oil price cycles and wavelets abstract the present paper addresses the question of the oil price macroeconomy relationship using world data and a time scale decomposition based on the theory of wavelets our approach is based on a global indicator the morgan stanley capital international msci index for the world and on the new framework offered by wavelets to analyse the oil price cycles and to investigate the oil price msci relationship this original approach enables us to identify that the cycles which contribute the most to oil price variations are 20 to 40 years cycles which correspond to the size of kuznets infrastructure cycles and probably represent energy investment cycles this wavelet decomposition also provides additional evidence to the reverse causality theory

the nexus between sectoral fdi and institutional quality empirical evidence from pakistan abstractthis study investigates short and long run bidirectional causality between institutional quality and sectoral level fdi in pakistan by using the ardl technique the results confirm that long run bidirectional causality exists between institutional quality and aggregate fdi the in depth sectoral level fdi analysis substantiates the presence of long run bidirectional causality between institutional quality and fdi in services and manufacturing sectors while no long run causality is observed between institutional quality and fdi inflows in primary sector furthermore the results in the study reveal short run bidirectional causality only between institutional quality and manufacturing fdi and report insignificant short run causal link between institutional quality and fdi in primary and services sectors the overall findings of the study suggest that in the long run institutional quality attract fdi and fdi inflows particularly to manufacturing and services sectors significantly enhance the qual

economic growth and institutions some sensitivity analyses 1961 2000 do institutions help explain macroeconomic performance this article addresses two issues first especially given the practical implications of the literature measurement of institutions should avoid tautologies and therefore this study uses econometrics to estimate the effect of objectively measurable institutions such as labor market organization financial development fiscal federalism and political regime type second the growing literature on these promising factors in turn is unfortunately incommensurable because previous studies fail to control for other institutional and in some cases standard economic variables given data on up to ninety four countries from 1961 through 2000 extreme bound analysis eba an econometric technique that addresses the sensitivity of previous findings to alternative assumptions about model specification suggests that some institutions associated with the organization of labor and capital are robust correlates of investment few data support the view that variables related to the organization of the state including fiscal federalism and political regime type affect macroeconomic performance without implication the author thanks richard nelson doug chalmers robert shapiro alessandra casella brendan o flaherty geoffrey garrett alexander hicks brett hammond mark kesselman the editor lisa martin and two anonymous referees for helpful comments also ross levine peter rousseau geoffrey garrett and torben iversen were very helpful in locating data the views expressed in this article do not necessarily reflect those of the board of governors of the federal reserve system or any member of its staff

reconciling the advantages and liabilities of foreignness towards an identity based framework this article leverages identity theory to address the question of when and how foreignness acts as an advantage and liability for the mne subsidiary applying an organizational identity lens i delineate how subsidiaries manage their foreignness by accentuating and attenuating internal and external organizational attributes drawing on this conceptualization i theorize how an accentuated foreign identity moderates context specific advantages and liabilities in offering a more nuanced understanding of how subsidiaries actively manage their foreignness and its contextual implications an identity based framework helps to both explain and reconcile the advantages and liabilities of foreignness

national animosity and cross border alliances we extend the cross border strategic alliance knowledge base by introducing dyad specific antagonism animosity between nation pairs and hold that the formation and the type of firm level cross border alliances are nontrivially impacted by conflicting relations and animosity between their home nations we examine the formation of alliances between firms among nation dyads with and without a history of conflicts the frequency and magnitude of conflicts increase the perception of likelihood of opportunism and dyad specific risks materially affect the context in which firms make alliance decisions as animosity between two nations increases the number and the probability of forming alliances within the dyad the nations form decreases conditional on the expected number of alliances increased antagonistic actions of nations outside the dyad and dissimilarity in the historical conflicts that each nation has engaged in outside the dyad i increase the number of equity alliances and ii decrease the number of nonequity alliances as a proportion of total alliances we find positive main effects of learning to contract through prior experience only for equity vs nonequity alliances the reputation effects of antagonism based on relationships with nations outside of the dyad negatively moderate the positive learning effects of prior equity alliance experience abstract from author

foreign locals a cautionary tale on the culture of mnc local employees multinational corporations mncs rely heavily on local employees when conducting their international operations yet the international business literature provides few instances of true focus on these employees the commonly used label host country nationals hcns confers them an identity strongly related to the culture of their country prompting both researchers and practitioners to know them through the knowledge about the local culture this paper provides evidence that a more sophisticated view of the culture of hcns is needed through an ethnographic exploration of hcns working in local subsidiaries of american mncs in romania i reveal that hcns are not always culturally interchangeable with the rest of the host country population hcns can display a variety of cultural profiles more or less reflective of the national culture depending on their enacted stance towards the native culture and the cultural landscape of the mncs themselves the findings call for further specification of theories relying on the assumed localness of hcns and should contribute to the ongoing conversation on the interplay between the cultures specific to the mnc and its host countries

the liability of localness in innovation i analyze differences in the innovativeness of domestic firms and subsidiaries of foreign firms operating in the same country i argue that domestic firms suffer a liability of localness in innovation or a competitive disadvantage in product innovation relative to subsidiaries of foreign firms i propose that this liability of localness is driven by the relatively lower levels of multiculturalism in employees of domestic firms in comparison with subsidiaries which limit the identification transfer and integration of a large diversity of knowledge that supports product innovation i also propose that managers of domestic firms can compensate for this liability of localness in two ways by investing in the training of their employees and by exporting training modifies the mindsets and abilities of employees and enables them to become more cognitively multicultural which facilitates product innovation exporting changes employees mindsets as they become exposed to new ideas available abroad which also facilitates product innovation i test these arguments on a sample of manufacturing firms and find that although domestic firms introduce fewer new products than subsidiaries of foreign firms they introduce more new products than subsidiaries at the same level of investment in language training and of exports

