fixing exchange rates a virtual quest for fundamentals abstract fixed exchange rates are less volatile than floating rates but the volatility of macroeconomic variables such as money and output does not change very much across exchange rate regimes this suggests that exchange rate models based only on macroeconomic fundamentals are unlikely to be very successful it also suggests that there is no clear tradeoff between reduced exchange rate volatility and macroeconomic stability

experiential knowledge and cost in the internationalization process using a behavioral approach this study identifies and delineates components of experiential knowledge in the internationalization process three hypotheses are developed and tested they center ar

real exchange rate volatility financial crises and exchange rate regimes this paper examines real exchange rate rer volatility in eighty countries around the world during the period 1970 to 2011 two main questions are raised are structural breaks in rer volatility related to changes in exchange rate regimes or financial crises and do these two events affect the permanent and transitory components of rer volatility to answer them we employ two complementary procedures that consist in detecting structural breaks in the rer series and decomposing volatility into its permanent and transitory components our results suggest that structural breaks in rer volatility coincidence with financial crises and certain changes in nominal exchange rate regimes moreover our findings confirm that rer volatility does increase with the global financial crises and detect that the more flexible the exchange rate regime the higher the volatility of the rer using a de facto exchange rate classification

cost value and foreign market entry mode the transaction and the firm this paper compares and contrasts the mode of foreign market entry decision from the transaction cost internalization and organizational capability perspectives each of these perspectives operates at a different level of analysis respectively the transaction and the firm and consequently differs in the primary arena of attention namely transaction characteristics and the capabilities of firms in making the comparison a key distinction is made between the cost and the value aspects in the management of know how based on which issues pertaining to the transfer of knowledge within and across firm boundaries and the exploitation and enhancement of competitive advantage are closely examined the main purpose of this paper is to demonstrate the implications of a shift in frame from cost to value in the analysis of decisions related to firm boundaries entry into foreign markets is used primarily as a vehicle for the accomplishment of this purpose the paper shows how the value based framework of the organizational capability perspective radically and fundamentally shifts the approach towards the governance of firm boundaries and argues that even though tc internalization theory raises some valid concerns the organizational capability framework may be more in tune with today s business context some of the assumptions of the tc internalization perspective both direct opportunism exploitation of existing advantage and indirect preservation of the value of know how across locational contexts asymmetry between bounded rationality for transaction and production purposes are critically examined and questioned implications of a shift from a cost to a value based framework are discussed and the need for a shift in research focus is emphasized

performance and interaction routines in multinational corporation research on multinational corporations mncs has neglected routines despite their importance for the process of coordination and their prominence in organization theory this paper focuses on three aspects of routinization in mncs first the transmission of routines across cultural boundaries in considered second the focus moves to routine interactions between performance teams in mncs third i discuss how such routines contribute to the structuring of complex international systems the conclusion suggests that the mnc may have to recognize that every replica of an existing facility is also an experimental test of taken for granted practices

use of minority and 50 50 joint ventures by united states multinationals during the 1970s the interaction of host country policies corporate strategies this article examines geographical sectoral and corporate trends in the use of minority and 50 50 joint ventures by u s multinational manufacturing and mining firms in less developed countries ldcs during the 1970s it is based primarily on data found in the harvard multinational enterprise data base as updated through the mid 1970s and supplemented with corporate performance data for the 1975 1980 period from a new international competitive analysis ica database developed with support from the general electric foundation

structural breaks in volatility evidence for the oecd and non oecd real exchange rates abstract this paper attempts to determine whether or not nominal exchange rate regimes affect the volatility of bilateral and effective real exchange rates to that end we examine the real exchange rate behaviour for a set of oecd and non oecd countries during the 1960 2006 period therefore covering both the bretton woods system of fixed exchange rates and the adoption of generalised floating exchange rates from 1973 we make use of an econometric methodology based on the hansen s hansen b e 1997 approximate asymptotic p values for structural change tests journal of business and economic statistics 15 1 60 67 approximation to the p values of the supreme exponential and average statistics developed by andrews andrews d 1993 test for parameter instability and structural change with unknown change point econometrica 61 4 821 856 and andrews and ploberger andrews d ploberger w 1994 optimal tests when a nuisance parameter is present only under the alternative econometrica 62 6 1383 1414 this methodology allows us to obtain a profile of p values and to delimit periods of stability and instability in the variance of real exchange rates results suggest that there is clear evidence in favour of the non neutrality of nominal exchange rate regime regarding real exchange rate volatility for developed countries but not in the case of developing or emerging countries

