on the existence of sunspot equilibria in an overlapping generations model abstract the existence of sunspot equilibria is shown in a one commodity overlapping generations model without stationarity assumptions on preferences endowments or nominal taxes the essential assumption is that there is a continuum of perfect foresight equilibria the technique is also useful for constructing stationary sunspot equilibria when they exist consumption in a sunspot equilibrium is shown to lie within the range consistent with perfect foresight

creation adoption and diffusion of innovations by subsidiaries of multinational corporations this paper reports some of the findings of a multi phased and multi method study on the organizational attributes that facilitate creation adoption and diffusion of innovations by subsidiaries of multinational companies comparison of results obtained through case research in nine companies multiple respondent questionnaire surveys in three companies and a single respondent survey in 66 north american and european multinationals reveal unambiguous and positive impacts of normative integration through organizational socialization and dense intra and inter unit communication on an mnc subsidiary s ability to contribute to the different innovation tasks the findings are less consistent with regard to the effects of local resources and autonomy and it appears that the influences of these two attributes are strongly mediated by the levels of normative integration and organizational communication

overcoming the dual liability of foreignness and privateness in international corporate citizenship partnerships responding to increased demands from stakeholder groups many companies have instituted corporate citizenship programs in recent years leveraging their specialized resources to create public goods and services at home and abroad significant suspicion nonetheless remains about the motives and impact of corporations acting in domains traditionally served by government and third sector organizations we argue that such ambivalence undermines the perceived legitimacy of private investments in public goods and that this fundamental liability of privateness lop constitutes a significant obstacle to corporations acting in the public domain through corporate citizenship initiatives for multinational corporations mncs the challenges stemming from the lop are further amplified by the liability of foreignness lof commonly associated with international business operations we discuss the origins of the lop and derive implications of the dual liability of lop and lof for partnering choices in mncs corporate citizenship programs we highlight limitations on the set of credible governance mechanisms available to participants in these partnerships describe a set of alternative governance arrangements that serve to realign incentives among alliance partners and link these to the severity of the lop in a particular setting we illustrate our arguments with a case description of microsoft s partners in learning program

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

can there be short period deterministic cycles when people are long lived this paper considers whether short period deterministic cycles can exist in a class of stationary overlapping generations models with long but finite lived agents it shows that if agents discount the future positively then as life spans get large nonmonetary cycles will disappear further neither constant monetary steady states nor stationary monetary cycles can exist it also shows that if agents discount the future negatively then there are robust examples in which constant monetary steady states as well as stationary monetary cycles with undiminished amplitude can occur no matter how long agents live

adjustment dynamics and rational play in games when a given strategic situation arises repeatedly the possibility arises that equilibrium predictions can be justified by a dynamic adjustment process we examine myopic adjustment dynamics a class that includes replicator dynamics from evolutionary game theory simple models of imitation models of experimentation and adjustment and some simple learning dynamics we present a series of theorems showing conditions under which behavior that is asymptotically stable under some such dynamic is strategically stable in the sense of kohlberg and mertens this behavior is thus as if the agents in the economy satisfied the extremely stringent assumptions that game theory traditionally makes about rationality and beliefs journal of economic literature classification number c72

the dynamic in stability of backwards induction abstract the evolutionary basis for predicting the backwards induction solution in finite extensive form games with perfect information is examined evolution is modelled using the replicator dynamic in combination with rare perturbations that introduce a small change in the proportion of each strategy the criterion for our judgement is whether this dynamic stabilizes over time at the subgame perfect equilibrium outcome we find that the backwards induction solution is fully justified by this process only in very simple games examples of more complex games are given in which this process does not select between the subgame perfect equilibrium outcome and alternative nash equilibrium outcomes journal of economic literature classification numbers c72 c79

a time series analysis of representative agent models of consumption andleisure choice under uncertainty this paper investigates empirically a model of aggregate consumption and leisure decisions in which utility from goods and leisure is nontime separable the nonseparability of preferences accommodates intertemporal substitution or complementarity of leisure and thereby affects the comovements in aggregate compensation and hours worked these cross relations are examined empirically using postwar monthly u s data on quantities real wages and the real return on the one month treasury bill the estimated values of the parameters governing preferences differ significantly from the values assumed in several studies of real business models several possible explanations of these discrepancies are discussed