mne institutional advantage how subunits shape transpose and evade host country institutions scholars increasingly emphasize the impact of institutions on multinational enterprises mnes but the opposite relationship has attracted less research that is mne agency in relation to institutions based on a comparative case study of six mnes from the united states and sweden this paper remedies this it explores and explicates mne subunits strategic responses to host country institutional constraints and opportunities in five different regions a new institutional approach is adopted which allows for an investigation of mne subunit agency in relation to normative and cognitive institutions as well as regulative ones this fine grained analysis reveals not only what kinds of responses mne subunits invoke but why and how they are able to respond we identify four strategic responses by which subunits shape transpose and evade institutions in the pursuit of competitive advantage innovation arbitrage circumvention and adaptation these responses are driven by three key enablers multinationality foreignness and institutional ambiguity that serve to enhance and heighten three mechanisms reflexivity role expectations and resources by linking the enablers and the mechanisms to specific types of strategic responses in a framework and typology the paper not only contributes to emerging research on the interplay between mnes institutions and strategy but to strategy practice

escaping the iron cage liabilities of origin and csr reporting of emerging market multinational enterprises this article examines the link between the condition of institutional voids in emerging markets and the use of the practice of corporate social responsibility csr reporting by emerging market multinational enterprises em mnes based on neo institutional theory and in light of the specificity of emerging markets we propose a positive relationship between institutional voids and csr reporting home country institutional voids push companies to internationalize as a way to escape the institutional constraints and inefficiencies in their own markets but at the same time create legitimacy challenges for these companies abroad in particular em mnes from less institutionally developed countries are likely to face liabilities of origin negative perceptions in host countries about these firms willingness and ability to conduct legitimate business csr reporting is an effective strategy to overcome such liabilities and barriers to legitimation as it conveys to host countries and global stakeholders alignment with global meta norms and expectations internationalization listing on developed country stock exchanges and time further magnify em mnes legitimacy challenges and thus the use of csr reporting to mitigate them our hypotheses are supported in a longitudinal study of 157 of the largest em mnes ranked by the united nations conference on trade and development unctad between 2004 and 2011

why and how does shared language affect subsidiary knowledge inflows a social identity perspective extending existing international business ib research we conceptualize shared social identity as an outcome rather than only an antecedent of multinational enterprise knowledge flows to provide an alternative reason for why such knowledge flows occur we further argue that shared language among subsidiary and headquarters hq managers is an insufficient condition for subsidiary knowledge receipt accordingly we develop a moderated mediation model at the subsidiary level to examine how shared language affects subsidiaries tacit knowledge inflows from hq specifically we study 1 whether this relationship is mediated by the extent to which subsidiary managers share hq goals and vision and the extent to which human resources decisions are centralized at hq and 2 whether subsidiary type greenfields vs acquisitions moderates these mediated relationships such that in both cases the mediation will be stronger in foreign acquisitions compared with foreign greenfields building on a sample of 817 subsidiaries in 9 countries regions and a novel subjective measure of shared language we find support for our model implications for research on hq subsidiary knowledge flows social identity theory and the literature on sociolinguistics and international human resource management are discussed and managerial implications outlined

what makes growth sustained abstract we identify structural breaks in economic growth in 140 countries and use these to define growth spells periods of high growth preceded by an upbreak and ending either with a downbreak or with the end of the sample growth spells tend to be shorter in african and latin american countries than elsewhere we find evidence that growth duration is positively related to the degree of equality of the income distribution democratic institutions export orientation with higher propensities to export manufactures greater openness to fdi and avoidance of exchange rate overvaluation favorable for duration and macroeconomic stability

the liability of foreignness in capital markets sources and remedies the accelerating pace of global capital market integration has provided new opportunities for firms to raise capital abroad through global debt issues cross listings and initial public offerings in foreign stock exchanges however existing empirical evidence suggests that foreign firms tend to be at a disadvantage compared with domestic firms and they often suffer from investors home bias the objective of this paper is to understand why firms are facing problems when accessing capital in foreign markets and possible mechanisms that can help to mitigate these problems it expands the liability of foreignness lof research beyond the product market domain to include liabilities faced by firms attempting to secure resources in foreign capital markets we identify key differences between product and capital markets related to information environment time structure of transactions and linkages between buyers and sellers we analyze institutional distance information asymmetry unfamiliarity and cultural differences as the main sources of capital market lof cmlof we suggest possible mechanisms that managers can employ to mitigate cmlof and overcome investors home bias bonding signaling organizational isomorphism and reputational endorsements we also outline directions for further theoretical and empirical development of the cmlof research

income distribution political instability and investment abstract this paper successfully tests on a sample of 71 countries for the period 1960 85 the following hypotheses income inequality by fuelling social discontent increases sociopolitical instability the latter by creating uncertainty in the politico economic environment reduces investment as a consequence income inequality and investment are inversely related since investment is a primary engine of growth this paper identifies a channel for an inverse relationship between income inequality and growth we measure socio political instability with indices which capture the occurrence of more or less violent phenomena of political unrest and we test our hypotheses by estimating a two equation model in which the endogenous variables are investment and an index of socio political instability our results are robust to sensitivity analysis on the specification of the model and the measure of political instability and are unchanged when the model is estimated using robust regression techniques