the extreme value in crude oil and us dollar markets abstract this study constructs a flexible range based volatility model by considering extreme value information to explore the volatility and dependence structures between the oil price and the us dollar exchange rate an asset allocation strategy is implemented to evaluate the economic value and confirm the efficiency of this model the empirical results indicate that the use of extreme value information can not only enhance the explanatory power of volatility structures but also sort out the asymmetric volatility effect in the oil market besides investors can obtain extra benefits of between 72 and 713 annualized basis points by incorporating extreme value information into their asset allocation strategies less risk averse investors can generate higher benefits the empirical results have potentially important implications for asset allocation and risk management

behind intermediary performance in export trade transactions agents and resources integrating transaction cost agency and resource based theories this study extends the work of peng and ilinitch 1998 by undertaking the first empirical efforts to explore the determinants of export intermediary performance we suggest that given the transaction cost constraints and principal agent conflicts export intermediaries performance depends on their possession of valuable unique and hard to imitate resources which help minimize their clients transaction and agency costs survey results from 166 firms largely support our hypotheses

variables associated with export profitability this study is an analysis of variables associated with the profitability of exporting such information is useful both for export management and for government agencies that wish to promote business commitment to exporting the methodology utilizes a multiple regression analysis of data in questionnaire responses from 168 wisconsin manufacturing firms in 1979 it provides a means for evaluating difficult to measure export marketing considerations such as export marketing channels export methods and foreign dealer support from the supply side of the demand supply equation which can be conceptualized as export marketing analysis from the supply side

local knowledge transfer and performance implications for alliance formation in asia foreign firms in host country environments frequently face location based disadvantages this study proposes three means channels of overcoming local knowledge disadvantages based on a sample of 558 japanese joint ventures jvs located in southeast and east asia we find that partnering with local firms the first channel can be a primary strategy for accessing local knowledge and improving jv performance jv experience in the host country the second channel also mitigates local knowledge disadvantages and leads to increased jv performance the third channel the foreign parent s host country experience leads to increased performance in the absence of a local partner however when a jv is formed with a local partner increased parent experience in the host country leads to decreased performance suggesting that the need for a local partner declines as parent experience in a host country increases

the psychic distance paradox companies tend to begin their internationalization process in countries that are psychically close researchers describe the sequence of entry that firms follow and the mode of entry they choose they suggest that psychically close countries are more easily understood than distant ones and offer more familiar operating environments although not prescriptive an unstated conclusion can be drawn linking sequence of entry to performance evidence from thirty two canadian retail companies shows that only seven 22 were functioning successfully in the united states the psychic distance paradox is that operations in psychically close countries are not necessarily easy to manage because assumptions of similarity can prevent executives from learning about critical differences moreover empirical evidence from 271 ceos confirms greater cultural differences between canada and the u s than assumed previously modifications are suggested to improve the psychic distance concept

global strategy and multinationals entry mode choice this paper makes a case directed towards establishing the importance of global strategic considerations in choosing multinationals entry mode specifically it is our contention that beyond the environmental and transaction specific factors well established in the literature to affect the entry mode decision we should also consider the strategic relationship a multinational envisages between its operations across borders in reaching this decision after incorporating various global strategic variables into an eclectic framework of the factors influencing the entry mode choice this paper tests both the validity of the overall framework and the importance of each entry mode determinant in differ entiating among entry modes this is done based on ninety six multinational managers responses to a survey questionnaire concerning their entry mode decision experiences the results suggest that an express incorporation of global strategic variables into an analysis of the entry mode decision is warranted

market knowledge diversification and export expansion the research focuses on the export expansion process of small and middle sized manufacturing firms and some of its correlates diversification and geographical market distribution means of acquiring information and modes of international distribution the study reveals the overwhelming influence on export expansion of information acquired from business transactions as opposed to reliance on private or public information services the impact of market diversification and its nature is confirmed policy implications are suggested

shifts in volatility driven by large stock market shocks abstract this paper presents an extension of the stochastic volatility model which allows for level shifts in volatility of stock market returns known as structural breaks these shifts are endogenously driven by large return shocks innovations reflecting large pieces of market news these shocks are identified from the data as being bigger in absolute terms than the values of two threshold parameters of the model one for the negative shocks and one for the positive shocks the model can be employed to investigate different sources of stock market volatility shifts driven by market news without relying on exogenous information in addition to this it has a number of interesting features which enable us to study the effects of large return shocks on future levels of market volatility the above properties of the model are shown based on a study for the us stock market volatility

equity joint ventures and the theory of the multinational enterprise this paper extends the internalization approach to the theory of the multinational enterprise mne to include an expanded role for equity joint ventures using the transaction cost paradigm of williamson this paper explains why joint ventures may sometimes be preferred over wholly owned subsidiaries also presented is empirical work on joint venture performance in developing countries which demonstrates that under certain conditions joint ventures can be the optimal mode of foreign direct investment

