foundations of religious influence in politics and society we show that an important islamic institution fostered the entrenchment of islamism at a critical juncture in indonesia the world s largest muslim country in the early 1960s rural elites transferred large amounts of land into waqf inalienable charitable trusts in islamic law to avoid expropriation by the state regions facing a greater threat of expropriation exhibit more prevalent waqf land and islamic institutions endowed as such including mosques and religious schools these endowments provided conservative forces with the capital needed to promote islamist ideology and mobilize against the secular state we identify lasting effects of the transfers on the size of the religious sector electoral support for islamist parties and the adoption of local sharia laws these effects are shaped by greater demand for religion in government but not by greater piety among the electorate waqf assets also impose costs on the local economy particularly in agriculture where these endowments are associated with lower productivity overall our findings shed new light on the origins and consequences of islamism

a model of cultural differences and international alliance performance we propose a model of cultural differences and international alliance performance to explain the ambiguous findings regarding the influence of national culture differences on alliance performance building on research on national organizational and professional cultures we argue that the closer the domain of a social group is to the value creating activities of an alliance the more disruptive cultural differences between the partners members of that social group will be organizational culture differences will tend to be more disruptive than national culture differences and differences in the professional culture most relevant to alliance value creation typically will be the most disruptive implications for research and managerial practice are discussed and the model s relevance for international r d alliances is highlighted

designing social security a portfolio choice approach public social security systems may provide diversification of risks to individuals life time income capturing that a pay as you go program paygo may be considered as a quasiasset we study the optimal size of the social security program as well as the optimal split between a funded part and a paygo part by means of a theoretical portfolio choice approach a low yielding paygo system can benefit individuals if it contributes to hedge other risks to their lifetime resources moreover a funded part of the social security system can be justified by potential imperfections to the individuals free access to the stock market numerical calculations for sweden norway the us and the uk demonstrate that the optimal size of paygo part of the pension program varies considerably in response to differences in projected growth rates and the correlation between stock returns and growth our calculations suggest that a paygo program has an important role in the three former countries but not in the u k

are the extent and effect of psychic distance perceptions symmetrical in cross border m as evidence from a two country study the concept of psychic distance has several entrenched assumptions that have not been put to sufficient systematic scrutiny we address this gap by investigating the assumptions of symmetry i e whether psychic distance from country a to country b is the same as that from country b to country a and discordance i e whether differences in psychic distance between two countries always lead to lack of fit of psychic distance in cross border mergers and acquisitions we propose a new framework which differentiates between the extent i e the degree to which two countries are perceived to be similar different and effects i e the degree to which distance perceptions create favorable or unfavorable attitudes and responses of psychic distance perceptions we argue that relative status positions affect extent and effects of psychic distance to test our predictions we collected data through policy capturing studies in sweden and china our findings reveal that both the extent and the effects of psychic distance perceptions are asymmetric we also found that psychic distance perceptions create unfavorable favorable attitudes among swedish chinese respondents toward chinese swedish acquirers our follow up examination confirms that relative status positions are a key driver of these results

reciprocity in international business a study of telecommunications alliances and contracts reciprocity has been identified as a messy concept to study within international cooperative ventures theoretically grounded in international cooperation transaction cost theory and economic anthropology reciprocity is operationalized and explored in this study specifically the effects of cultural distance economic nearness country level risk and governance mechanisms are analyzed in relationship to three distinct measures of reciprocity the international long distance industry provides the research setting during the 1980s and 1990s as this industry has become more competitive within the united states foreign partners have been slow to reciprocate regarding the sharing of revenues derived from increased overseas calling to study reciprocity between u s international long distance carriers and their partnering foreign entities a pooled time series cross sectional technique is used 11 years of contractual arrangements between the u s firms and the telecom administrations of 109 countries are analyzed governance mechanisms test as highly significant with all measures of reciprocity while the other independent variables exhibit varying degrees of significance with the respective dependent measures