subsidiary size and the level of subsidiary autonomy in multinational corporations a quadratic model investigation of australian subsidiaries we investigate the relationship between subsidiary size and subsidiary autonomy in multinational corporations mncs and conclude that a quadratic inverted u shaped model is the best fit to our data founding our arguments in resource dependence theory we propose that while the subsidiary is relatively small increasing subsidiary size will correlate with increasing resources in the subsidiary and a consequent increase in subsidiary autonomy this positive linear relationship persists until an inflection point is reached and subsidiary autonomy begins to decline we argue that this is due to increasing subsidiary size bringing increasing coordination complexity a need for greater inputs of managerial experience and expertise and growing interdependence between the subsidiary and the rest of the corporation employing a sample of 313 australian subsidiaries of mostly us uk european and japanese mncs we use a three step hierarchical regression to investigate controls only linear and quadratic effects of subsidiary size on subsidiary autonomy the quadratic inverted u model supports and extends hedlund s 1981 proposition a post hoc investigation suggested that there might be value in exploring a sinusoidal relationship between size and autonomy

evolutionary dynamics and backward induction the backward induction or subgame perfect equilibrium of a perfect information game is shown to be the unique evolutionarily stable outcome for dynamic models consisting of selection and mutation when the mutation rate is low and the populations are large

autonomy and procedural justice a framework for evaluating subsidiary strategy using the well supported dimensions of autonomy and procedural justice a four quadrant model of subsidiary strategy is proposed and a four part typology hypothesized partner collaborator militant and vassal subsidiaries a clustering process is used to develop a four group taxonomy that corresponds with the induced model the four groups of subsidiaries are analysed across seven alternative strategic dimensions integration responsiveness coordination configuration market scope product scope and value added scope the external and internal validity of the framework is confirmed and its utility discussed in terms of subsidiary s movement from one strategy state to another

stationary pareto optimality of stochastic asset equilibria with overlapping generations abstract a way of establishing the stationary pareto optimality of asset equilibria in stochastic settings with age diversity among the agents is suggested difficulties in obtaining such results arise because agents behavior is affected by random future state variables while pareto optimality defined in terms of expected lifetime utility of representative agents conditioned on their first period state involves redistributions of consumption among agents with different histories of realized states frobenius theorem is used to establish the existence of weights for which the so weighted sum of representative agents conditional expected utilities is maximized at the asset equilibrium allocation

stochastic olg models market structure and optimality for a general class of pure exchange olg economies under uncertainty we provide a complete characterization of the efficency properties of competitive equilibria when markets are only sequentially complete and the criterion of efficency is conditional pareto optimality we also consider a particular case in which markets fail to be even sequentially complete and provide a characterization when the criterion of efficency is weakened to ex post pareto optimality

carrot or stick the evolution of reciprocal preferences in a haystack model this paper studies the evolution and the co evolution of both characteristics of reciprocity the willingness to reward friendly behavior and the willingness to punish hostile behavior firstly both preferences for rewarding and preferences for punishing can survive in evolution provided individuals interact within separate groups this holds even with randomly formed groups and even when individual preferences are unobservable secondly preferences for rewarding survive only in coexistence with self interested preferences but preferences for punishing tend either to vanish or to dominate the population entirely finally the evolution of preferences for rewarding and the evolution of preferences for punishing influence each other decisively the existence of rewarders enhances the evolutionary success of punishers but punishers crowd out rewarders jel classification c72 d63 d64 d83

absorptive capacity socially enabling mechanisms and the role of learning from trial and error experiments a tribute to dan levinthal s contribution to international business research the concept of absorptive capacity ac of firms cohen and levinthal 1989 and 1990 is a foundational feature of organizational learning and adaptation that has had enormous influence in international business ib and innovation studies and management research in general in this tribute to dan levinthal we discuss the close connection between ac and learning two areas central to dan levinthal s research in relation to different contexts where ac comes into play in extant ib research we discuss four specific aspects of the nexus of ac and learning in the context of ib 1 bridging between intra and inter firm learning 2 a routine based framing of ac that emphasizes processes and capabilities underlying seeking assimilating and innovation in a global setting 3 the role of socially enabling mechanisms and 4 the logic of learning through trial and error experiments within firms and countries

mnc knowledge transfer subsidiary absorptive capacity and hrm based on a sample of 169 subsidiaries of multinational corporations mncs operating in the usa russia and finland this paper investigates the relationship between mnc subsidiary human resource management hrm practices absorptive capacity and knowledge transfer first we examine the relationship between the application of specific hrm practices and the level of the absorptive capacity second we suggest that absorptive capacity should be conceptualized as being comprised of both employees ability and motivation further results indicate that both ability and motivation absorptive capacity are needed to facilitate the transfer of knowledge from other parts of the mnc

