transition and capital misallocation the chinese case this paper demonstrates that the allocation of household savings to state owned enterprises soes in china and not to the increasing share of private firms explains both the patterns of capital flows fdi entries and the accumulation of foreign assets and the drop in the consumption share during china s transition the contribution is to explain these two elements in a dynamic general equilibrium model with tfp growth that differentiates fdi and foreign assets in addition to other frictions financial intermediation and soes have the crucial role by misdirecting household savings it modifies firms labor and capital intensiveness and creates shifts in savings accumulation and capital flows moreover the increasing share of credit constrained private firms hinders wage growth and returns on household savings are low to finance soes these two elements reduce the consumption share with a calibration adapted to the chinese economy and deterministic shocks the model also matches to a large extent the data for a variety of stylized facts over the last 30 years

social influence and mne strategic response to political risk a global network approach abstract according to the conventional view of mne host country relations mnes faced with political risk condition their strategic responses on each party s relative power positions or bargaining influence drawing insight from network theory institutional theory and international relations research i argue that firm sensitivity to political risk is contingent upon a complementary concept social influence social influence arises through the mutual embeddedness of mne and host government in a complex global network of nations to test my hypotheses i construct a global network of trade relations that i combine with a unique transaction level dataset from the global petroleum industry my results demonstrate that social influence as modeled by home host structural equivalence moderates the effects of political risk further my findings provide support for a conceptual and empirical distinction between social influence and the traditional bargaining influence examined in the literature

hukou status and individual level labor market discrimination an experiment in china this article examines discrimination based on hukou status a legal construct that segregates locals and migrants in urban china local and migrant household helpers were recruited as experimental

terms of trade shocks and economic performance 1870 1940 prebisch and singer revisited debate over trends in the terms of trade between primary commodities and manufactures their causes and their impact has dominated the literature for more than a century classical economists claimed that the terms of trade of primary commodities should improve since land and natural resources are always in inelastic supply following the great depression a new view emerged what came to be known as the prebisch singer thesis was instead that the terms of trade for primary products had deteriorated up to the 1950s the subsequent literature has almost exclusively and obsessively asked whether a deterioration has actually taken place over the 130 years following 1870 nowhere in this literature has the impact of these terms of trade shocks on long run growth been assessed although it is certainly full of lively speculation and debate this paper fills part of this empirical gap by constructing a country specific panel data base 1870 1940 by documenting terms of trade trends by country and region and finally by estimating the impact of the price shocks on long run economic performance we find the impact to have been asymmetric between center and periphery this abstract was borrowed from another version of this item

vertical trading and uneven development abstract the phenomenon of vertical trading in which the center exports a good involving a high degree of processing which leads to economy wide learning and the periphery exports a good which does not generate such effects is formalized in a simple dynamic model of trade it is shown that the periphery can lose from such trade relations conditions under which this can occur are shown to involve parameters of the learning functions and the sizes of the two countries

the end of cheap chinese labor abstract in recent decades cheap labor has played a central role in the chinese model which has relied on expanded participation in world trade as a main driver of growth at the beginning of chi

let s not throw the baby out with the bath water the role of urban villages in housing rural migrants in china in the era of china s economic growth and urbanisation providing adequate and affordable housing for rural urban migrants in urban areas is crucial for the success of china s multifaceted reforms

state ownership and transparency in foreign direct investment we contribute to ib literature on state owned multinationals by examining an understudied element of mne strategy transparency drawing insight from accounting finance and political science we develop theory and hypotheses regarding ownership effects on fdi disclosure we argue that transparency of outward fdi depends on both state ownership and home and host country institutions we also posit that host governments harness their soes to exploit information disclosed by foreign mnes discouraging inward fdi transparency we test our hypotheses using a unique transaction level database from the global petroleum industry analyzing a sample of 965 investment disclosures across 81 developing and developed countries we find state ownership reduces mne transparency soes are less sensitive to host country political risk than private firms soes from better governed countries are more transparent and regardless of ownership foreign mnes are more opaque when investing in the presence of a host country soe

inside china s cities institutional barriers and opportunities for urban migrants one of the most glaring legacies of 20thcentury chinese socialism is a sharp and widened divide between china s urban and rural areas china s widened urban rural divide arose from a socialist industrialization process which created a hastened heavy industrial base at the expense of its rural population china s vast rural population not only endured a standard of living far below that in the urban sector they were also denied access to many social welfare benefits and social mobility opportunities martin king whyte 1996 this urban rural gap in social and economic wellbeing together with a massive reservoir of rural surplus labor and an acute shortage of consumer goods formed the driving forces for china s change of migration control policy and for the rapid increase of rural migrants in chinese cities though the exact number of migrants is still hard to ascertain due to both a lack of consensus in the definition of migrant and the absence of an authoritative national survey migrants prominent presence in chinese cities is hardly disputable in china s largest cities for instance it is often quoted that at least one out of every five persons is a migrant and most likely a migrant from rural areas in shanghai the number of migrants rose tenfold in one decade from 0 26 million in 1981 to 2 81 million in 1993 the percentage of local residents who were migrants correspondingly rose from less than 5 percent in the early 1980 s to 21 7 percent in 1993 changming sun 1997 in beijing the number of migrants was 3 29 million in 1994 compared to a locally registered population of 10 63 million for the whole municipality and 6 million for its city districts dangsheng ji et al 1996 p 95 in city districts one out of every three persons in beijing is a temporary migrant from elsewhere most of these recorded migrants are also genuine migrants not short term visitors more than 60 percent had stayed for more than half of a year and only 17 percent had been in beijing for less than one month three quarters of all the surveyed migrant population listed business or employment as their purpose of stay ji et al 1996 pp 96 97 rural migrants account for over threequarters of all migrants in large chinese cities in shanghai for instance a survey in 1995 found that 88 1 percent of all migrants had their place of household registration in the countryside wang and zuo 1997 similarly in beijing where one expects to see a higher circulation of urban to urban migrants close to 80 percent of migrants surveyed in late 1994 were peasants before moving into beijing xiuhualiu 1996 p 112