hungarian western partnerships a grounded theoretical model of integration processes and outcomes international cooperative ventures icvs are known to be strongly influenced by the parent firms values practices and systems vpss however less clear is whether and why vpss actually adopted by an icv are those of either parent singly both parents jointly or neither parent this question is especially timely in the transition economies of central and eastern europe where cooperative activity with western multinationals is growing rapidly and where decades old legacies of communism abound in this exploratory study we used a multiple case study methodology to examine 17 hungarian western icvs results show that a majority of the icvs adopted the vpss of the western partner we develop a theoretical model of integration process and outcomes and suggest future research directions

cultural influences on home bias and international diversification by institutional investors abstract we investigate determinants of international diversification in institutionally managed portfolios from more than 60 countries survey based country specific variables on cross cultural behaviors help to explain both home bias and diversification among foreign equities in particular investment funds from countries characterized by higher uncertainty avoidance behavior display greater home bias and are less diversified in their foreign holdings portfolios from countries with higher levels of masculinity and long term orientation display lower levels of home bias and portfolios from countries with higher levels of masculinity are more diversified abroad portfolios from culturally distant countries invest less abroad and underweight culturally distant target markets the economic significance of cultural variables is high and comparable in magnitude to geographical distance a consistent influence on foreign diversification in prior studies culture impacts investor behavior directly and not merely though indirect channels such as legal and regulatory framework

lost in translation the effect of cultural values on mergers around the world we find strong evidence that three key dimensions of national culture trust hierarchy and individualism affect merger volume and synergy gains the volume of cross border mergers is lower when countries are more culturally distant in addition greater cultural distance in trust and individualism leads to lower combined announcement returns these findings are robust to year and country level fixed effects time varying country pair and deal level variables as well as instrumental variables for cultural differences based on genetic and somatic differences the results are the first large scale evidence that cultural differences have substantial impacts on multiple aspects of cross border mergers

social interaction and stock market participation we propose that stock market participation is influenced by social interaction in our model any given social investor finds the market more attractive when more of his peers participate we test this theory using data from the health and retirement study and find that social households those who interact with their neighbors or attend church are substantially more likely to invest in the market than non social households controlling for wealth race education and risk tolerance moreover consistent with a peer effects story the impact of sociability is stronger in states where stock market participation rates are higher

national culture and life insurance consumption this cross disciplinary study examines the way national culture affects consumption patterns of life insurance across countries life insurance is a service that is abstract complex and focused on unsure future benefits because of the uncertainty and ambiguity inherent in the life insurance product consumers are more likely to respond according to their cultural prescriptions our research hypotheses are tested empirically using hofstede s cultural dimensions and data from 1976 2001 across 41 countries the findings show that individualism indeed has a significant positive effect on life insurance consumption whereas power distance and masculinity femininity have significant negative effects the results are robust even after controlling for economic institutional and demographic determinants

the origins of violence in rwanda this paper shows that the intensity of violence in rwanda s recent past can be traced back to the initial establishment of its precolonial state villages that were brought under centralized rule one century earlier experience a doubling of violence during the state organized 1994 genocide instrumental variable estimates exploiting differences in proximity to nyanza an early capital suggest these effects are causal in other periods when the state faced rebel attacks with longer state presence violence is lower using data from several sources including a lab in the field experiment across an abandoned historical boundary i show that the effect of the historical state is primarily sustained by culturally transmitted norms of obedience the persistent effect of the precolonial state interacts with government policy where the state developed earlier there is more violence when the rwandan government mobilized for mass killing and less violence when the government pursued peace

international new ventures revisiting the influences behind the born global firm there is a small but theoretically important literature on born globals or international new venture firms that positions itself in contrast to the more established sequential international entry literature in this paper we examine the pattern of entry into international markets for a set of international new ventures and show that they need not be a distinct breed of firms as previous research has portrayed absent a specific technological advantage the decision for a new venture to internationalize at inception is influenced by the size of its home market and by its production capacity as well as by cultural and economic forces that also influence other more traditional firms that stage their entry into international markets most importantly we demonstrate that the decision to internationalize or not should be considered jointly with the capacity allocation decision to specific international markets as analysing these separately may lead to biased results

