learning from failure towards an evolutionary model of collaborative ventures this paper reports on a longitudinal case study of the interaction between two partners to a failed international joint venture we develop a model of the collaboration process in partnership and alliances based on earlier work by ring and van de ven 1994 and by doz 1996 we employ a series of events that occurred in the course of the relationship as the unit of analysis in order to trace the interactions between the partners and to explicate the impact that external shocks have on their perceptions of efficiency and equity the impact of these events as well as the responses they elicit on the quality of the relationship and vice versa are also considered we find that the partners assessments cause them to either engage in renegotiation of the terms of the contract or to modify their behavior unilaterally in an attempt to restore balance to the relationship the process feeds back until a new mutual understanding of equity is restored or else the relationship deteriorates gradually until a point when the venture is dissolved we conclude that positive feedback loops are critical in the evolutionary process that relationship quality is both an outcome and a mediating variable and that procedural issues are critical from the start in fostering a climate for positive reinforcement and the building of mutual trust and confidence in the relationship

weak exogeneity and long run and contemporaneous identifying restrictions in vec models abstract this paper shows that under the king et al 1991 approach kpsw 1991 stochastic trends and economic fluctuations american economic review 81 819 840 to structural identification in vec models the structural shocks with transitory effects do not have a contemporaneous impact on the weakly exogenous variables this result is used to establish the conditions under which the kpsw and sims 1980 identification schemes macroeconomics and reality econometrica 48 1 48 are equivalent in a model of us consumption investment and private output

the impact of joint venture status on the longevity of japanese stakes in u s manufacturing affiliates a number of well known studies report that between one third and two thirds of international joint ventures eventually break up while many generalizations explanations and prescriptions have been based on these statistics their meaning is unclear first all foreign affiliates are subject to normal business risk and to the risk that they will be divested by parents for strategic or financial reasons are these risks higher for joint ventures than for wholly owned subsidiaries second joint ventures may be shorter lived not because of their joint venture status but because affiliates which are joint ventured have other characteristics that make them more likely to exit to know whether joint ventures are shorter lived one must control for the other factors that affect the longevity of affiliates whether wholly owned or joint ventured third many joint ventures contracts contain clauses that allow partners to sell their stakes to one another at specific intervals because they make exit easier joint ventures should have shorter lives but these shorter lives should only be due to sell offs not to liquidations it is therefore important to see whether the supposedly higher termination rate of joint ventures stakes is due to a higher rate of selloffs or to a higher rate of liquidations in this paper we 1 compare the longevity of stakes in joint ventures versus those in wholly owned subsidiaries 2 while controlling for other factors that affect the longevity of such stakes and 3 while distinguishing between two types of exit those through sale and those through liquidation while past authors have addressed these three issues in piecemeal fashion we believe we are the first to address them simultaneously we analyze the factors that affect the longevity of 355 japanese stakes in u s manufacturing affiliates controlling for all the factors that affect exit rates we find that japanese parents are more likely to terminate their stakes in u s joint ventures than in wholly owned subsidiaries this higher termination rate of joint venture stakes is explained by a higher probability of selling them but not of liquidating them most of the other factors that have been found significant in explaining gross divestment of foreign affiliates do in fact only affect exits through sales but not exits through liquidations hence it is true that joint ventures have shorter lives but dangerous to interpret this finding as necessarily meaning that they are more likely to fail

global value chain governance a relational perspective global value chain gvc governance is an established field within international business research yet the relational aspects of gvcs have to date garnered less scholarly attention than have efficiency considerations this conceptual study s objective is to explore the relational dynamics of gvc governance using an internalization theory perspective and by linking gvc research with insights from the business network literature gvcs are argued to be a distinct form of asymmetrical networks associated with economizing and capability creation features as well as costs the orchestrating firm can thus enhance efficiency outcomes of the gvc using social mechanisms similar to those adopted by core actors in a business network in the study six such mechanisms were identified 1 selectivity 2 inclusion of non business intermediaries 3 joint strategizing 4 relational capital 5 multilateral feedback and 6 rules for equitable value distribution while safeguarding the gvc s efficiency the above social mechanisms are associated with challenges and limitations and therefore do not guarantee international competitive success however deployed in an integrative fashion these social mechanisms facilitate coordination thus economizing on bounded rationality reduce the hazards of imperfect effort by partners thus economizing on bounded reliability and foster innovation and new capability development