does institutional quality matter for trade institutional conditions in a sectoral trade framework summary this article examines the extent to which national institutional quality affects bilateral sectoral trade flows as well as whether the conditioning role of institutions for trade has been waxing or waning with time based on a new trade theory framework we derive a sectoral gravity equation including novel variables corresponding to the exporter s labor competitiveness levels along with importer s price indices and sectoral incomes and analyze industry specific bilateral trade flows of 186 countries for the period 1996 2012 we address potential endogeneity and econometric drawbacks by means of the poisson pseudo maximum likelihood estimation methods the results indicate that both the institutional conditions at destination and the institutional distance between exporting and importing countries are relevant factors for bilateral trade moreover the effect associated with institutional conditions at destination moderately increases over time this is a robust outcome across economic sectors with higher values for agriculture and raw materials than for manufacturing and services

public goods and minimum provision levels does the institutional formation affect cooperation we investigate experimentally the role of institutional formation on the implementation of a binding minimum contribution level to a public good groups either face the minimum level exogenously im

one more time international business in a global economy this paper seeks to redirect the debate on the past present and future of international business ib it sets out to dispel prevailing myths pertaining to the field s disciplinary roots its domain and underlying bases of theory and knowledge ib is positioned as an integrative field whose competitive advantage and added value lie in the synergetic combination of global and local knowledge that is unavailable to and not imitable by its major competitors in particular economics and strategy

new silicon valleys or a new species commoditization of knowledge work and the rise of knowledge services clusters this paper explores knowledge services clusters kscs as a distinct and increasingly important form of geographic cluster in particular in developing countries kscs are defined as geographic concentrations of lower cost skills serving global demand for increasingly commoditized knowledge services based on prior research on clusters and services offshoring and data from the offshoring research network orn major properties and contingencies of ksc growth are discussed and compared with both high tech clusters and low cost manufacturing clusters special emphasis is put on the ambivalent effect of commoditization of knowledge work on ksc growth it is proposed that kscs attract most client projects if service commoditization is medium whereas higher or lower commoditization either increases global competitive pressure or lowers demand and economies of scale and scope ksc attractiveness is further related to the perceived availability of skills at relatively low costs and cluster connectedness with client economies through corporate networks and professional communities findings not only advance current debates on clusters global services sourcing and the geography of knowledge production but also have important policy implications

fragmenting global business processes a protection for proprietary information this study shows that when sourcing business services in foreign countries the fragmentation of processes across production units acts as an operational level adjustment variable for firms to adapt their information protection approach to the regulative environment of the host country they have selected and to the possibility to use internal controls over the activities performed abroad we hypothesize that when the above mechanisms are not available firms are more likely to fragment processes across multiple foreign production units instead of collocating all process tasks in the same unit thanks to it enabled integration capabilities firms can exploit the complementarities between the dispersed fragments of a process while reducing the misappropriation hazard of individual fragments empirical results and robustness tests are strongly congruent with these hypotheses we find also that the propensity to turn to the process fragmentation protection mechanism increases with firm host country specific experience and with the alternative value of the proprietary information involved in the activity sourced abroad

trade environment and development the issues in perspective abstract this special issue on trade and the environment brings together a number of papers that are constructively critical of the conventional economic wisdom on the topic we think that this criticism is warranted because of the decidely uncritical way in which free trade has been advocated in much of the literature and especially in policy the papers analyse the validity of the underlying assumptions on which the conventional wisdom is based and provide suggestions for ways to facilitate trade that is also adequately protective of the environment sustainability and other social values in this introductory piece we discuss trade the environment and sustainability summarizing arguments in the papers included in this issue and adding a few additional points not covered by them

energy consumption in service industries challenging the myth of non materiality abstract this paper addresses the issue of energy consumption in service industries official energy statistics show that the amount of energy consumed in service industries is quite small and this is explained in the theoretical literature by the presumed intangibility of services our hypothesis however is that the energy consumed by services has been underestimated after identifying and analyzing the full range of sources of energy consumption in service industries we show that official energy statistics account for only a part of this consumption our work is based on a thorough rereading of the economics literature on services especially concerning the definition of services and the specificities of the service provision process done in light of our knowledge about energy consumption eventually using the 2007 french national transportation and travel survey we estimate one of the overlooked sources of energy consumption the one pertaining to mobility

precautionary behavior migrant networks and household consumption decisions an empirical analysis using household panel data from rural china abstract we develop a test of precautionary behavior in the consumption decisions of rural agricultural households among surveyed households facing a median level of consumption risk 10 of savings can be attributed to a precautionary motive and this increases to 15 for households with consumption per capita below the poverty line we next use distant lags of local rainfall shocks uncorrelated with current consumption growth to identify the size of migrant networks outside the village and then present evidence that both poor and nonpoor households engage in less precautionary saving as the size of the village migrant network increases