the double edged sword of cultural distance in international acquisitions this study aims to bring together seemingly contradicting arguments in the literature about the role of cultural distance in international acquisitions we offer a model that postulates that cultural distance relates negatively to international acquisition performance because it taxes integration capabilities during international acquisitions but that cultural distance also elevates the positive association of integration capabilities and international acquisition performance because it provides more learning opportunities that can only be exploited with strong integration capabilities empirical tests with a sample of international acquisitions by 118 us multinational companies provide support for the proposed model on one hand we find that cultural distance impedes understandability of key capabilities that need to be transferred and constrains communication between acquirers and their acquired units bringing about a negative indirect effect on acquisition performance on the other hand we find that cultural distance enriches acquisitions by enhancing the positive effects of understandability and communication on acquisition performance acquirers that can overcome the impeding effects of cultural distance on understanding key capabilities and effective communication appear to reap significant performance gains our study provides initial support for a double edged sword effect of cultural differences on acquisition performance and illustrates the importance of integration capabilities

an assessment of the measurement of performance in international business research a sizeable body of international business ib research is devoted to building knowledge about the determinants of organizational performance a key precursor to accurately diagnosing why some organizations succeed in the international marketplace while others struggle is operationalizing performance appropriately yet to date no systematic investigation has considered how well ib research measures performance we examine the measurement of performance in 96 articles published in the academy of management journal administrative science quarterly journal of marketing journal of marketing research journal of international business studies management science organization science a nd thestrategic management journal between 1995 and 2005 the findings reveal that most studies do not measure performance in a manner that captures the multifaceted nature of the construct we describe the implications of these results and offer suggestions for improving future practice journal of international business studies 2008 39 1064 1080

risk sharing across generations without publicly owned equities abstract the u s social security trust fund currently invests in government bonds investing some of it instead in equities while continuing to pay social security benefits under existing rules would alter potentially improve the sharing of financial risks across non trading generations this paper shows that the same risk sharing can be achieved without direct government ownership of equities if instead the government places a linear and symmetric tax on risky private capital returns this equivalence is very robust and holds even if some agents are endogenously borrowing constrained

cross border acquisition abandonment and completion the effect of institutional differences and organizational learning in the international business service industry 1981 2001 based on the concepts of north s 1990 political economy of national institutions and economic behavior we investigate how formal and informal institutional features influence the likelihood that a cross border acquisition deal will be completed as well as the time taken for its completion after announcement additionally we study how past experience with completed acquisition deals moderates the effects of institutional differences we focus on a relatively new context the pre completion stage of acquisition processes we test our hypotheses using data from 2389 announced cross border acquisition deals in the international business service industry 1981 2001 we find that differences in national formal and informal institutions explain part of the variation in the likelihood that an announced cross border acquisition deal will be completed as well as the duration of the deal making in addition organizational learning moderates the effects of institutional distance past experience with completed cross border acquisition deals increases the likelihood of a subsequent deal completion in institutionally closer environments but shortens the deal duration in institutionally distant environments

intergenerational risk shifting through social security and bailout politics abstract this paper adopts a stochastic overlapping generations framework to analyze the allocation of aggregate financial risks under different social security systems and a majority voting rule we study whether there will be switches between pay as you go payg and fully funded ff systems in such an economy we show that in case of a negative aggregate shock low income young individuals will form a political coalition with the elderly to implement a payg system payg scheme is shown to persist even after a good aggregate shock if the system is redistributive enough

the evolution of culture and institutions evidence from the kuba kingdom we use variation in historical state centralization to examine the long term impact of institutions on cultural norms the kuba kingdom established in central africa in the early 17th century by king shyaam had more developed state institutions than the other independent villages and chieftaincies in the region it had an unwritten constitution separation of political powers a judicial system with courts and juries a police force a military taxation and significant public goods provision comparing individuals from the kuba kingdom to those from just outside the kingdom we find that centralized formal institutions are associated with weaker norms of rule following and a greater propensity to cheat for material gain this finding is consistent with recent models where endogenous investments to inculcate values in children decline when there is an increase in the effectiveness of formal institutions that enforce socially desirable behavior consistent with such a mechanism we find that kuba parents believe it is less important to teach children values related to rule following behaviors