managing the mne subsidiary advancing a multi level and dynamic research agenda abstract multinational enterprise mne subsidiaries abroad are important organizations in their own rights they typically hold some of the mne s most critical resources and operate at the forefront of complex international environments in this review we identify and organize theoretical and empirical research on subsidiary management based on over 600 articles in leading academic journals we develop a conceptual framework that integrates complementary streams of theoretical and empirical research with the subsidiary as its focal unit of analysis in particular we review six lines of research on subsidiary scope practices knowledge management engagement with local market and nonmarket actors performance and individuals within subsidiaries we highlight theoretical perspectives that have contributed to and been advanced by research on mne subsidiaries based on the review we explore future research agendas linking the contemporary research themes with two main thrusts first subsidiary management is a multi level phenomenon that would benefit from more microfoundational research second subsidiary management operates at key interfaces of technology paradigm shifts and of disruptions in the political and institutional environment research into the dynamics of subsidiary management would thus enhance our understanding of international business in a volatile global economy

subsidiary expansion contraction during times of economic crisis this paper compares two real options within country growth and across country operational flexibility to examine subsidiary expansion contraction during times of economic crisis specifically we examine how the real options orientations of individual subsidiaries interact with the general characteristics of multinational enterprise networks our main findings are that a economic crises can be detrimental for subsidiaries with stronger within country orientations and advantageous for those with stronger across country orientations and b network characteristics are not the sole determinants of subsidiary expansion contraction what really matters is how the real options orientations of individual subsidiaries mesh with the overall characteristics of the network they belong to

configurations of strategy and structure in subsidiaries of multinational corporations a three fold typology of subsidiary roles world mandate specialized contributor local implementer was induced from the literature and its empirical validity was confirmed adopting a configurational approach we then explored the ways in which subsidiary structural context varies across subsidiary role types structural context characteristics were determined through a discussion of the underlying principles of the hierarchy and heterarchy models of multinational organization the key findings were a higher strategic autonomy in world mandates than in local implementers b a more internationally configured value chain in world mandates and specialized contributors than local implementers c lower levels of internal product flows in world mandates than the other two types and d a significantly lower performance in specialized contributors implications for a configurational model of subsidiary management and for heterarchy as a higher level conceptualization are discussed

the evolution of exchange abstract stochastic stability is applied to the problem of exchange we analyze the stochastic stability of two dynamic trading processes in a simple housing market in both models traders meet in pairs at random and exchange their houses when trade is mutually beneficial but occasionally they make mistakes the models differ in the probability of mistakes when all mistakes are equally likely the set of stochastically stable allocations contains the set of efficient allocations when more serious mistakes are less likely the stochastically stable states are those allocations always efficient with the lowest envy level

stationary monetary equilibria in overlapping generations models with incomplete markets abstract the objective of this paper is to study the stationary monetary equilibria of a stochastic overlapping generations model with a general incomplete asset structure it is proved that a stationary equilibrium with a nonzero price of money generically exists and is locally isolated when there is outside money for an open set of economies there is an equilibrium with positive money prices in all states the equilibrium is also given a neat characterisation in terms of the properties of the underlying state prices with only inside money there will instead be a continuum of equilibria journal of economic literature classification numbers d52 d90 e40

the structure of sunspot equilibria the role of multiplicity this paper examines the structure of sunspot equilibria in a standard two period exchange economy with real assets we show that for a generic choice of utility functions and endowments there exists an open set of real asset structures whose payoffs are independent of sunspots such that the economy with this asset structure has a regular sunspot equilibrium an important implication of our result is that the multiplicity of non sunspot equilibria is not necessary for the existence of sunspot equilibria our technique is general and can be applied to show the existence of sunspot equilibria in other frameworks this paper analyses the structure of sunspot equilibria in a standard two period competitive exchange economy with more than one consumption good in each period and a real asset which pays a bundle of commodities there is no uncertainty except for sunspots we show that for an open and dense subset of the set of utility functions and endowments there exists an open set of real asset structures with payoffs independent of sunspots such that the resulting economy with an asset structure in this set has a regular sunspot equilibrium we also show that this result is tight in the space of utility functions endowments and asset structures there is in fact an open set of economies for which sunspot equilibria do not exist moreover our argument provides a systematic method which allows us to find generically all the sunspot equilibria of a given economy thus it can be used as a tool for studying the global structure of the set of sunspot equilibria not just the existence of a sunspot equilibrium the dependence of the existence of sunspot equilibria on the particular specification of the payoff of the asset provides an interesting contrast with the fact that the set of equilibrium allocations of the underlying certainty economy does not depend on the asset structure recall that when markets are complete preferences and endowments completely determine the set of competitive equilibria in our setting markets are complete in the underlying certainty economy so if payoffs change the price of the asset will change accordingly but there is no effect on the equilibrium consumption of the certainty economy thus the fundamentals of the certainty economy are the distribution of endowments and preferences among consumers and our result implies that the existence of sunspot