oil prices inflation and interest rates in a structural cointegrated var model for the g 7 countries sharp increases in the price of oil are generally seen as a major contributor to business cycle asymmetries moreover the very recent highs registered in the world oil market are causing concern about possible slowdowns in the economic performance of the most developed countries in this paper a structural cointegrated var model has been considered for the g 7 countries in order to study the direct effects of oil price shocks on output and prices and the reaction of monetary variables to external shocks our results can be summarized as follows i a stationary money demand as suggested by the classic theory of money can be identified for most countries ii according to the estimated coefficients of the structural part of the model for all countries except japan and u k the null hypothesis of an influence of oil prices on the inflation rate cannot be rejected inflation rate shocks are transmitted to the real economy by increasing interest rates iii impulse response analysis suggests for most countries the existence of an instantaneous temporary effect of oil price innovations on prices iv impulse response functions indicate different monetary policy reactions to inflationary and growth shocks v the simulation exercises directed to estimate the total impact of the 1990 oil price shock indicate that for some countries u s a significant part of the effects of the oil price shock is due to the monetary policy reaction function for other countries canada france and italy however the total impact is offset at least in part by an easing of monetary conditions

phasing the operation mode of foreign subsidiaries reaping the benefits of multinationality through internal capital markets the lifetime of foreign equity partnerships is often limited research suggests that mncs abandon their local partners when the need for sharing ownership in foreign subsidiaries has diminished this study shows that mncs may abandon their local equity partners to reap the benefits of multinationality as mncs gain a competitive advantage from leveraging resources across borders they will initially benefit from sharing ownership with a local firm to embed their foreign subsidiaries in the local environment and access local resources more effectively later they will benefit from taking over the local partner s equity share to better embed their subsidiaries in the parent organization and transfer locally accessed resources to the mnc s other locations moderated mediation regressions provide evidence of such practice in the context of cross border transfers of capital resources this strategy seems to work as a corollary of our model panel regressions suggest that sharing ownership with local firms in a host country with a capital resource advantage is associated with appropriating more capital resources from the local debt market while abandoning these partner firms later is associated with transferring more capital resources from this host country via internal capital markets to other parts of the mnc

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

can democracy induce development a constitutional perspective we examine the constitutional design required for democratic societies to overcome poverty traps restricting agenda setting by ensuring subsistence levels of consumption and applying simple majority voting as a decision rule will not enable a society to overcome poverty we show that a combination of suitable constitutional rules can however overcome poverty and induce economic well being besides majority voting these rules include rotating agenda setting agenda repetition and tax protection rules we thus highlight the crucial role of democratic institutions for economic development

the interaction effect of economic freedom and democracy on corruption a panel cross country analysis abstract this paper examines the effects of economic freedom democracy and its interaction term on controlling corruption interactive results indicate that economic freedom and democracy significantly combat corruption economic freedom reduces corruption in any political environment democracy increases corruption when economic liberalization is low

the time varying nairu and its implications for economic policy the nairu the unemployment rate consistent with a constant rate of inflation is estimated in this paper as a parameter allowed to vary over time value is determined in an econometric model where the inflation rate depends on its past values demand and supply shocks the nairu estimated for the gdp deflator varies over the past forty years within 5 4 to 6 5 percent its estimated value for the most recent quarter 1996 q2 is 5 6 percent the nairu has declined in recent years in response to global competition immigration other factors weakening labor s bargaining position and the rapidly declining prices of computers and other electronics

review of easterly s the elusive quest for growth 1 the failure of development panaceas all encompassing hypotheses concerning the sources of economic growth periodically surface and with the support of adequately chosen cross country correlations enjoy their fifteen minutes of fame over the last few decades the list of proposed panaceas for growth in per capita income has included high rates of physical capital investment rapid human capital accumulation low income inequality low fertility being located far from the equator a low incidence of tropical diseases access to the sea favorable weather patterns hands off governments trade policy openness capital markets development political freedom economic freedom ethnic homogeneity british colonial origins a common law legal system the protection of property rights and the rule of law good governance political stability infrastructure market determined prices including exchange rates foreign direct investment and suitably conditioned foreign aid this is a growing and non exhaustive list

unemployment equilibria and input prices theory and evidence from the united states the paper develops an efficiency wage model where input prices affect the equlibrium rate of unemployment we show that a simple framework based on only two prices the real price of oil and the real rate of interest is able to explain the main post war movements in the rate of u s joblessnss the equations do well in forecasting unemployment many out of sample and provide evidence that the oil price spike associated with iraq s invasion of kuweit appears to be a component of the mystery recession which followed

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

effects of local legitimacy on certification decisions to global and national csr standards by multinational subsidiaries and domestic firms we explore the impact of local legitimacy on the imitation of certification by subsidiaries of foreign multinational enterprises and domestic firms we propose that mne multinational enterprise subsidiaries and domestic firms differ in their propensity to imitate geographically proximate firms when deciding whether to adopt national vs global csr corporate social responsibility certifications for two reasons first there are differences in the legitimacy they can expect to gain in different communities from adopting these certifications second there are differences in their knowledge about the local legitimacy of these certifications we test our hypotheses by studying the decisions of automotive suppliers in mexico to certify either to iso 14001 a global certification or to clean industry a national certification we find that geography matters mne subsidiaries imitate national certifications by geographically proximate firms to overcome a liability of foreignness while domestic firms imitate global certifications by proximate firms to overcome the disadvantages of localness we explore the implications of our findings for institutional theory and future research

firm specific assets multinationality and financial performance a meta analytic review and theoretical integration through a meta analysis of 120 independent samples reported in 111 studies we test the predictions of internalization theory in the context of the multinationality performance relationship findin

institutional theory and mnc subsidiary hrm practices evidence from a three country study this study sets out to explore human resource management hrm practices in multinational corporation mnc subsidiaries within an institutional theory framework based on a sample of 158 subsidiaries of mncs operating in the united states russia and finland the paper examines factors hypothesised to influence the hrm practices adapted in us japanese and european mnc subsidiaries located in russia finland and the us the results indicate significant differences in hrm practices used across host countries both the status of the subsidiary human resource department and the degree to which the subsidiary was involved in knowledge transfer with other parts of the mnc had a significant impact on the selection of hrm practices