a decomposition method on employment and wage discrimination and its application in urban china 2002 2013 abstract labor market discrimination is an important issue in developing countries where path dependent institutions have been dominant while effective institutional arrangements and policies have been hidden by local customs and culture however the existing applications of classical blinder oaxaca decomposition face criticism for their imprecise understanding of the factors affecting institutional discrimination in labor markets as well as for their lack of power in formulating well targeted anti discrimination policies following oaxaca 1973 we propose a new method to decompose the total discrimination index tdi to analyze employment and wage discrimination in the labor markets of developing countries the tdi is decomposed into the employment discrimination index edi and the wage discrimination index wdi then into the underpayment index to majorities upi and the overpayment index to minorities opi we apply this method to the institutional discrimination against rural migrants in china s urban areas using national representative data from 2002 to 2013 we have found that 1 the tdi increased quickly after china entered the wto then dropped after anti discrimination policies were implemented 2 the tdi is mainly determined by the upi while the tdi s fluctuation is mainly determined by the wdi our method provides insights into the changing composition of employment and wage discrimination and their respective labor market outcomes in developing countries as a result appropriate policy measures may be developed accordingly

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

selecting public goods institutions who likes to punish and reward we study the link between individual attitudes toward uncertainty on the one hand and preferences over as well as behavior within various public goods institutions on the other hand we incentive compatibly elicit preferences over voluntary contribution mechanisms with and without reward and punishment options and then randomly assign subjects to play in one of the four institutions we find that payoffs are significantly greater when punishment is allowed but that only a small minority of participants prefers such an environment somewhat surprisingly preferences over institutions are generally independent of individual characteristics conversely individual characteristics including institutional preferences are significantly predictive of behavior in the public goods game for instance risk averse individuals preemptively punish more often this suggests that when studying sanctions and rewards it is important to consider individual attitudes toward risk and uncertainty although they may not affect the original selection into institutions

economic geography and the location of tncs financial and professional service fdi to the usa this paper attempts to examine theoretically and empirically the explanatory power of concepts drawn from economic geography for the explanation of the location of tncs it combines concepts from economic geography and international business theories in a model that seeks to explain the location of transnational corporations tncs and tests the model on financial and professional service fdi to the us the findings suggest a need to extend the conventional location model of international business by acknowledging the processes taking place among firms located in geographic proximity

heterodox theories of economic growth and income distribution a partial survey heterodox theories of economic growth and income distribution are surveyed focusing on major theories and recent contributions first a general framework for examining growth and distribution is discussed in terms of which classical marxian and post keynesian kaleckian and other theories are presented since this framework examines how variables are determined in equilibrium second dynamics behind equilibria are examined focusing on goods market and labor market changes third the framework is extended in a variety of ways to examine additional models addressing productivity growth and technical change money and inflation finance and debt additional distributional considerations multisector issues open economy questions and the environment it is concluded that the literature on heterodox theories of growth and distribution is vibrant large and growing and addresses many issues that are ignored or neglected in orthodox theories including power unemployment and aggregate demand

the dynamic impact of unilateral environmental policies this paper builds a two country two sector polluting nonpolluting trade model with directed technical change examining whether unilateral environmental policies can ensure sustainable growth the emission rate of the polluting sector depends on its relative use of a clean and a dirty input a unilateral policy combining clean research subsidies and a trade tax can ensure sustainable growth while unilateral carbon taxes alone increase innovation in the polluting sector abroad and generally cannot ensure sustainable growth relative to autarky and exogenous technical change respectively trade and directed technical change accelerate environmental degradation either under laissez faire or with unilateral carbon taxes yet both help reduce environmental degradation under the appropriate unilateral policy i characterize the optimal unilateral policy analytically and numerically using calibrated simulations knowledge spillovers have the potential to reduce the otherwise large welfare costs of restricting policy to onecountry

an organizational model for understanding internationalization processes we propose an organizational model for understanding internationalization processes we argue that these processes differ with the type of organization we compare the internationalization processes of three organization types the mass production organization the disaggregated production organization and the project based organization each organization type responds differently to critical elements of the internationalization process namely the focus of entry the degree of presence and physical presence requirements in the foreign market which in turn influence what modal forms are adopted as the process progresses consequently we observe different approaches to resource commitment in the foreign market over time

a keynesian model of north south trade abstract this paper considers a two country two good model of international trade where in each country employment and output are constrained by effective demand it is shown that the country identified as the south exporting consumption goods and importing investment goods in trade equilibrium experiences an unambiguous fall in consumption and employment as trade opens up the other country identified as the north experiences an unambiguous rise in consumption and employment

englishization in offshore call centers a postcolonial perspective the spread and use of english as the lingua franca of international business ib corporate englishization has received increasing scholarly attention in recent years but the focus has mostly been on the communication benefits and challenges of using english as a shared language inside multinationals in this article we examine how english is used externally in the provision of business services and apply a postcolonial perspective to frame our analysis drawing on fieldwork in india within the call center units of two outsourcing organizations serving anglo american firms we show how corporate englishization 1 relies on and contributes to producing comprador managerial cadres 2 serves to construct a transnational intra linguistic hierarchy of power and privilege and 3 undercuts its own effectiveness by simultaneously eliminating and maintaining the alterity of the other through processes of mimicry we thus show how corporate englishization does not merely overcome or conversely worsen transnational communication problems it also re produces colonial style power relations between the anglosphere and the rest our analysis deepens our understanding of corporate englishization and opens a new avenue for postcolonial research on the role of language in ib our analysis also advances the field of postcolonial organization studies and has implications for ib scholarship more generally