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

baby boomer retirement security the roles of planning financial literacy and housing wealth abstract we compare wealth holdings across two cohorts of the health and retirement study the early baby boomers in 2004 and individuals in the same age group in 1992 levels and patterns of total net worth have changed relatively little over time though boomers rely more on housing equity than their predecessors most important planners in both cohorts arrive close to retirement with much higher wealth levels and display higher financial literacy than non planners instrumental variables estimates show that planning behavior can explain the differences in savings and why some people arrive close to retirement with very little or no wealth

widening the lens rethinking distance diversity and foreignness in international business research through positive organizational scholarship the point of departure for the special issue is that current theory and research in international business ib may have overly emphasized a negative view on foreignness distance and differences of all kinds national cultural organizational and institutional with an emphasis on liabilities and adverse outcomes associated with such differences while existing research is certainly valuable we argue that focusing on mostly negative processes and outcomes has hindered our understanding of the dynamics processes and conditions that enable organizations to benefit from diversity in a wide range of ib contexts the goal of this special issue is to promote research that is in line with a positive organizational scholarship perspective which encourages scholars to look at commonly considered phenomena in new ways as well as to explicitly consider positive phenomena in ib research we then introduce the three articles included in the special issue and highlight how they help ib scholars better understand when and how foreignness distance and diversity can enhance organizational effectiveness and performance at multiple levels

portable country governance and cross border acquisitions the agency theory and law and finance literatures show good country governance encourages financial development mitigates agency problems and increases firm value drawing on these literatures we develop a theory that benefits from good country governance are portable by firms across countries through cross border acquisitions using acquisitions from 56 countries from 1990 to 2007 we find that acquirers can transport the benefits from good country governance so that they gain more from acquiring targets with worse country governance than their own as predicted the acquirer s stock price reaction to acquisitions increases with the country governance distance between the acquirer and the target

merging without alienating interventions promoting cross cultural organizational integration and their limitations foreign direct investment particularly cross border mergers and acquisitions can spawn a range of individual level outcomes from cross cultural adjustment and synergistic learning on the positive side to work alienation on the negative unsuccessful navigation of these individual level outcomes leads to failed integration that can seriously affect the realization of desired organizational outcomes such as successful technology transfer knowledge sharing and the general realization of global growth by means of an iterative between methods triangulation the study surfaces cross cultural work alienation as a phenomenon that can limit the overall success of such ventures and identifies interventions that help to promote successful post merger integration

on the asset allocation of a default pension fund we characterize the optimal default fund in a dened contribution dc pension plan using detailed data on individuals and their holdings inside and outside the pension system we nd substantial heterogeneity among default investors in terms of labor income nancial wealth and stock market participation we build a life cycle consumption savings model incorporating a dc pension account and realistic investor heterogeneity we examine the optimal asset allocation for dierent realized equity returns and investors and compare it with age based investing the optimal asset allocation leads to less inequality in pensions while it moderates the risks through active rebalancing

translating theoretical logics across borders organizational characteristics structural mechanisms and contextual factors in international alliances in this essay i critically review the 2006 jibs decade award article by lyles and salk knowledge acquisition from foreign parents in international joint ventures ijvs an empirical examination in the hungarian context this article develops theoretical arguments and empirically tests a two stage research question 1 what are the organizational characteristics and structural mechanisms between ijv parents that influence knowledge acquisition from the foreign parent and 2 what is the relationship between knowledge acquisition and performance in hungarian ijvs the most important contribution is the focus on both the antecedents and the consequences of knowledge acquisition in ijvs i also discuss subsequent research that draws heavily on the conceptual or empirical findings of the 2006 jibs decade award paper i conclude by suggesting areas of future research in the field of knowledge transfer organizational learning and international strategic alliances