organizational attractiveness is in the eye of the beholder the interaction of demographic characteristics with foreignness our analysis of 4605 individual evaluations of the 60 companies in the reputation quotient annual 2000 study suggests that foreign headquartered companies are less attractive employers whereas more international companies are more attractive moreover we find that gender race respondent age and educational level significantly interact with our foreignness variables in predicting company attractiveness

uncovering the complex relationships between political risk and mne firm legitimacy insights from libya using the before after natural experiment occasioned by the arab spring in libya we explore how market and non market activity affect foreign firm legitimacy in times of political turmoil although all mnes in libya had to cultivate strong ties to qadhafi to succeed during his 40 years of rule we found that those that also invested in social benefit projects and in social ties with families with few ties to the qadhafi family earned a broad based legitimacy that helped them survive qadhafi s overthrow our findings contribute to the political risk and political behavior literature the notion that the pursuit of firm legitimacy in general and especially in the eyes of social sector actors is an effective hedge against political risk more theoretically our findings support the addition of a social sector based path to firm legitimacy in the host country that complements and may at times substitute for the government based path to foreign firm legitimacy practically our findings suggest that mnes facing severe political risk can improve their prospects for survival by investing in relationships with influential social groups and by offering goods or services that are perceived as socially valuable

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

distance without direction restoring credibility to a much loved construct in this commentary we build on shenkar s 2001 award winning critique of cultural distance arguing that most distance constructs in fact suffer the same flaws because they oversimplify the relationship between countries overlook their subjective and context specific nature and pay insufficient attention to the mechanisms through which distance operates the idea of distance however has intrinsic value moreover its considerable appeal and undeniable effectiveness have made it a well entrenched construct therefore we see merit in redressing its weaknesses and offer several suggestions for doing so these include allowing for the influence of firm level characteristics that either moderate the effects of distance or render distance at least in part subjective with varying consequences for different mnes maintaining directionality by distinguishing between distance and the tendency toward a particular characteristic and acknowledging asymmetry and conceptualizing the effects of distance and the mechanisms through which it operates more carefully by drawing on concepts and measures from a variety of disciplines by offering ways to strengthen both its theoretical foundations and measurement we hope to enhance the usefulness of one of international business theory s most central constructs

wage and competition channels of foreign direct investment and new firm entry using a rich data set of the dutch manufacturing sector between 1995 and 2010 we investigate the effect of foreign direct investment fdi on domestic new firm entry the emerging empirical literature has focused on the direct relationship between fdi and entry but has not explored the mechanisms behind the observed effect drawing on a simultaneous equations model our analysis features both the direct effect of fdi as well as indirect effects through two channels industry competition and wages we estimate the parameters through 3sls and take into account the endogeneity of competition and wages with respect to entry our results show that there is a significant negative direct effect of fdi on entry at the same time fdi decreases competition and increases wage levels which then impact entry positively and negatively respectively the total effect of fdi is negative but small and virtually disappears after one year policy implications are discussed

liability dollarization exchange market pressure and fear of floating empirical evidence for turkey the objective of this article is to examine the relationship between liability dollarization and the exchange market pressure emp in turkey within an autoregressive distributed lag ardl and granger causality framework using monthly data from 1991 12 to 2006 08 the findings suggest that there exists a long term equilibrium relationship between emp and liability dollarization where liability dollarization granger causes emp both in the short and long run with no evidence of reverse causality this suggests that the predominance of foreign currency liabilities in the banks balance sheets in turkey induces a selling pressure in the exchange market as well as a fear of floating

the economic effects of direct democracy a first global assessment this is the first study that assesses the economic effects of direct democratic institutions on a cross country basis we find that total spending as well as spending on welfare is lower in countries with mandatory referendums consistent with the previous literature but we also find that countries with national initiatives appear to spend more and be more corrupt finally budget deficits government effectiveness productivity and happiness appear unrelated to direct democracy institutional detail thus matters a great deal in general the effects of direct democratic institutions become stronger if the frequency of their actual use is taken into account effects are usually stronger in countries with weak democracies

education democracy and growth abstract this note presents a model of endogenous growth where redistribution determined by a political equilibrium is in the form of public education it is shown that there need not be a negative relationship between growth and redistribution as public education increases the level of human capital in the conomy and at the same time tends to produce a more even income distribution

the effects of linguistic distance and lingua franca proficiency on the stake taken by acquirers in cross border acquisitions we study the effects of linguistic distance and lingua franca proficiency on the equity stake taken by acquirers from 67 countries in 59 092 acquisition targets in 69 host countries we theorize and find that acquirers take lower equity stakes in foreign targets when linguistic distance and differences in lingua franca proficiency between them are high and take higher stakes when the combined lingua franca proficiency of the parties is high we also find that linguistic and cultural distance reduce the impact of the combined lingua franca proficiency of the parties on the level of equity taken which shows that the effective use of a lingua franca is affected by the native tongues and cultures of the parties our results clearly demonstrate that governance research and international business studies can benefit from incorporating language into their explanatory models

the dynamics of the liability of foreignness a global study of survival in financial services we study the impact of foreignness on survival in interbank currency trading worldwide over the period 1974 93 in particular we develop hypotheses on the behavior of the liability of foreignness over time and on the consequences of evolving sources of firm level competitive advantage on this liability we test these hypotheses on the population of 2667 market making trading rooms located in 47 countries worldwide that either existed in 1974 or entered the industry between 1974 and 1993 the results show that there is a liability of foreignness and that it changes over time further strategic and organizational factors such as the adoption of technology by these firms and their mode of internal control significantly influenced survival as did location related factors such as the intensity of local and foreign competition 1997 by john wiley sons ltd