from the editors common method variance in international business research jibs receives many manuscripts that report findings from analyzing survey data based on same respondent replies this can be problematic since same respondent studies can suffer from common method variance cmv currently authors who submit manuscripts to jibs that appear to suffer from cmv are asked to perform validity checks and resubmit their manuscripts this letter from the editors is designed to outline the current state of best practice for handling cmv in international business research

innovation in multinational subsidiaries the role of knowledge assimilation and subsidiary capabilities subsidiaries of multinational firms play an important role in the globalization of innovation yet we have an incomplete idea of the influences on their innovative activity drawing on prior research in international business and strategy we identify two sets of factors that influence the absorption and utilization of knowledge in multinational corporation subsidiaries a the range of external and internal knowledge sources available and b the subsidiary capabilities associated with knowledge absorption and utilization we find that knowledge absorbed from the host country is useful to subsidiary innovation we also find support for the role of subsidiary capabilities both sourcing capability and combinative capability have a significant influence on the scale and quality of innovation

existence and local uniqueness of functional rational expectations equilibria in dynamic economic models abstract this paper established the existence and local uniqueness of stationary functional rational expectations equilibria for an open set of multi good multi agent pure exchange overlapping generations models in which agents endowments are random such equilibria are given by prices which are functions of one period lagged prices and endowments and of current endowments

endogenous market incompleteness without market frictions dynamic suboptimality of competitive equilibrium in multiperiod overlapping generations economies abstract in this paper we show that within the set of stochastic three period lived olg economies with productive assets such as land markets are necessarily sequentially incomplete and agents in the model do not share risk optimally we start by characterizing perfect risk sharing and find that it requires state dependent consumption claims which depend only on the exogenous shock realizations we show then that the recursive competitive equilibrium of any overlapping generations economy with weakly more than three generations is not strongly stationary this then allows us to show directly that there are short run pareto improvements possible in terms of risk sharing and hence that the recursive competitive equilibrium is not pareto optimal we then show that a financial reform which eliminates the equity asset and replaces it with zero net supply insurance contracts arrow securities will implement to pareto optimal stochastic steady state known to exist in the model finally we also show via numerical simulations that a system of government taxes and transfers can lead to a pareto improvement over the competitive equilibrium in the model

sunspot like effects of random endowments abstract random endowments can affect economic outcomes in two ways directly by affecting resources and indirectly by endogenously affecting expectations this second effect which we call a sunspot like effect allows prices to overreact to movements in fundamentals we prove that sunspot equilibria can be viewed as the limiting case of markets overreacting to small shocks to fundamentals two examples illustrate the theorem and show that sunspot like effects can be present even with significant shocks to fundamentals

an evolutionary approach to understanding international business activity the co evolution of mnes and the institutional environment this paper examines the co evolution of mne activities and institutions external and internal to the firm we develop a theoretical framework for this analysis that draws on the more recent writings of douglass north on institutions as a response to complex forms of uncertainty associated with the rise in global economic interconnectedness and of richard nelson on the co evolution of technology and institutions we link historical changes in the character of mne activities to changes in the institutional environment and highlight the scope for firm level creativity and institutional entrepreneurship that may lead to co evolution with the environment we argue that the main drivers for institutional entrepreneurship are now found in the increasing autonomy of mne subsidiaries thus mne agency derives from more decentralized forms of experimentation in international corporate networks which competence creating nodes of new initiatives can co evolve with local institutions unlike most other streams of related literature our approach connects patterns of institutional change in wider business systems with more micro processes of variety generation and experimentation within and across individual firms this form of co evolutionary analysis is increasingly important to understanding the interrelationships between mne activities and public policy

non existence of recursive equilibria on compact state spaces when markets are incomplete abstract this paper analyzes one good exchange economies with two infinitely lived agents and incomplete markets it is shown that there are no recursive markov equilibria for which borrowing debt constraints never bind if the state space of exogenous and endogenous variables is a compact subset of r n moreover for large enough but finite borrowing limits no recursive equilibrium with compact state space exists these non existence results hold for any economy satisfying the following standard assumptions preferences are additively separable across time and states the one period utility function is time and state independent and unbounded from below endowments are bounded and follow a markov chain with stationary transition matrix there is some idiosyncratic risk and no aggregate risk