explaining the national cultural distance paradox past studies of the relationship between national cultural distance and entry mode choice have produced conflicting results some scholars find cultural distance associated with choosing wholly owned modes others find cultural distance linked to a preference for joint ventures in this paper we provide both theoretical and empirical evidence to explain the discrepant findings and thus help to resolve the national cultural distance paradox

the effect of cultural distance on entry mode choice international diversification and mne performance a meta analysis although a growing literature indicates that cultural distance that is differences between national cultures is an important determinant of organizational actions and performance both empirical and theoretical concerns abound in this study the relationships of cultural distance with entry mode choice international diversification and mne performance are examined by meta analyzing data from 66 independent samples with cumulative sample sizes ranging from 2 255 to 24 152 regression results failed to provide statistical evidence of significant relationships between cultural distance and entry mode choice international diversification and mne performance the examination of moderator effects however yielded important results we found a strong negative association between cultural distance and entry mode choice for us based mnes the cultural distance international diversification relationship was negative for high technology industries while it was positive for other industries cultural distance also had a strong positive effect on mne performance for developed country investments a similar strong positive relationship was found between cultural distance and international diversification in studies with more recent samples results of this study indicate that substantial additional research is needed before the role of cultural distance is fully understood

incompatible strategies in international mergers the failed merger between telia and telenor the aim of this paper is to explore the problems of incompatible strategies in international mergers studying a failed merger between the two state owned scandinavian telecom corporations we examine how the parties strategies were incompatible we find that the parties strategies were incompatible in three distinctive areas and study how the companies tried to resolve these incompatibilities owing to national governance structures established to protect national interests the parties were unable to resolve these strategic incompatibilities

intergenerational risk sharing and fiscal policy abstract risk sharing implications of alternative fiscal policies are compared in a stochastic production economy with overlapping generations ex ante efficiency is shown to be achievable with optimal transfers regardless of distributional concerns for crra preferences stylized real world policies notably safe debt and safe pensions are found inefficient in the direction of imposing not enough productivity risk on retirees and too much on future generations safe transfers can be rationalized as efficient if preferences display age increasing risk aversion such as habit formation the ubiquity of safe transfers suggests that governments treat the young as more risk tolerant than older cohorts

individual values and household finances we create individual cultural values measures for households and show that this is an important determinant of their financial behaviour to date personal cultural values have only been indirectly measured through religion and trust but these are at best an approximation of true cultural values applying a holistic framework from the world values survey wvs we create individual measures of cultural values and show that the self expression values of this framework are positively associated with households financial decisions examining the individual cultural values that make up the wvs model we further show that happiness trust and playing an active role in society are individually important determinants of household financial decision making our study shows that cultural values can be brought from a generalized national level to the individual level in order to improve our understanding of household financial decision making

asset pricing with limited risk sharing and heterogeneous agents we develop a model with incomplete markets and heterogeneous agents that generates a large equity premium while simultaneously matching stock market participation and individual asset holdings the high risk premium is driven by incomplete risk sharing among stockholders which results from the combination of aggregate uncertainty borrowing constraints and a realistically calibrated life cycle earnings profile subject to idiosyncratic shocks we show that it is challenging to simultaneously match asset pricing moments and individual portfolio decisions while limited participation has a negligible impact on the risk premium contrary to the results of models where it is imposed exogenously

foreign direct investment the role of institutional and cultural determinants abstractusing panel data for 29 source and 65 host countries in the period 1995 2009 we examine the determinants of bilateral fdi stocks focusing on institutional and cultural factors the results reveal that institutional and cultural distance is important and that fdi has a predominantly regional aspect fdi to developing countries is positively affected by better institutions in the host country while foreign investors prefer to invest in developed countries that are more corrupt and politically unstable compared to home the results indicate that foreign investors prefer to invest in countries with less diverse societies than their own

social security investment in equities this paper explores the general equilibrium impact of social security portfolio diversification into private securities either through the trust fund or private accounts the analysis depends critically on heterogeneities in saving production assets and taxes limited diversification weakly increases interest rates reduces the expected return on short term investment and the equity premium decreases safe investment increases risky investment and increases a suitably weighted social welfare function however the effects on aggregate investment long term capital values and the utility of young savers hinges on assumptions about technology aggregate investment and long term asset values can move in opposite directions jel h55