careers in foreign owned firms in japan this article examines how organizational environments affect labor market processes in japan i hypothesize that labor market inequality is generated through workers being positioned in either domestic or in foreign firms i apply the concept of social versus economic exchange to distinguish the nature of transactions between domestic and foreign firms i argue that foreign firms operate under an institutional context that is conducive to the economic mode of exchange which has enormous consequences for their personnel practices and reward systems using a dataset of japanese workers collected in 2000 i examine the extent to which employment practices in foreign firms deviate from the benchmark features observed in the japanese labor market my results confirm that employment in foreign firms significantly affects career outcomes the highcommitment culture commonly associated with the japanese workforce is an outcome of the organizational environment i find little evidence of japanese employment pra

killing the goose that lays the golden egg institutional change and economic growth in hong kong i introduction hong kong became a special administrative region sar after its sovereignty reverted to chinain july 1997 since then the basic law which is the sar s mini constitution has functioned as the foundation of one country two systems in the sar it is true that hong kong sar has enjoyed a high degree of autonomy under this arrangement but its sovereignty resides with nondemocratic institutions ultimately chosen by the central government in beijing what are the effects if any of the rapid change of institutions from a colony to a sar on the quality of governance in hong kong more importantly has the prosperity of hong kong been compromised by such a drastic change of its institutions these are serious questions deserving a formal analysis as one of the asian tigers the rapid growth of hong kong s economy during the colonial period has been widely documented with its real gross domestic product gdp per capita of us 26 699 in 2000 hong kong is now one of the five richest economies in the world surpassing even industrialized countries such as japan great britain and france 1 the precise factors that account for its miraculous growth have been the subject of considerable debate however a consensus seems to have emerged that a major part of hong kong s success is due to its reliance on market oriented laissez faire policies and the rule of law tradition moreover it has been observed that hong kong s hands off approach to development under colonial rule differed fundamentally from the more interventionist strategies adopted by japan korea singapore and taiwan the uniqueness of hong kong s past success coupled with its rapid but peaceful institutional change in 1997 provides a rare opportunity for a case study of the relationship between institutions and economic performance since the changeover of sovereignty in july 1997 a series of government decisions and policies appears to have negatively affected the quality of institutions and confidence in the sar most noticeably the plan to introduce the national security legislation article 23 sparked off a massive but peaceful demonstration on july 1 2003 even before this huge public display of dissatisfaction with chief executive tung chee hwa s administration there were already widespread concerns and discontent with certain controversial government decisions first decisions by the hong kong executive in 1999 and in january 2001 to refer judgments of the hong kong court of final appeal on individuals right of abode to the standing committee of the national people s congress raised serious concerns about the autonomy of the hong kongjudiciary second in his first policy address in 1997 mr tung announced a target of supplying 85 000 public housing units a year which has been blamed for the downward spiral of housing prices and the protracted economic recession 2 third mr tung was reappointed by an 800 strong election committee for a second 5 yr term as the chief executive on july 1 2002 despite his consistently poor popularity ratings fourth in april 2004 the standing committee of the national people s congress in china ruled out the possibility of introducing universal suffrage in electing the chief executive in 2007 and the legislative council in 2008 these were controversial decisions and policies that sparked opposition from a large segment of the population 3 in the empirical literature researchers find strong evidence to indicate that institutional quality is one of the most important factors of long run economic growth the protection of property rights efficiency of the bureaucracy and effectiveness of the rule of law are the most widely used aspects of institutions that have been found to significantly affect the long run income level or growth rate in cross country econometric studies 4 more recent studies have even gone beyond correlations to establish causation between the protection of property rights and the higher income levels as in acemoglu johnson and robinson 2001

a multivariate cointegration analysis of the role of energy in the us macroeconomy abstract this paper extends my previous analysis of the causal relationship of gdp and energy use in the usa in the post war period a majority of the relevant variables are integrated justifying a cointegration analysis the results show that cointegration does occur and that energy input cannot be excluded from the cointegration space the results are plausible in terms of macroeconomic dynamics the results are similar to my previous granger causality results and contradict claims in the literature based on bivariate models that there is no cointegration between energy and output

what happened to the oil price macroeconomy relationship abstract strong evidence is found that oil prices no longer granger cause many u s macroeconomic indicator variables in data after 1973 a number of potential explanations are explored that sample stability issues are responsible that oil prices are now endogenous and that linear and symmetric specifications misrepresent the form of the oil price interaction none of these hypotheses are supported by the data the opec price increases do appear to have had significant impacts while the effects of the price declines of the 1980s are smaller and harder to characterize these results have potentially important implications for the large body of research which utilizes oil prices as an instrumental or explanatory variable

demographic transition in resource rich countries a blessing or a curse summary this study argues that resource wealth is a key factor for understanding income effects of demographic transition we develop a simple model highlighting how the income effect of increased labor supply may depend on resource rents and provide empirical evidence that support the theoretical predictions using panel data covering the period from 1982 to 2006 for more than 120 countries we find a negative interaction effect between resource wealth and demographic transition on national income moreover the negative interaction effect does not depend on institutional quality and is found also across different samples

consumer ethnocentrism reconceptualization and cross cultural validation consumer ethnocentrism ce is a popular construct in international marketing research and is generally measured using the cetscale a reliable scale with proven predictive validity but with limited evidence about its construct validity dimensionality and cross cultural measurement invariance this note addresses these gaps by reconceptualizing ce as an attitude construct consisting of three dimensions 1 affective reaction 2 cognitive bias and 3 behavioral preference a revised ce scale ces is developed and tested using two empirical studies with adult consumers from four different countries china india uk and usa showing that ces is a reliable valid and cross culturally invariant scale and it explains greater variance than the cetscale and other similar scales in customer evaluations and behavioral intentions for a wide range of products and services