location and the multinational enterprise a neglected factor this article first traces the changing world economic scenario for international business over the past two decades and then goes on to examine its implications for the location of foreign direct investment and multinational enterprise activity it suggests that many of the explanations of the 1970s and early 1980s need to be modified as firm specific assets have become mobile across natural boundaries a final section of the article examines the dynamic interface between the value added activities of multinational enterprises in different locations

social identity and inequality the impact of china s hukou system abstract we conduct an experimental study to investigate the causal impact of social identity on individuals performance under incentives we focus on china s household registration hukou system which favors urban residents and discriminates against rural residents in resource allocation our results show that making individuals hukou identity salient significantly reduces the performance of rural migrant students relative to their local urban counterparts on an incentivized cognitive task and consequently significantly lowers their relative ranking in the earnings distribution under the piece rate regime however the impact of hukou identity salience is insignificant in the tournament regime suggesting that its negative effect on migrant students performance may be mitigated when competition is introduced the results demonstrate the impact of institutionally imposed social identity on individuals economic performance and potentially on inequality

trade blocs currency blocs and the reorientation of world trade in the 1930s we analyze the impact of commercial and financial policies on the reorientation of trade in the 1930s we report evidence that commercial policies attenuated prior connections between income growth and trade and that exchange rate instability marginally discouraged international trade in contrast the tendency toward regionalization commonly ascribed to the formation of trade and currency blocs was already evident to a considerable extent prior to the regional policy initiatives of the 1930s this reorientation is more properly attributed to ongoing historical forces such as commercial and financial links between countries forged over many years

north south trade and southern industrialization abstract this paper presents a simple model of international trade and growth between a mature industrial region the north and a semi industrial primary exporting region the south under capital autarky per capita southern industrial output is minimized if the north is at the golden rule point regardless of whether capital is internationally mobile northern transfers to the south will not necessarily raise southern industrial output unless they reach a critical level additional transfers may crowd northern private investment in the south out if this critical level is not attained the effects of changes in saving behavior and technical progress are also studied

the groves ledyard mechanism an experimental study of institutional design the groves ledyard mechanism theoretically can solve the free rider problem in public good provision in certain environments two questions are of overriding importance in implementing the mechanism the first is related to the actual performance of the mechanism in general the second is the choice of a punishment parameter which is the only parameter that is available for those who may want to actually use the mechanism thus the determination of the role of this variable on mechanism performance is fundamental for any advances along the lines of actual implementation in studying the groves ledyard mechanism we show that the punishment parameter plays a crucial role in the performance of the mechanism by using 1 and 100 we show that under the higher punishment parameter the groves ledyard equilibrium is chosen much more frequently a higher level of the public good is provided and efficiency is higher by examining two behavioral models we show that a higher leads to an increase in the probability of an individual choosing a best response predicted by the model the parameter alone explains nearly 70 of the data in both the cournot and the carlson auster behavioral model we also found that convergence to cournot behavior is faster and more stable under a high than under a low

separable but not equal the location determinants of discrete services offshoring activities in this paper we explore the question of why firms offshore particular services to specific geographic locations we draw on research related to the unique characteristics of services in trade and commerce and more recent analyses of the transnational unbundling and spatial dispersion of business processes we move beyond a simple assessment of the cost sensitivity or relative sophistication of offshoring services and develop a typology emphasizing the degree to which offshoring services activities are interactive repetitive or innovative we suggest that the location of offshoring projects will depend on the particular mix of these attributes and test this assertion using a data set of 595 export oriented offshore services projects initiated from 2002 to 2005 by us and uk company parents in 45 developed and developing countries we find that offshore location choices greatly depend on these services characteristics and in sometimes surprising ways and draw implications from our findings for international business theory policy and practice

growth and trade with asymmetric returns to scale a model for nicholas kaldor manufacturing activities are subject of increasing returns to scale both of a static and a dynamic kind and under these conditions the presumption derived from ricardo s doctrine of comparative costs the presumption that free trade secures the best allocation of resources to each and every participant and that there must be net gain from trade all round no longer holds for under these conditions it can be demonstrated that free trade may lead to stunted growth or even impoverishment of some regions or countries to the greater benefit of others

leaders and followers perspectives on the nordic model and the economics of innovation abstract what kinds of social and economic systems are most conducive to innovation we formulate a simple model in which countries can close the gap with the technological leader but where the cost of doing so may be so high that the country chooses to remain laggards observed disparities in productivity may be the result of a recognition that the cost of closing the gap exceeds benefit and there may therefore exist an international equilibrium in which there are leaders and followers even if it is granted that the united states is the leader and scandinavia are followers there are theoretical grounds for arguing that the nordic model may in fact be better for innovation suggesting that if the us adopted some of the nordic institutions innovations would be higher and societal welfare would be improved even more

selfish punishers an experimental investigation of designated punishment behavior in public goods abstract we show that a second party punisher forces his peers to contribute to a public good while contributing significantly less himself this effect increased over time and casts doubt on the prevalent prosocial interpretation of designated punishment behavior

the origins of uneven development the indian subcontinent in the 17th century the indian subcontinent henceforth india was not significantly less developed than britain but between 1757 when britain began colonizing india and 1947 when india gained independence and british growth had already slowed down the ratio between british and indian per capita income increased at least tenfold angus maddison 1971 and several countries initially less developed than india grew rapidly while india stagnated the obvious question is what caused this uneven development the answer to this question is important for understanding both the roots of india s present economic backwardness and the current division of