mitigating risk in international mergers and acquisitions the role of contingent payouts previous internationalization studies have focused on the entry modes employed by multinational firms but have not considered the contractual heterogeneity that underlies each mode it is important to examine these contractual details as the firm may be able to obtain some of the benefits typically associated with one entry mode while selecting another in the case of international mergers and acquisitions m as a key contractual variable is whether the parties agree to a performance contingent payout structure which can mitigate the risk of adverse selection in this paper we examine the antecedents of contingent payouts in the form of earnouts and stock payments the results indicate that firms lacking international and domestic acquisition experience turn to contingent payouts when purchasing targets in high tech and service industries firms tend to avoid contingent payouts in host countries with problems with investor protection and legal enforceability

from extreme to mainstream the erosion of social norms social norms usually persistent can change quickly when new public information arrives such as a surprising election outcome people may become more inclined to express views or take actions previously perceived as stigmatized and may judge others less negatively for doing so we examine this possibility using two experiments we first show via revealed preference experiments that donald trump s rise in popularity and eventual victory increased individuals willingness to publicly express xenophobic views we then show that individuals are sanctioned less negatively if they publicly expressed a xenophobic view in an environment where that view is more popular

kinship cooperation and the evolution of moral systems across the social sciences a key question is how societies manage to enforce cooperative behavior in social dilemmas such as public goods provision or bilateral trade according to an influential body of theories in psychology anthropology and evolutionary biology the answer is that humans have evolved moral systems packages of functional psychological and biological mechanisms that regulate economic behavior including a belief in moralizing gods moral values negative reciprocity and emotions of shame guilt and disgust based on a stylized model this article empirically studies the structure and evolution of these moral traits as a function of historical heterogeneity in extended kinship relationships the evidence shows that societies with a historically tightly knit kinship structure regulate behavior through communal moral values revenge taking emotions of external shame and notions of purity and disgust in loose kinship societies on the other hand cooperation appears to be enforced through universal moral values internalized guilt altruistic punishment and an apparent rise and fall of moralizing religions these patterns point to the presence of internally consistent but culturally variable functional moral systems consistent with the model the relationship between kinship ties economic development and the structure of the mediating moral systems amplified over time

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

rethinking economic development i provide a summary reflection and assessment of the current state of economic development in both the policy and academic worlds in terms of development policy currently the primary focus is on policy interventions namely foreign aid aimed at fixing the deficiencies of developing countries academic research also has a similar focus except with an emphasis in rigorous evaluation of interventions to estimate causal effects a standard set of versatile quantitative tools is used e g experimental and quasi experimental methods which can be easily applied in a range of settings to estimate the causal effects of policies which are typically presumed to be similar across contexts in this article i take a step back and ask whether the current practices are the best that we can do are foreign aid and policy interventions the best options we have for poverty alleviation what else can be done is our current research strategy characterized by rigorous but a lack of context specific analysis the best method of analysis is there a role for other research methods for a deeper understanding of the local context and for more collaboration with local scholars repenser le developpement economiquee dans cet article je propose un apercu une reflexion et une evaluation de l etat actuel du developpement economique a la fois dans les spheres politiques et universitaires en matiere de developpement economique l attention est principalement portee sur l intervention politique c est a dire l aide exterieure visant a corriger les defaillances des pays en developpement les recherches universitaires y portent une attention similaire mais en mettant davantage l accent sur l evaluation rigoureuse de ces memes interventions pour en mesurer les effets de causalite a cette fin un ensemble d outils quantitatifs et modulables standard sont utilises notamment par l entremise de methodes experimentales et quasi experimentales pouvant facilement s appliquer a une vaste gamme de situations et ce aux fins d evaluations des liens de causalite engendres par ces politiques liens habituellement consideres comme similaires d un contexte a l autre dans cet article je prends un peu de recul pour m interroger sur la pertinence des pratiques actuelles les interventions politiques et l aide exterieure offrent elles les meilleures options pour reduire la pauvrete que pouvons nous faire d autre notre strategie de recherche actuelle caracterisee par des analyses rigoureuses mais peu adaptees a des contextes specifiques est elle la meilleure d autres methodes de recherche peuvent elles permettre de mieux comprendre les contextes regionaux et favoriser une meilleure collaboration avec les intellectuels locaux