transforming disadvantages into advantages developing country mnes in the least developed countries we analyze the advantages and disadvantages of developing country multinational enterprises mnes in comparison with developed country mnes developing country mnes tend to be less competitive than their developed country counterparts partly because they suffer the disadvantage of operating in home countries with underdeveloped institutions we argue that this disadvantage can become an advantage when both types of mne operate in countries with difficult governance conditions because developing country mnes are used to operating in such conditions the empirical analysis shows that although developing country mnes rarely appear among the largest mnes in the world they are more prevalent among the largest foreign firms in the least developed countries ldcs especially in ldcs with poorer regulatory quality and lower control of corruption

oil price movements and macroeconomic performance evidence from twenty six oecd countries abstract this study investigates the relationship between oil price movements and macroeconomic aggregates such as gross domestic product gdp consumer prices cpi and unemployment for oecd countries to do this second generation econometric methods have been employed to panel data including panel unit root tests panel cointegration tests and panel long run models panel unit root tests suggest that oil prices plus selected macroeconomic aggregates in oecd countries are non stationary at levels but become stationary at first differences in the existence of multiple structural breaks five structural break points have successfully been investigated in the series of this study during panel unit root and panel cointegration tests durbin h panel co integration tests confirm that there is a long term relationship between oil prices and those macroeconomic aggregates on the other hand results of this study reveal that the price of oil exerts statistically and negatively significant impacts on gdp cpi and unemployment in the case of oecd countries in general

international expansion through flexible replication learning from the internationalization experience of ikea business organizations may expand internationally by replicating a part of their value chain such as a sales and marketing format in other countries however little is known regarding how such international replicators build a format for replication or how they can adjust it in order to adapt to local environments and under the impact of new learning to illuminate these issues we draw on a longitudinal in depth study of swedish home furnishing giant ikea involving more than 70 interviews we find that ikea has developed organizational mechanisms that support an ongoing learning process aimed at frequent modification of the format for replication another finding is that ikea treats replication as hierarchical lower level features marketing efforts pricing etc are allowed to vary across ikea stores in response to market based learning while higher level features fundamental values vision etc are replicated in a uniform manner across stores and change only very slowly if at all in response to learning flexible replication we conclude by discussing the factors that influence the approach to replication adopted by an international replicator

institutional causes macroeconomic symptoms volatility crises and growth countries that have pursued distortionary macroeconomic policies including high inflation large budget deficits and misaligned exchange rates appear to have suffered more macroeconomic volatility and also grown more slowly during the postwar period does this reflect the causal effect of these macroeconomic policies on economic outcomes one reason to suspect that the answer may be no is that countries pursuing poor macroeconomic policies also have weak institutions including political institutions that do not constrain politicians and political elites ineffective enforcement of property rights for investors widespread corruption and a high degree of political instability this paper documents that countries that inherited more extractive institutions from their colonial past were more likely to experience high volatility and economic crises during the postwar period more specifically societies where european colonists faced high mortality rates more than 100 years ago are much more volatile and prone to crises based on our previous work we interpret this relationship as due to the causal effect of institutions on economic outcomes europeans did not settle and were more likely to set up extractive institutions in areas where they faced high mortality once we control for the effect of institutions macroeconomic policies appear to have only a minor impact on volatility and crises this suggests that distortionary macroeconomic policies are more likely to be symptoms of underlying institutional problems rather than the main causes of economic

how democracy affects growth abstract this paper introduces a new methodology to examine the empirical relationship between democracy and economic growth democratic institutions are assumed to affect growth through a series of channels we specify and estimate a full system of equations determining growth and the channel variables results suggest that democracy fosters growth by improving the accumulation of human capital and less robustly by lowering income inequality on the other hand democracy hinders growth by reducing the rate of physical capital accumulation and less robustly by raising the ratio of government consumption to gdp once all of these indirect effects are accounted for the overall effect of democracy on economic growth is moderately negative our results indicate that democratic institutions are responsive to the demands of the poor by expanding access to education and lowering income inequality but do so at the expense of physical capital accumulation

real interest rate and labor market performance around the world this article studies the effects of the real interest rate on labor market performance using a much larger sample of countries and more indicators of labor market performance than have been used in previous articles it finds that a rise in the real interest rate increases the unemployment rate raises the share of long term unemployed and reduces the employment rate the magnitude of these effects is very small in the short run but much more pronounced though still fairly small in the long run young people are disproportionately affected the results are robust to variations in specification

what you do depends on where you are understanding how domestic and expatriate work requirements depend upon the cultural context to empirically address the importance of the cultural context for successful assignments we conducted two studies using a large sample of public sector us professionals working in comparable jobs in 156 different countries the results provided direct evidence that social and perceptual skill reasoning ability and adjustment and achievement orientation personality requirements are higher in expatriate assignments which has implications for pre departure selection also the results partly supported the hypothesis that expatriates are required to adjust their behavior to be consistent with the local cultural values which has implications for post arrival behavioral training

how institutions matter for international business institutional distance effects vs institutional profile effects extant institutional research has failed to make a distinction between the effects of institutional profile and institutional distance on mnes the problem stems from the fact that due to the use of a single reference country variation in institutional distance between the reference country and partner countries is essentially equal to variation in the institutional profiles of these partner countries making institutional distance and institutional profile effects indistinguishable this research begins by demonstrating that the problem of profile distance conflation is relevant for virtually all possible countries as reference points and then showing how this problem is mitigated by using more than one country as reference points from which to calculate institutional distance we conclude that current institutional research in international business is unable to explain how institutions matter for mnes and that a more careful theoretical and empirical distinction between the effects of institutions and institutional distance on cross border business activities is essential for pushing the institutional perspective in international business studies forward multiple reference point research designs are required to achieve this