is the international business research agenda running out of steam this research note challenges international business researchers to think of their future work in terms of the past achievements of their discipline it identifies three key research areas corresponding to attempts to tackle crucial empirical questions the explanation of foreign direct investment the multinational firm and the globalization of business it ends by considering the future research agenda

why are companies offshoring innovation the emerging global race for talent this paper empirically studies determinants of decision by companies to offshore innovation activities it uses survey data from the international offshoring research network project to estimate the impact of managerial intentionality past experience and environmental factors on the probability of offshoring innovation projects the results show that the emerging shortage of highly skilled science and engineering talent in the us and more generally the need to access qualified personnel are important explanatory factors for offshoring innovation decisions moreover contrary to drivers of many other functions labor arbitrage is less important than other forms of cost savings the paper concludes with a discussion of the changing dynamics underlying offshoring of innovation activities suggesting that companies are entering a global race for talent

the potential bias in producer service employment estimates the case of the canadian space economy footloose information technology producer services are increasingly viewed as the new engines of regional growth and employment creation the claim is often that appropriate government policy can engineer comparative advantage in that direction by means of judicious subsidisation the evaluation of such claims relies on accurate statistical data we argue that attempts to distinguish in survey data or official statistics the subset of services commonly but unofficially known as producer services from consumer and government services may result in a potential bias with implications for public policy an input output model is developed for estimating this bias by decomposing service industry data into its producer and consumer services content this method can give a truer estimate of the actual employment in producer services at various spatial levels we find a systematic bias in official data and a non systematic bias in survey data the model is applicable to countries and regions for which input ou

securing access to lower cost talent globally the dynamics of active embedding and field structuration manning s sydow j and windeler a securing access to lower cost talent globally the dynamics of active embedding and field structuration regional studies this article examines how multinational corporations shape institutional conditions in emerging economies to secure access to high skilled yet lower cost science and engineering talent two in depth case studies of engineering offshoring projects of german automotive suppliers in romania and china illustrate how multinational corporations engage in active embedding by aligning local institutional conditions with global offshoring strategies and operational needs multinational corporations thereby contribute to the structuration of field relations and practices of sourcing knowledge intensive work from globally dispersed locations the findings stress the importance of institutional processes across geographic boundaries that regulate and are shaped by multinational corporation activities manning s sydow j and windeler a

identifying the big question in international business research buckley 2002 argues that the international business ib research agenda may be running out of steam because no big research question has currently been identified buckley also asks whether the field needs a big question and if so challenges ib scholars to discover it buckley and ghauri 2004 elaborate on the third question of globalization discussed in buckley 2002 as a possible candidate for the big question in response this article is written to take up buckley s challenge and also to comment on buckley and ghauri s more recent work i agree that ib needs a big question the pursuit of which can serve to unite and energize scholars make scientific progress and enhance the status and prestige of the field toward that end i argue that what determines the international success and failure of firms has always served as a fundamental research question which has permeated ib research in the past and present and is likely to propel its progress in the future therefore i am of the opinion that the ib research agenda is not likely to run out of steam because focusing on this question will leverage ib s comparative advantage and keep the field engaged in generating exciting and disciplined theories and findings in the 21st century

the next wave of globalization relocating service provision to india summary services offshoring to india has grown dramatically in the last 10 years it is linked to the earlier expansion of indian software services exports but has its own dynamic and workforce although domestic firms were early entrants mncs are central actors already some work done in india resembles that done in developed countries to explain the dynamism and complexity of offshoring a taxonomy of market participants is presented offshoring by small entrepreneurial us firms is highlighted as an emerging phenomenon the conclusion argues that market entry by other developing countries is possible

coalition formation in standard setting alliances we present a theory for predicting how business firms form alliances to develop and sponsor technical standards our basic assumptions are that the utility of a firm for joining a particular standard setting alliance increases with the size of the alliance and decreases with the presence of rivals in the alliance especially close rivals the predicted alliance configurations are simply the nash equilibria i e those sets of alliances for which no single firm has an incentive to switch to another alliance we illustrate our theory by estimating the choices of nine computer companies to join one of two alliances sponsoring competing unix operating system standards in 1988

out of africa locational determinants of south african cross border mergers and acquisitions abstractsouth africa is the africa s biggest source of outward foreign direct investment this study examines the principal locational motives of cross border mergers and acquisitions cbma by south african firms for the 1990 2014 period the role of inter country cultural and economic linkages is also studied firm level data of south african merger and acquisition activities in 74 host countries are used to estimate a number of model specifications that control for host country economic geographical cultural and institutional characteristics estimations are carried out using random effects negative binomial panel model capturing the host economy market and enhancing efficiency are found to be the two major motives driving south african corporations cbma activities natural resources acquisition seems a less important motive while strategic assets such as patents and technology do not appear to be attractive the role of cultural and economic linkages between the home and the host country is found t