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

cultural differences convergence and crossvergence as explanations of knowledge transfer in international acquisitions in spite of the proliferation of research on cultural differences in international mergers and acquisitions we lack systematic analyses of the impact of cultural factors on knowledge transfer in this paper we argue that both national and organizational cultural differences and cultural integration in the form of cultural convergence and crossvergence affect knowledge transfer in acquisitions we develop specific hypotheses concerning the nature of these effects and test our hypotheses with data on international acquisitions carried out by finnish corporations the analyses performed show that national cultural differences provide great potential for knowledge transfer in international acquisitions furthermore organizational cultural convergence and crossvergence have a significant positive impact on knowledge transfer in particular convergence and crossvergence moderate the impact of national cultural differences on knowledge transfer

nationality cultural distance and expatriate status effects on the managerial network in a multinational enterprise we study the role of three characteristics of international managers nationality cultural distance and expatriate status for their network ties a network analysis of cross subsidiary interactions among 457 managers in an mne demonstrates that managers form strong expressive ties with peers with smaller cultural distance and from the same status group however managers form strong instrumental ties with peers who are different on these background characteristics the implications for international management theory and practice are discussed

do multinationals really prefer to enter culturally distant countries through greenfields rather than through acquisitions the role of parent experience and subsidiary autonomy prior research has argued that multinational enterprises mnes prefer to enter culturally distant countries through greenfields rather than through acquisitions since acquisitions in such countries are costlier to manage this argument contains two hidden assumptions 1 the additional costs of acquisitions in culturally distant countries are the same for all mnes and 2 such acquisitions have no benefits over their greenfield counterparts in this paper we relax these two assumptions by arguing that an mne s preference for greenfields in culturally distant countries depends on its international and host country experience and on the level of autonomy it plans to grant the focal subsidiary analyzing 171 wholly owned greenfield investments and full acquisitions made by dutch mnes in 35 countries we find that these mnes prefer to enter culturally distant countries through greenfields but that this preference is lower when they have little international experience or plan to grant the focal subsidiary considerable autonomy in marketing

pension plan funding technology choice and the equity risk premium in this paper the impact of lazear contracts with defined benefit pensions on aggregate technology composition and the aggregate risk premium is examined in the presence of capital market constraints affecting workers defined benefit pensions bias the economy towards risk free production leveraging the risky technology relaxes the constraints and results in more risky production and a fall in the aggregate risk premium this effect holds with risky debt and low pension shortfall risk but breaks down with high pension shortfall risk a key prediction is that as lazear contracts become less common risky production will increase and the aggregate risk premium will fall

cultural differences and capability transfer in cross border acquisitions the mediating roles of capability complementarity absorptive capacity and social integration this paper presents an integrative model of the impact of cultural differences on capability transfer in cross border acquisitions we propose that cultural differences affect the post acquisition capability transfer through their impact on social integration potential absorptive capacity and capability complementarity two dynamic variables the use of social integration mechanisms and the degree of operational integration of the acquired unit are proposed to moderate the effects of cultural differences on social integration and potential absorptive capacity the implications for acquisition research and practice are discussed

the effects of investing social security funds in the stock market when fixed costs prevent some households from holding stocks with fixed costs of participating in the stock market consumers with high income will participate in the stock market but consumers with lower income will not participate if a fully funded defined contribution social security system tries to exploit the equity premium by selling a dollar of bonds per capita and buying a dollar of equity per capita consumers who save but do not participate in the stock market will increase their consumption thereby reducing saving and capital accumulation calibration of a general equilibrium model indicates that this policy could reduce the aggregate capital stock substantially by about 50 cents per capita