on endogenous competitive business cycles the belief that the long run equilibrium of a competitive monetary economy that does not experience any exogeneous shocks whether originating from the external environment or from policy should be modelled as a state that is stationary or perhaps growing at a constant rate seems to be deeply rooted in the mind of some economists

knowledge transfer capacity and its implications for the theory of the multinational corporation this study updates and extends research on foreign entry modes by examining the impacts of knowledge transfer capacity and knowledge tacitness research on international corporate expansion has long emphasized that deploying intangible knowledge based assets is required for successful international expansion more recently research from a knowledge based perspective has addressed the role of tacitness in constraining a firm s ability to transfer knowledge internationally we combine these perspectives to describe how knowledge tacitness affects the relative suitability of four archetypal entry modes exporting licensing establishing an alliance and wholly owned entry we then examine and develop conceptually a seldom studied firm characteristic knowledge transfer capacity we offer predictions that describe the combined effects of knowledge tacitness and transfer capacity on entry mode choice we distinguish between the transfer capacity of the organization that develops knowledge source transfer capacity and that of the organization that seeks to access that knowledge recipient transfer capacity the discussion addresses how our model generalizes to knowledge seeking strategies and to the study of ongoing multinational networks the study enriches and reconciles multiple theoretical perspectives on entry strategy it brings together the study of knowledge characteristics and firm heterogeneity in the theory of the multinational corporation and in international and strategic management more generally journal of international business studies 2003 34 356 373 doi 10 1057 palgrave jibs 8400037

managing knowledge transfer in mncs the impact of headquarters control mechanisms in this paper we explore the impact of organisational mechanisms on inter unit knowledge flows in multinational corporations mncs a comprehensive model based on agency theory and socialisation theory is tested on a sample of 134 finnish and chinese mnc subsidiaries our findings indicate that mncs can influence inter unit knowledge transfer by specifying the objectives of the subsidiary and by utilising corporate socialisation mechanisms however we found no support for the hypothesised impact of management compensation systems and the use of expatriate managers on the extent of knowledge transfers from foreign subsidiaries to other parts of the mnc

centralization vs decentralization in a multi unit organization a computational model of a retail chain as a multi agent adaptive system a computational model of a retail chain is developed in which store managers continually search for better practices search takes place over a rugged landscape defined over the space of store practices the main objective of this research is to determine how the amount of discretion given to store managers as to how they run their stores influences the rate of innovation at the store level we find that greater decentralization enhances firm performance when stores markets are sufficiently different the horizon is sufficiently long and markets are sufficiently stable

implementing global strategy characteristics of global subsidiary mandates implementing a global strategy requires coordinating subsidiary activities across country locations the assumption often made is that such coordination must be managed at headquarters however an alternate approach is decentralized centralized responsibilities in which different subsidiaries within the multinational are given worldwide mandates to manage specific products or products lines this study identifies subsidiary characteristics that are associated with receiving a global mandate by examining foreign subsidiaries located in france germany japan u k u s and canada

the evolution of strategic sophistication this paper investigates the evolutionary foundation for our ability to attribute preferences to others an ability that is central to conventional game theory we argue here that learning others preferences allows individuals to efficiently modify their behavior in strategic environments with a persistent element of novelty agents with the ability to learn have a sharp unambiguous advantage over those who are less sophisticated because the former agents extrapolate to novel circumstances information about opponents preferences that was learned previously this advantage holds even with a suitably small cost to reflect the additional cognitive complexity involved jel c73 d11 d83

building a process model of local adaptation of practices a study of six sigma implementation in korean and us firms the strategic transformation of asian firms into global players has involved the adoption and adaptation of many organizational practices developed in the west we build a process model of adaptation by observing how an organizational practice is adapted to a local setting different from its locus of origin through inductive methods and case studies of six sigma implementation in korean and us firms based on these cases we propose a cascading sequential pattern to the local adaptation of the conceptual social and technical dimensions of organizational practices reconciling conflicting views in the literature on whether or not to adapt our theoretical model highlights the importance of considering the different degrees of contextual influence on different underlying dimensions of a practice and of configuring each dimension accordingly further we suggest that the sequence and configuration of adaptation across different practice dimensions matter to the successful implementation of a practice across borders