the time frequency dependence of unemployment on real input prices a wavelet coherency and partial coherency approach abstractwhile the dependence of unemployment on real oil price and real interest rate is an important issue that has been addressed only in the time dimension little is known about the movements o

oil price shocks stock market economic activity and employment in greece abstract using a multivariate vector autoregression var approach this paper attempts to shed light into the dynamic relationship among oil prices real stock prices interest rates real economic activity and employment for greece the empirical evidence suggests that oil price changes affect real economic activity and employment oil prices are important in explaining stock price movements stock returns do not lead to changes in real activity and employment

impact of terrorism on tourism in turkey empirical evidence from turkey this article aims at investigating the causal impact of terrorist attacks on the tourism industry in turkey based on the autoregressive distributed lag ardl bounds testing procedure for the period between 1986 and 2006 the ardl bounds test reveals that tourism is in a long run equilibrium level relationship with terrorism the evidence obtained from the long run and short run parameter estimates indicates the existence of a negative causal effect of terrorism on tourism

foreignness and exit over the life cycle of firms received wisdom indicates that owing to a liability of foreignness foreign firms exit with greater likelihood than do comparable domestic firms and that the difference attenuates as firms age and overcome the liability we posit that foreign firms are also intrinsically more volatile and footloose than domestic ones and that this leads to an increasing divergence between the exit rates of foreign and domestic firms empirically we find that the difference between exit rates of foreign firms and domestic firms increases with age as exit of foreign firms increases with age while that of purely domestic firms decreases exit rates of domestic based multinationals do not change significantly with age they are between those of foreign and purely domestic firms but are closer to the latter this suggests that the footlooseness observed for foreign firms is due to foreignness more than to multinationality

influences on human resource management practices in multinational corporations a study of human resource management practices in 249 u s affiliates of foreign based multinational corporations mncs shows that in general affiliate hrm practices closely follow local practices with differences among specific practices the degree of similarity of local practices is significantly influenced by the method of founding dependence on local inputs the presence of expatriates and the extent of communication with the parent in addition sharp differences are revealed among affiliates of canadian japanese and european mncs suggesting strong country effects together these findings support the view of mncs as composed of differentiated practices which in turn are shaped by forces for local isomorphism and for internal consistency

international entrepreneurship the pursuit of entrepreneurial opportunities across national borders in this editorial for the special issue on international entrepreneurship we inter relate key concepts about the pursuit of opportunities from the entrepreneurship and international business literatures in doing so we consider the assessment of opportunities as an individual level cognitive activity the construction of opportunity as a firm level innovative activity and the shaping of opportunity as an institutional level structuring activity we then extend the discussion to explore the notion of a distributed global ecosystem of opportunities and opportunity seekers which we believe may provide a platform for valuable future research

relationship between oil prices interest rate and unemployment evidence from an emerging market abstract while the interrelation between oil price changes economic activity and employment is an important issue that has been studied mainly for developed countries little attention has been devoted to inquiries on fluctuations in the price of crude oil and its impact on employment for small open economies adopting an efficiency wage model for equilibrium employment that does not require any assumptions regarding labor supply this paper contributes to the literature by investigating the causality between unemployment and two input prices namely energy crude oil and capital real interest rate in an emerging market turkey for the period 2005 01 2009 08 applying a relatively new technique the toda yamamoto procedure we find that the real price of oil and interest rate improve the forecasts of unemployment in the long run this finding supports the hypothesis that labor is a substitute factor of production for capital and energy

links between business strategy and human resource management strategy in u s based japanese subsidiaries an empirical investigation this study examines linkages between business strategy and human resource management hrm strategy in japanese subsidiaries in the u s it investigates whether or not fit between a subsidiary s business strategy and its hrm strategy is associated with higher performance the data show that subsidiaries with matched strategies performed better than unmatched ones in terms of hrm related performance measures such as rates of promotion and turnover japanese subsidiaries with a business strategy hrm strategy match were also more likely to experience better business performance versus competitors than were unmatched ones

an institutional logics approach to liability of foreignness the case of mining mnes in sub saharan africa prior research on firms liability of foreignness lof has emphasized the role of isomorphic behavior in overcoming lof however the literature has not adequately considered how firms can overcome lof under conditions of institutional complexity when fundamental differences in firms home and host country values beliefs and rules may make isomorphic behaviors impossible or undesirable in this article we use the emerging research on institutional logics and institutional entrepreneurship to address this important issue by examining case studies of eight foreign mining mnes experiencing lof in sub saharan africa based upon our qualitative analysis we find that mnes can overcome lof by co creating new institutional logics rather than conforming to existing ones yet our data show that this is a difficult process one that may not be capable of being done unilaterally by the mne instead we find that local employees embedded in both sets of competing institutional logics acted as key intermediaries who facilitated institutional entrepreneurship moreover we found that firms implementation strategy matters as well in some cases institutional entrepreneurship mitigated lof in others friction returned to varying degrees

disaggregated analysis of us energy consumption in the 1990s evidence of the effects of the internet and rapid economic growth abstract this paper decomposes us energy use from 1988 to 1998 and attributes the changes in energy use to three underlying factors activity structure and intensity for this study we use a bottom up methodology by separately decomposing delivered energy use in six sectors travel freight manufacturing industries non manufacturing industries residential and services the most commonly used indicator of energy efficiency in the total economy the ratio of energy consumed to unit of gdp e gdp created can often be misleading the rapid decline in the e gdp ratio in recent years has been used to support assertions that the internet and information technologies in general have enabled improvements in energy efficiencies however our disaggregate analysis suggests that energy intensities on average are falling more slowly than ever before while actual energy use increased faster than at any time since 1970 the decline in the e gdp ratio in the mid to late 1990s owes much more to structural changes in the demand for energy services than to falling energy intensities