migration and incomes in source communities a new economics of migration perspective from china the objective of this paper is to understand the effects of china s migration on source communities and to discuss their policy implications we draw from new economics of labor migration nelm theory to understand how migration and migrant remittances can relax or tighten market constraints in china s rural economy using simultaneous equation econometric techniques and household survey data from china we estimate net sectorspecific effects of migration on rural household income focusing on farm production and self employment our econometric findings indicate that the loss of labor to migration has a negative effect on household cropping income in source areas however we provide evidence that remittances sent home by migrants positively compensate for this lost labor effect contributing to household incomes directly and indirectly by stimulating crop and possibly self employment production this finding offers evidence in support of the nelm hypothesis that remittances loosen constraints on production in the imperfect market environments characterizing rural areas in less developed countries taking into account both the multiple effects of migration and the change in household size participating in migration increases household per capita income between 14 and 30 percent migration and incomes in source communities a new economics of migration perspective from china china is experiencing the largest peacetime flow of labor out of agriculture ever witnessed in world history solinger 1999 rozelle et al 1999 despite the rapid expansion of labor migration china s work force is still disproportionately employed in agriculture compared to other countries at similar levels of per capita gdp taylor and martin 2001 hence as china s economy continues to expand the flow of labor to urban areas will continue and even accelerate johnson 1999 the massive flow of labor away from farms has intensified research interest in china s migration in recent years however as in the broader literature on migration in less developed countries most recent studies on china s migration have focused on determining the size and composition of the labor flow macroeconomic implications of increased migration and the effects of migration on urban areas zhao 1999 yang 1999 1997 less emphasis has been placed on researching the effects of migration on the rural communities that migrants leave even though evidence shows that the rural household in the village of origin is typically the central concern of all those involved in migration both those who leave and those who stay behind exceptions include wang and zuo 1999 bai 2001 moreover the recent increase in migration has left policy makers particularly concerned regarding the way source communities will be affected moa 1999 they are concerned that as labor flows away from farms food production and crop income will decline potentially threatening china s food security furthermore policy makers are concerned about the increasing gap between urban and rural household incomes if migration exacerbates this gap some fear that as it grows rural residents eventually will flood cities ill equipped to absorb them others fear that discontent over a rising urban rural income gap could even spill over into political unrest yang 1999 because china s markets and other modern economic institutions are still relatively undeveloped migration may play a pivotal role in creating or overcoming constraints caused by the lack of well functioning markets and or institutions knight and song 1999 benjamin and brandt 2000 the new economics of labor migration nelm literature analyzes migration as a household decision rather than as an individual decision stark 1991 the nelm hypothesizes that rural households facing imperfect market environments decide

institutions and behavior experimental evidence on the effects of democracy a novel experiment is used to show that the effect of a policy on the level of cooperation is greater when it is chosen democratically by the subjects than when it is exogenously imposed in contrast to the previous literature our experimental design allows us to control for selection effects e g those who choose the policy may be affected differently by it our finding implies that democratic institutions may affect behavior directly in addition to having effects through the choice of policies our findings have implications for the generalizability of the results of randomized policy interventions

task attributes and process integration in business process offshoring a perspective of service providers from india and china this study addresses an important issue in designing and managing business process offshoring bpo process integration between an offshore service provider and its global bpo client we applied the information processing lens in global bpo and developed the logic that internationally disaggregated process integration requires a fit between process integration and bpo s task characteristics i e task complexity and security and task interdependence task connectivity stickiness and dependency this alignment is further moderated by the task context such as the geographic dispersion of the global client s end customers and the type of offshore provider independent vendor vs captive and joint venture finally we suggest that process integration has a positive but curvilinear relationship with the economic returns achieved by offshore providers our analysis of 308 bpo companies in india and china supports our propositions we conclude that international managers monitoring and integrating globally disaggregated activities in bpo should establish a proper alignment with the bpo project s task traits and task interdependence and look closely at the conditioning effect of external complexity by redressing the paucity of research on governing global bpo this study offers some insights into the integration externalization dynamics for growing business knowledge process offshoring

monopoly power and uneven development baran revisited baran examined the implications of the rise in monopoly power in advanced economies for the underdevelopment in poor countries and the process of uneven development on a world scale this article examines his work critically and then presents a north south model which defines uneven development in a precise manner and analyses the mechanism by which the rise in monopoly power leads to such uneven development it is shown that the process can work even without reference to imperialism which is a central but controversial element in baran s analysis

competition cooperation and collective choice the ability of groups to implement efficiency enhancing institutions is emerging as a central theme of research in economics this study explores voting on a scheme of intergroup competition which facilitates cooperation in a social dilemma situation experimental results show that the competitive scheme fosters cooperation competition is popular but the electoral outcome depends strongly on specific voting rules of institutional choice if the majority decide competition is almost always adopted if likely losers from competition have veto power it is often not and substantial gains in efficiency are foregone

export led development primary vs industrial exports abstract trade with north can make south poorer if south is a primary exporter manufactured imports from north can cause a decline in the real wage and consequently lower the labour supply the production possibility frontier and hence the gnp of south can shrink while that of north can expand if south gains comparative advantage in manufactured goods and reverses the trade pattern it can turn the tables on north the analysis based on a theoretical model suggests a way to reconcile the divergent views on the desirability of north south trade

the state as strategist in international business research no matter what strategy managers choose cross national differences in states strategic capabilities and objectives affect multinational corporations capabilities to manage interdependent operations in this paper we develop four attribute dimensions along which states strategic economic capabilities vary we then apply these dimensions to show how they contribute to familiar international business models of managerial process mnc strategy and organizational structure and country competitiveness

the determinants of temporary rural to urban migration in china this paper evaluates the impact of various explanatory factors on temporary rural to urban migration in china using a series of probit models of the migration decision the empirical basis of this work is a sample of 11 924 individuals age 16 35 years drawn from the 1995 data of the chinese household income project chip we find that the profiles for migration age and migration education are both quadratic with the least educated and most educated members of rural society being less likely to migrate in addition the marginal effect of education tends to be higher for men than for women an increase in farming income reduces the probability of migration while the amount of land controlled by a household does not have a significant effect on migration in most provinces