dominant root characterization of pareto optimality and the existence of optimal equilibria in stochastic overlapping generations models abstract we characterize pareto optimality of interior stationary allocations in single good overlapping generations models with stochastic aggregate shocks and heterogeneous but recurring generations an interior stationary allocation is pareto optimal if and only if it is an equilibrium allocation and the associated contingent claims price matrix has a dominant root less than or equal to unity we then use this characterization to show that there always exists an optimal equilibrium with or without valued fiat money

perspective absorbing the concept of absorptive capacity how to realize its potential in the organization field the purpose of this perspective paper is to advance understanding of absorptive capacity its underlying dimensions its multilevel antecedents its impact on firm performance and the contextual factors that affect absorptive capacity twenty years after the cohen and levinthal 1990 paper the field is characterized by a wide array of theoretical perspectives and a wealth of empirical evidence in this paper we first review these underlying theories and empirical studies of absorptive capacity given the size and diversity of the absorptive capacity literature we subsequently map the existing terrain of research through a bibliometric analysis the resulting bibliometric cartography shows the major discrepancies in the organization field namely that 1 most attention so far has been focused on the tangible outcomes of absorptive capacity 2 organizational design and individual level antecedents have been relatively neglected in the absorptive capacity literature and 3 the emergence of absorptive capacity from the actions and interactions of individual organizational and interorganizational antecedents remains unclear building on the bibliometric analysis we develop an integrative model that identifies the multilevel antecedents process dimensions and outcomes of absorptive capacity as well as the contextual factors that affect absorptive capacity we argue that realizing the potential of the absorptive capacity concept requires more research that shows how micro antecedents and macro antecedents influence future outcomes such as competitive advantage innovation and firm performance in particular we identify conceptual gaps that may guide future research to fully exploit the absorptive capacity concept in the organization field and to explore future fruitful extensions of the concept

best response dynamics with level n expectations in two stage games this paper analyzes behavior in repeatedly played two stage games where players choose actions in both stages according to best replies using level n expectations about the opponent s actions in both stages level n expectations are recursively defined in a way that a player holding level n expectations correctly predicts the action of an opponent holding level n 1 expectations a general conceptual framework to study such dynamics for two stage games is developed and it is shown that contrary to results for single stage games the fixed points of the dynamics depend on the level of the expectations in particular for level 0 expectation fixed points correspond to a nash equilibrium of a simultaneous move version of the game whereas under certain conditions fixed points converge towards the subgame perfect equilibrium of the two stage game if the level of expectations goes to infinity the approach is illustrated using a two stage duopoly game where firms in the first stage invest in activities reducing their marginal costs and in the second stage engage in cournot competition conditions for local stability of the fixed points are derived for different levels of expectations and it is shown that level 2 expectations are sufficient to move the fixed point of the dynamics to a close neighborhood of the subgame perfect equilibrium furthermore it is demonstrated that although firms benefit from unilateral increases in the level of expectations an increase of n by all firms reduces all profits

nonmonetary steady states in stationary overlapping generations models with long lived agents and discounting multiplicity optimality and consumption smoothing abstract we construct a sequence of pure exchange stationary olg economies in which generations have longer and longer life spans and all agents maximize a discounted sum of utilities with a fixed positive and common discount rate period utility functions and endowment patterns are subject to mild restrictions and within generation heterogeneity is permitted we show that i every sequence of equilibrium interest rates converges to the discount rate ii eventually every non monetary steady state is optimal and a monetary steady state will never exist and iii for any agent consumption at any fixed age converges to permanent income evaluated using the utility discount rate

learning to play games in extensive form by valuation abstract game theoretic models of learning which are based on the strategic form of the game cannot explain learning in games with large extensive form we study learning in such games by using valuation of moves a valuation for a player is a numeric assessment of her moves that purports to reflect their desirability we consider a myopic player who chooses moves with the highest valuation each time the game is played the player revises her valuation by assigning the payoff obtained in the play to each of the moves she has made we show for a repeated win lose game that if the player has a winning strategy in the stage game there is almost surely a time after which she always wins when a player has more than two payoffs a more elaborate learning procedure is required we consider one that associates with each move the average payoff in the rounds in which this move was made when all players adopt this learning procedure with some perturbations then with probability 1 there is a time after which strategies that are close to subgame perfect equilibrium are played a single player who adopts this procedure can guarantee only her individually rational payoff