the effect of human resource management practices on mnc subsidiary performance in russia this study investigates the relationship between human resource management hrm and the performance of 101 foreign owned subsidiaries in russia the study s results provide support for the assertion that investments in hrm practices can substantially assist a firm in improving performance further different hrm practices for managerial and non managerial employees are found to be significantly related to firm performance only limited support however is obtained for the hypothesized relationship between efforts at aligning hrm practices with firm strategy and subsidiary performance

walking the walk or talking the talk corporate social responsibility decoupling in emerging market multinationals research shows that emerging market multinational enterprises em mnes increasingly use corporate social responsibility csr reporting as a global legitimation strategy less is known about when their csr reporting is decoupled from their csr performance drawing on neo institutional theory we argue that em mnes csr decoupling is shaped by their dual embeddedness in their home countries and the global institutional environment we then examine how em mnes home country institutional voids and degree of internationalization affect their tendency to engage in such decoupling our model receives partial support in a study of 93 mnes from 15 emerging markets between 2005 and 2012

building sustainable hybrid organizations the case of commercial microfinance organizations we explore how new types of hybrid organizations organizations that combine institutional logics in unprecedented ways can develop and maintain their hybrid nature in the absence of a ready to w

betrayal as market barrier identity based limits to diversification among high status corporate law firms1 why are some diversified market identities problematic but others are not we examine this question in the context of high status corporate law firms which often diversify into one low status area of work family law fl but face a barrier strong disapproval from existing clients that prevents diversification into another such area plaintiffs personal injury law pil drawing on a qualitative study of the boston legal market we argue that this barrier reflects a situation where loyalty norms have been violated and it surfaces because service to individual plaintiffs is tantamount to betraying the interests of corporate clients our analysis clarifies identity based limits to diversification indicating that they are rooted in concerns about the firm s commitments as well as its capabilities and suggests a more general refinement of theory on status and conformity

phillips curve instability and optimal monetary policy this paper assesses the implications for optimal discretionary monetary policy if the slope of the phillips curve changes the paper first derives a phillips curve from the optimal pricing decision of a monopolistic firm that faces a changing cost of price adjustment the second aspect of the paper constructs a utility based welfare criterion a novel feature of this criterion is that is has a relative weight on output gap deviations that changes synchronously with changes in the cost of price adjustment the systematic component of the targeting rule that implements the optimal discretionary policy under the utility based criteria is constant in contrast the systematic component of the targeting rule under an ad hoc criteria changes along with changes in the slope of the phillips curve

distributive politics and economic growth a crude distinction between economics and politics would be that economics is concerned with expanding the pie while politics is about distributing it in this paper we analyze the relationship between the two we focus on how an economy s initial configuration of resources shapes the political struggle for income and wealth distribution and how that in turn affects long run growth our main conclusion is that inequality is conducive to the adoption of growth retarding policies we derive this result from a simple political economy model of growth and present cross country evidence consistent with it the key feature of our model is that individuals differ in their relative factor endowments we distinguish between two types of factors an accumulated factor called capital and a nonaccumulated factor called labor growth is driven by the expansion of the capital stock which is in turn determined by individual saving decisions long run growth is endogenous as the aggregate production function is taken to be linearly homogeneous in capital and productive government services taken together the provision of government services is financed by a tax on capital because government services are productive a small tax on

how ethnic diversity affects economic growth summary this paper investigates the empirical relationship between ethnic diversity polarization and economic growth ethnicity is assumed to affect economic growth through a number of possible transmission channels that are generally included in cross country growth regressions this paper provides an extensive empirical analysis shedding light on the various sources through which ethnic diversity and polarization affects economic growth indirectly it advances and empirically establishes the hypothesis that ethnic diversity has a strong direct negative impact on economic growth whereas ethnic polarization has non negligible indirect economic effects through the specified channel variables

multinationality and performance among british manufacturing companies over the period 1972 84 profitability among 304 large british manufacturing companies was positively related to their degree of multinationality moreover increases in overseas production were strongly associated with increases in sales and profitability the profitability of multinational growth over the whole period was independent of its destination supporting the view that the primary source of the superior performance of multinationals was competitive advantage rather than the higher rate of profit in the industries of other countries

deconstructing the liability of foreignness regulatory enforcement actions against foreign banks it is widely acknowledged that foreign firms are at an institutional disadvantage relative to domestic firms operating in the local market this liability of foreignness typically manifests as inferior performance for foreign firms relative to domestic competitors although myriad studies document the liability of foreignness few demonstrate how individual host country institutions generate specific liabilities in this study we explore the regulatory liabilities that foreign firms face using a sample of 189 foreign banks operating in the united states we find that regulators initiate more enforcement actions on average against foreign banks than they do against domestic banks the effects however vary by regulation type and firm characteristics for example foreign banks are no more likely to receive risk related sanctions but far more likely to receive stakeholder related sanctions foreign banks with higher quality of human capital and more host country experience are less likely to run afoul of all regulations foreign banks with more third country experience are less likely to receive risk related sanctions but more likely to receive stakeholder related sanctions the results highlight the contingent nature of regulatory liabilities the role of information asymmetry versus regulatory bias in enforcement outcomes and the liability reducing effects of resources and capabilities

the uppsala internationalization process model revisited from liability of foreignness to liability of outsidership the uppsala internationalization process model is revisited in the light of changes in business practices and theoretical advances that have been made since 1977 now the business environment is viewed as a web of relationships a network rather than as a neoclassical market with many independent suppliers and customers outsidership in relation to the relevant network more than psychic distance is the root of uncertainty the change mechanisms in the revised model are essentially the same as those in the original version although we add trust building and knowledge creation the latter to recognize the fact that new knowledge is developed in relationships