offshoring of r d looking abroad to improve innovation performance the offshoring of knowledge services has become a phenomenon of increasing importance for firms but many of its implications are yet to be discussed thoroughly this paper analyzes whether r d offshoring contributes to enhancing firms innovation capabilities specifically the study distinguishes between two governance models of offshoring captive offshoring and offshore outsourcing and two types of innovation outcomes product and process innovations we suggest that r d offshoring has different impacts depending on the innovation results and governance models considered the study empirically tests these relationships using the spanish technological innovation panel this survey contains information on a large sample of firms from diverse sectors for the period 2004 2007 the empirical findings allow us confirm our hypotheses and highlight the strategic importance of r d offshoring the empirical evidence reveals a positive relation between offshoring and innovation performance with a greater effect on product than on process innovations the results for different governance models show that captive offshoring has a greater effect on innovation outcomes than offshore outsourcing these findings lead us to conclude that firms that look overseas can benefit from location specific and specialization advantages to improve innovation performance

the obsolescing bargaining model mnc host developing country relations revisited the traditional bargaining model of mnc host developing country relations has become obsolete today those relations are better understood as the result of a two tier multi party bargaining process tier 1 bargaining between the governments of host and home countries occurs bilaterally or through multilateral institutions it produces macro rules on fdi that affect micro negotiations in tier 2 per the traditional bargaining model the extent of fdi liberalization resulting from tier 1 bargaining varies predictably across home host country pairs and industries suggestions for testing the two tier bargaining model are also presented

towards a renaissance in international business research big questions grand challenges and the future of ib scholarship in this article we review critiques of international business ib research with a focus on whether ib scholarship tackles big questions we identify three major areas where ib scholars have addressed important global phenomena but find that they have had little influence outside of ib and only limited effects on business or government policy we propose a redirection of ib research towards grand challenges in global business and the use of interdisciplinary research methods multilevel approaches and phenomena driven perspectives to address those questions we argue that ib can play a more constructive and vital role by tackling expansive topics at the business societal interface

servitisation and value co production in the uk music industry an empirical study of consumer attitudes abstract since the rise of music on the internet the record industry has reported falling total sales revenues this has occurred at a time when technology has radically increased choice availability and the opportunity for the consumer to purchase music to date pay per unit music sales channels have been more successful than music subscription services as the music industry has moved from a product to a service business model does the loss of sales indicate they have not taken their customers with them this paper provides a description of different music consumer attitudes an independent variable in this research based upon quantitative analysis of more than 5000 valid survey responses consumer purchasing behaviour and music discovery methods are treated as dependant variables an empirical study using structural equations model was carried out to test the relationship between consumer groups and purchasing preference in relation to tangible products and intangible service purchases moreover consumer typology and propensity to actively engage with music communities was analysed and thus their willingness to co produce value was explored the most important findings were first all consumers view pay per unit positively and second a group of consumers representing just under half the sample was identified that would engage with a monthly subscription music service and could co produce solutions in this channel

public goods and voting on formal sanction schemes abstract the burgeoning literature on the use of sanctions to support the provision of public goods has largely neglected the use of formal or centralized sanctions we let subjects playing a linear public goods game vote on the parameters of a formal sanction scheme capable of either resolving or exacerbating the free rider problem depending on parameter settings most groups quickly learned to choose parameters inducing efficient outcomes we find that cooperative orientation political attitude gender and intelligence have a small but sometimes significant influence on voting

explaining diversity symmetry breaking in complementarity games strategic complementarity games have found applications in many fields including macroeconomics development and labor economics they provide a useful framework within which to address questions like what generates the disparity across regions and countries why are there booms and recessions and what causes gender and race discrimination in the labor market in short they help us think about the diversity and variations across space time and groups the literature on complementarity games has emphasized coordination failures as the key notion to understand these questions this paper argues that such emphasis is misplaced the key to understand the diversity is symmetrybreaking the notion of coordination failures is not only irrelevant but also misleading when thinking about the diversity

factor mobility trade and welfare abstract the paper develops a north south model which is driven by scale economies in the modern sector the model predicts that skilled and unskilled labor migrate from south to north and capital migrates from north to south migration of skilled labor and capital exhibits complementarity with trade while migration of labor may exhibit complementarity or substitutability if the terms of trade effects are ignored small movements of all factors affect the welfare of the population in south negatively and of that in north positively the effects of migration on the terms of trade are ambiguous in general

service multinationals conceptualization measurement and theory the application of mne definitions measurements and theories to international services is still in its infancy despite the considerable size and growth of this sector there are problems in defining classifying measuring comparing and explaining service mnes but they do not require special definitions and theories still research to date suggests 1 delinking the concepts of multinational enterprise and foreign direct investment under certain conditions and 2 qualifying the nature of ownership internalization and location advantages in fdi theory as far as service mnes are concerned

financial market globalization symmetry breaking and endogenous inequality of nations this paper investigates the effects of financial market globalization on the inequality of nations the world economy consists of inherently identical countries which differ only in their levels of capital stock each country is represented by the standard overlapping generations model modified only to incorporate credit market imperfection an integration of financial markets affects the set of stable steady states as it changes the balance between the equalizing force of the diminishing returns technology and the unequalizing force of the wealth dependent borrowing constraint the model is tractable enough to allow for a complete characterization of the stable steady states in the absence of the international financial market the world economy has a unique steady state which is symmetric and stable in the presence of the international financial market symmetry breaking occurs under some conditions that is the symmetric steady state loses its stability and stable asymmetric steady states come to exist in the stable asymmetric steady states the world economy is endogenously divided into the rich and poor countries the borrowing constraints are binding in the poor but not in the rich the world output is smaller the rich are richer and the poor are poorer in any of the stable asymmetric steady states than in the unstable symmetric steady state