dynamic capabilities what are they this paper focuses on dynamic capabilities and more generally the resource based view of the firm we argue that dynamic capabilities are a set of specific and identifiable processes such as product development strategic decision making and alliancing they are neither vague nor tautological although dynamic capabilities are idiosyncratic in their details and path dependent in their emergence they have significant commonalities across firms popularly termed best practice this suggests that they are more homogeneous fungible equifinal and substitutable than is usually assumed in moderately dynamic markets dynamic capabilities resemble the traditional conception of routines they are detailed analytic stable processes with predictable outcomes in contrast in high velocity markets they are simple highly experiential and fragile processes with unpredictable outcomes finally well known learning mechanisms guide the evolution of dynamic capabilities in moderately dynamic markets the evolutionary emphasis is on variation in high velocity markets it is on selection at the level of rbv we conclude that traditional rbv misidentifies the locus of long term competitive advantage in dynamic markets overemphasizes the strategic logic of leverage and reaches a boundary condition in high velocity markets copyright 2000 john wiley sons ltd

the effects of mnc parent effort and social structure on subsidiary absorptive capacity although the literature provides ample evidence that the global transfer and local implementation of knowledge represents a key advantage for multinational corporations mncs we lack comparable understanding as to whether knowledge creating mnc parents can actively expand the absorptive capacity of their subsidiaries using a teacher student lens this study examines the combined impact of specific structural mechanisms and motivational processes by mnc parents on the ability of 216 subsidiaries to absorb parent initiated marketing strategies the findings reveal that mnc parents can indeed cultivate subsidiaries ability to appropriate marketing knowledge through a combination of adopting specific social structures and investing in particular efforts however the effect of social structure on subsidiary absorptive capacity is indirect and accounted for by the parents intensity of effort a number of theoretical implications emerge from the findings for research on absorptive capacity in relation to the role of the knowledge source the need to examine organizational influences in relation to one another and validating the original absorptive capacity dimensions for managers in the global marketplace the findings lead to the suggestion that mncs devote attention to nurturing the absorptive capacities at different organizational levels in order to optimize the global transfer of knowledge

evolution and game theory introduced by john von neumann and oskar morgenstern 1944 energized by the addition of john nash s 1950 equilibrium concept and popularized by the strategic revolution of the 1980s noncooperative game theory has become a standard tool in economics in the process attention has increasingly been focused on game theory s conceptual foundations two questions have taken center stage should we expect nash equilibrium play that is should we expect the choice of each player to be a best response to the choices of the other players if so which of the multiple nash equilibria that arise in many games should we expect in the 1980s game theorists addressed these questions with models based on the assumptions that players are perfectly rational and have common knowledge of this rationality in the 1990s however emphasis has shifted away from rationalitybased to evolutionary models one reason for this shift was frustration with the limitations of rationality based models these models readily motivated one of the requirements of nash equilibrium that players choose best responses to their beliefs about others behavior but less readily provided the second requirement that these beliefs be correct simultaneously rationality based criteria for choosing among nash equilibria produced alternative equilibrium refinements strengthenings of the nash equilibrium concept designed to exclude implausible nash equilibria with sufficient abandon as to prompt despair at the thought of ever choosing one as the right concept a second reason for the shift away from rationality based game theory was a change in the underlying view of what games represent it was once typical to interpret a game as a literal description of an idealized interaction in which an assumption of perfect rationality appeared quite

markov rational expectations equilibria in an overlapping generations model abstract in this paper we analyze rational expectations equilibrium paths in a stochastic overlapping generations model the work presented here builds on results of s e spear j econ theory 35 1985 251 275 where is is shown that in a model with multiple goods and time non separable preferences a stochastic steady state equilibrium will generically fail to exist a stochastic steady state is defined as an equilibrium in which the stochastic process of endogenously determined variables is measure isomorphic to the exogenous process driving the model in this paper we establish the existence of non steady state equilibria and provide a characterization of their stochastic properties

life cycle economies and aggregate fluctuations do the implications for business cycle issues change when we switch from studying infinitely lived representative agent models to more sophisticated demographic structures with finitely lived agents this article addresses that question by using a large overlapping generations model that is calibrated to u s demographic properties microeconomic evidence and national income and product accounts the finding is that the answers obtained are basically the same for the two kinds of models the article also explores the relative volatility of hours across age groups an issue that cannot be addressed by using the infinitely lived representative agent abstraction

adaptive learning in international business building on daniel levinthal s seminal theories on learning adaptation and innovation this article elucidates an adaptive view of organizational learning undertaken by multinational enterprises mnes levinthal s perspectives have tremendous implications for theorizing and examining processes pathways and mechanisms of dynamic learning for mnes competing in a complex environment this article extends these perspectives considering unique organizational traits and environmental characteristics facing mnes for a more nuanced understanding of contexts in which adaptive learning creates global competitive advantage discussion also includes levinthal s perspectives that are not yet adequately extended to but valuable for ib research such as learning mindfulness cognitive search organizational architecture for adaptation and co evolution with technological change we offer additional research questions as well as possible solutions to adaptive learning for international business