evaluating export promotion programmes uk overseas trade missions and export performance this paper examines the extent to which firms knowledge and structural characteristics as well as firms behaviour in foreign markets following trade mission participation impacts upon trade mission success and export performance the findings suggest that 1 a diversification strategy in terms of export markets benefits future expansion into new foreign markets 2 specific knowledge about the targeted markets should be acquired prior to participating in the trade missions 3 communication with potential business partners should be established prior to participating in the trade missions and 4 the business relationships established before and during the trade missions should be cultivated through regular contacts using not only communication technology but also regular visits in summary overseas trade missions contribute to the generation of incremental sales in foreign markets by enhancing the relationship building process between business partners

business cycles and the exchange rate system some international evidence this paper investigates the differences in time series behavior of key economic aggregates under alternative exchange rate systems we use a postwar sample of 49 countries to compare the behavior of output consumption trade flows government consumption spending and real exchange rates under alternative exchange rate systems pegged floating and cooperative systems such as the ems we then examine evidence from two particular episodes involving canada and ireland of changes in the exchange rate system aside from greater variability of real exchange rates under flexible than under pegged nominal exchange rate systems we find little evidence of systematic differences in the behavior of macroeconomic aggregates or international trade flows under alternative exchange rate systems these results are of interest because a large class of theoretical models implies that the nominal exchange rate system has important effects on a number of macroeconomic quantities

nominal exchange rate regimes and the real exchange rate abstract two assumptions about the real exchange rate are common in the literature on international finance 1 the real exchange rate is a random walk 2 the time series properties of the real exchange rate depend on the nominal exchange rate regime this paper presents evidence that indicates that the random walk behavior of the real exchange rate is only a characteristic of the post world war ii period moreover our findings also suggest that what is crucial to the real exchange rate behavior is the particular historical period rather than the nominal exchange rate arrangement

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

diffusion of knowledge based products applications to developing economies demand for a knowledge based product often must be created by the product s innovator but the process which diffuses knowledge and so enhances demand accelerates decay of the company s ability to appropriate benefits generated both by the product and by the company s complementary explanation of its qualities and uses decay of the ability to appropriate profit arises from a pervasive free rider problem rivals as well as users become educated by the innovator as the market deepens and expands entry will become feasible for firms capable of production but incapable of supplying effective educational packages at least two principal themes emerge i logically innovative products will be sold bundled with education and other complementary services at least in their early stages ii intensity of diffusion will be sensitive to the nature of governing property rights regimes the analysis suggests that because of free rider and other problems an innovator often finds initial product development plans unproductive and must resort to alternatives feasible diffusion often requires that the product space allocated to an innovator by grants of property rights be larger contain more dimensions than one confined to primary invention s

key characteristics in the choice of international technology transfer mode the choice between licensing and direct investment as a vehicle for international technology transfer is hypothesized to be related to characteristics of the individual technology parent corporation and the host country involved in the transfer a set of hypotheses regarding these relationships are developed and tested in a logit statistical model for a sample of 1 226 technology transfers we find that hypotheses regarding the effects of technology and parents characteristics are strongly supported by this analysis hypotheses regarding the effect of host country characteristics on transfer patterns receive mixed support

international business education a corporate view as a preliminary step in the internationalization of business school curricula 122 major canadian corporations were surveyed for their views on the importance of various management skills and international courses as well as their opinion on the mechanisms institutions and academics for delivering them this article reports on the responses obtained and suggests methods for improving the overall effectiveness of international business education

the modern history of exchange rate arrangements a reinterpretation we develop a novel system of reclassifying historical exchange rate regimes one key difference between our study and previous classifications is that we employ monthly data on market determined parallel exchange rates going back to 1946 for 153 countries our approach differs from the imf official classification which we show to be only a little better than random it also differs radically from all previous attempts at historical reclassification our classification points to a rethinking of economic performance under alternative exchange rate regimes indeed the breakup of bretton woods had less impact on exchange rate regimes than is popularly believed

a contractual remedy to premature innovation the vertical integration of brand name specific research is there any private contractual mechanism which can reduce premature innovation vertical integration of inventors and manufacturers is shown to be an answer so is exclusive dealing between inventors and manufacturers the prospect of getting ahead of other manufacturers and the fear of being left behind would induce a manufacturer to contract for an inventor s output inventors assured of markets for their results can focus more on the quality than on the completion dates of their work the paper examines contractual remedies for premature innovation consistent with the idea of competition the analysis develops from the conventional rushing model first it is shown that self interest of consumers manufacturers and inventors contradicts the intrinsic consequences of the rushing model correction requires exclusive commitments by manufacturers to the innovating results of winning inventors second it is hypothesized that vertical integration of inventors with production facilities of manufacturers is a form of prior commitment discouraging premature innovation viewed this way an entry barrier raised by brand name advertising may not be entirely undesirable