why are different services outsourced to different countries the tradability revolution in services has led to a dramatic expansion of offshore outsourcing of services allowing firms to take advantage of lower production costs in foreign countries however production costs alone cannot explain the location determinants of offshore outsourcing of services in this paper we argue that minimizing transaction costs is also an important determinant of the location of offshore outsourcing of services we empirically analyze characteristics of services and characteristics of foreign countries that may impact on transaction costs in an outsourcing relationship and hence determine where services will be outsourced offshore we derive measures of service characteristics routineness complexity and interactiveness based on the tasks required to provide them further we posit that there are interaction effects between service and country characteristics using bureau of economic analysis data on us service outsourcing across 11 types of services to 31 countries between 1992 and 2005 we find that 1 services that are more routine less complex or less interactive are outsourced more to foreign countries 2 services are outsourced more to countries with higher institutional quality and greater cultural proximity 3 non routine complex and interactive services are outsourced relatively more to countries with a better institutional quality

the influence of hukou and college education in china s labour market this paper examines the impact of hukou and college education on job placement and wage attainment for chinese rural migrant workers in the cities the analysis of the 2010 chinese general social survey shows that when rural born individuals gain both urban hukou and college education they enjoy equal job sector placement and they earn significantly higher wages than the college educated locals but in the absence of a rural to urban hukou transfer migrants have fewer opportunities to go to college than local peers and even college education does not gain a migrant an equal chance of working in the state sector or receiving equal earnings a major contribution of this study is to suggest a nine category analytic scheme which takes into account how education hukou and type of workplace affect one another in jointly influencing labour market inequality between rural migrants and urbanite workers

a simple dynamic model of uneven development and overtaking this paper extends the brezis et al 1993 ricardian leapfrogging model by introducing geographically mobile capital and allowing for a wider variety of development patterns in a two region economy localised learning by doing causes specialisation and uneven development technological change reverses the existing development pattern if the new technology locates in the low wage region however the development pattern may also be reinforced if spillovers between the old and the new technology make the leading region a more attractive location capital flows are explicitly analysed and it is furthermore shown that inter regional transfers may reduce the chance of take off

the role of egalitarian motives in altruistic punishment abstract we conduct experiments in which subjects participate in both a game that measures preferences for income equality and a public goods game involving costly punishment the results indicate that individuals who care about equality are those who are most willing to punish free riders in public goods games

new developments in trade theory and ldcs abstract this paper surveys the new literature on international trade relevant to the north south controversy in the first part two types of north south models are considered the unequal exchange theory of lewis and emmanuel and the models of dynamic interaction of findlay taylor and others the analysis focuses on the determinants of growth the terms of trade and relative employment in the world economy in the second part the paper reviews the empirical literature on south north and south south trade and the theories of north south technological gaps intra industry trade and external economies finally we analyze the literature on exports and economic growth and the neo classical keynesian and disequilibrium approaches to the theory of import controls

social preferences can make imperfect sanctions work evidence from a public good experiment abstract sanctions are often so weak that a money maximizing individual would not be deterred in this paper i test the hypothesis that imperfect sanctions may nonetheless serve a forward looking purpose if sufficiently many individuals are averse against advantageous inequity using a linear public good with centralized punishment i find that participants increase contributions even if severity had been insufficient to deter a profit maximizing individual the more an individual is averse against exploiting others the less it matters whether punishment was deterrent

a numerical simulation analysis of hukou labour mobility restrictions in china abstract we use numerical simulation methods to analyze the hukou system of permanent registration in china which many believe has supported growing relative inequality over the last 20 years by restraining labour migration both between the countryside and urban areas and between regions and cities our aim is to inject economic modelling into the debate on sources of inequality in china which thus far has been largely statistical we first use a model with homogeneous labour in which wage inequality across various geographical divides in china is supported solely by quantity based migration restrictions urban rural areas rich poor regions eastern central and western non coastal zones eastern and central western development zones eastern central western zones more disaggregated 6 regional classifications and an all 31 provincial classification we calibrate this model to base case data and when we remove migration restrictions all wage and most income inequality disappears results from this model structure points to a significant role for hukou restrictions in supporting inequality in china we then present a further model extension in which urban house price rises retard rural urban migration the impacts of removing hukou restrictions on migration are smaller but are still significant finally we modify the model to capture labour productivity differences across regions calibrating the modified model to estimates of both national and regional gini coefficients removal of migration barriers is again inequality improving but less so

trade accumulation and uneven development abstract this paper develops a two country model of capital accumulation and growth where the industrial sector exhibits increasing returns to scale it shows that uneven development is a necessary outcome in such a model an initial discrepancy in capital labor ratios between the two countries will cumulate over time leading to the division of the world into a capital rich industrial region and capital poor agricultural region which region takes on which role depends on primative accumulation that is on which region starts with more capital if capital is mobile internationally the model can given rise to a two stage pattern of development a first stage where trade is the engine of growth in the leading country and a second in which foreign investment takes on that role which is reminiscent of the hobson lenin theory of imperialism

economics of development and the development of economics the purpose of this paper is to restore some historical perspective by highlighting the many contributions of development economics to the rest of economics we will point out to the younger generations how some of the glittering ideas they currently play with originally came from that now neglected field and how in some cases they have rediscovered with great fanfare insights that were well known in the development literature familiarity with which would have enriched their own work