short memory equilibrium in stochastic overlapping generations economies abstract in stochastic olg exchange economies we show that short memory equilibria the natural extension from deterministic economies of steady states low order cycles or finite state space stationary sunspots equilibria fail to exist generically in utilities as a result even with independent and identically distributed exogenous shocks there is serial correlation in endogenous economic variables in equilibrium this arises even if utilities are time separable some goods inferior and there are no technological lags hence the origins of economic fluctuations can be traced only to the demographic structure of a heterogeneous agent multiple good economy

human capital in multinational enterprises does strategic alignment matter this research proposes a strategic human capital alignment framework to examine whether the alignment between subsidiary strategy i e export oriented vs local market oriented strategy and human capital i e parent firm vs local specific human capital is positively related to subsidiary performance in multinational enterprises mnes we further explore two important exogenous i e foreign exchange rate change and endogenous i e mne international experience boundary conditions since they may adjust the positive effect of strategic human capital alignment on performance the analysis based on 5604 subsidiary observations of 423 mnes from 1990 to 2012 confirms the positive synergic effect of aligning subsidiary strategy and human capital and shows the moderating effects of foreign exchange rate change and mne international experience by presenting the importance of subsidiary strategy global staffing alignment and the roles of external economic environments and internal organizational capabilities as boundary conditions the strategic human capital alignment framework suggests that what makes human capital valuable for the firm is its alignment with strategic orientation thus managers should carefully deploy the appropriate type of human capital to fulfill the requisite organizational strategy and take into account changing external and internal contextual conditions in applying the framework

informational diversity over time and the optimality of monetary equilibria abstract the temporal realizations of a random state variable in an overlapping generations model create an informational diversity between members of different generations and require a reexamination of the optimality that competitive equilibria might display in such an environment using an optimality criterion that reflects this informational diversity we prove the optimality of competitive equilibrium in a model with a fixed stock of fiat money a single spot market and good endowments that follow a markov process the need for an optimality criterion that incorporates informational diversity is further motivated by studying the same model with the operation of complete contingent commodities markets

rational expectations in the overlapping generations model abstract this paper reports results on the character of the rational expectations equilibria of a stochastic overlapping generations model with heterogenous markets the model considered is a stationary overlapping generations model in which the endowments of young agents are subject to i i d random shocks the main result shown is that if there are l 1 commodities traded in every period then for most preferences the rational expectations equilibrium stochastic process of prices and allocations necessarily exhibits serial correlation this is in marked contrast to the one commodity model in which there always exists an equilibrium which is measure isomorphic to the endowment process

searching locally and globally applying daniel levinthal s scholarship to international business daniel a levinthal has made several important contributions to the fields of strategy and management his research has been pivotal in enhancing our understanding of interactions between the internal and external contexts that organizations face as well as the roles of experience search and learning processes despite substantial overlap between the core issues in international business ib and levinthal s work the ib field has yet to fully embrace key tenets of his research we aim to bridge this gap by providing a number of concrete suggestions for areas in which ib research may benefit from levinthal s work and vice versa

debt deficits and finite horizons the stochastic case abstract we introduce aggregate uncertainty and complete markets into blanchard s 1985 perpetual youth model we derive a simple expression for the pricing kernel that can be used to close a variety of equilibrium models in which the set of agents changes over time

existence and optimality of currency equilibrium in stochastic overlapping generations models the pure endowment case abstract we consider a pure exchange stochastic overlapping generations economy sufficient conditions for the existence of a monetary equilibrium and a characterization of optimality are provided it is shown that in a monetary equilibrium currency provides partial insurance and that the equilibrium allocation is optimal it is also shown that if an allocation is optimal the contingent claim prices associated with it are such that in an average sense the present value of the social endowment is bounded

stationary equilibria with incomplete markets and overlapping generations recent work on general equilibrium models with incomplete financial markets has demonstrated that when assets pay off in units of account equilibrium prices and allocations are indeterminate the equilibria in such models are also generically constrained suboptimal a central planner can typically reallocate assets in such a way as to pareto dominate the competitive equilibrium in this paper the authors consider an overlapping generations model with incomplete markets in which one asset is fiat money they show that when outside money has value in equilibrium the stationary equilibrium prices and allocations are both locally isolated and constrained optimal copyright 1992 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association