a time based process model of international entrepreneurial opportunity evaluation this article investigates two important research gaps in international business ib how entrepreneurs evaluate international entrepreneurial opportunities ieos and the role of time in the evaluation process drawing on the literature on decision making models and the philosophical foundation of opportunity this study employs gioia s methodology and content analysis to examine how the founders of 15 early internationalizing firms evaluated ieos in the early and late stage of internationalization the findings reveal that the interaction of time and three general rules of ieo evaluation that i coin simple revised and complex influenced the entrepreneurs decisions the findings show that the founders transitioned from simple to revised and to complex rules in the ieo evaluation process and that various contingent factors such as time pressure resource availability and type of stakeholders drove these transitions the three general rules correspond to what i label as opportunity actualization revision and development maximization processes respectively i propose a time based process model that reconciles extant internationalization models i e process network economics and entrepreneurship different explanations regarding why and how firms internationalize

the global value chain and internalization theory in a research note in this issue strange and humphrey discuss how a global value chain gvc approach serves to usefully move internalization theory towards a better understanding of the increasingly important middle ground between markets and hierarchies in the contemporary highly globalized international business scene after a brief recount of their main arguments we argue that their discussion needs to the extended as it does not adequately recognize important differences between internalization theory and the gvc approach specifically the approaches differ on the notions of efficiency opportunism and level of analysis we then argue that internalization theory can benefit from the systemic view implied in the gvc approach and discuss the role of trust as a coordinating mechanism in international business this leads to a more general discussion of internalization theory and the difficulty of encompassing dynamic considerations such as learning and foreign operation mode combinations and flexibility within value chain interdependencies we conclude with a research agenda that flows from our discussion

natural disaster impacts and fiscal decentralization in recent years many developing countries have sought to implement more decentralized governmental systems despite efforts toward fiscal federalism assessment of decentralization activity has been hampered by lack of consistent cross country measures of effectiveness since governments play a central role in the management of catastrophic events disaster impact data provide an opportunity to evaluate whether government structure is important in limiting disaster losses we use cross country data over the 1970 2005 period to estimate the relationship between decentralization and disaster casualties countries with more decentralized governments experience fewer disaster induced fatalities jel h73 q54

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

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

earthquake fatalities the interaction of nature and political economy to say that the level of fatalities resulting from an earthquake is inversely related to a country s per capita level of income is hardly novel what makes our approach novel is that we relate fatalities to both per capita income and the level of inequality that exists within a country through their joint impact on the likelihood of collective action being taken to mitigate the destructive potential of quakes we first develop a theoretical model which offers an explanation as to why in some environments different segments of society prove incapable of arriving at what all parties perceive to be an agreeable distribution of the burden of the necessary collective action causing the relatively wealthy simply to self insure against the disaster while leaving the relatively poor to its mercy following this we test our theoretical model by evaluating 269 large earthquakes occurring worldwide between 1960 and 2002 taking into account other factors that influence a quake s destructiveness such as its magnitude depth and proximity to population centers using a negative binomial estimation strategy with both random and fixed estimators we find strong evidence of the theoretical model s predictions that is while earthquakes themselves are natural phenomena beyond the reach of humankind our collective inaction with respect to items like the creation and enforcement of building codes failure to retrofit structures and to enact quake sensitive zoning clearly plays a part in determining the actual toll that a given quake takes and it is through these and other examples of collective inaction that limited per capita income and inequality couple together with a given quake s natural destructive power in determining the actual fatalities resulting from a quake

can the new forms of investment substitute for the old forms a transaction costs perspective this paper uses transaction costs theory is used to explain the features of the new contractual alternatives to foreign direct investment the new forms to assess their efficiency and to forecast their future development

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 more realistic conceptualisations of foreign operation modes we address a long standing discrepancy between theory and practice regarding how firms choose use and modify their modes of operation in foreign markets theory typically treats foreign operation modes as choices between well specified discrete alternatives observation of business practice reveals a messier reality we commonly observe mode packages within mode adjustments and mode role changes yet by and large these aspects of international business development have been relatively ignored in the literature and in theoretical and empirical research we propose richer and more realistic conceptualisations of foreign operation modes and look at their implications for theory and practice

back to basics behavioral theory and internationalization international business ib scholars over reliance on a select few theories leaves our understanding of firm internationalization incomplete the behavioral theory of the firm btf can offer new insights and can be used to model a broad range of firm actions we focus on the three basic btf components problemistic search learning by doing and vicarious learning these components help us understand why firm behaviors are more dynamic and heterogeneous than other theories allow btf with its emphasis on how firms assess performance according to aspiration levels selectively learn and update routines and selectively incorporate the learning of others is better suited to examine the diversity and change increasingly observed in internationalization decisions we explain why scholars should move beyond dynamizing static theories and show btf s applicability to behaviors involving change such as multi mode market entries and market re entries btf also helps examine the decision to internationalize in the first place nascent firm internationalization location choices international market adaptation and headquarter subsidiary relationships we encourage ib scholars to use theories that can handle the complexity increasingly associated with modern firm growth and propose btf as a promising starting point

the shocking origins of political transitions evidence from earthquakes do earthquakes trigger political transitions using a rich panel dataset of 160 countries observed over 1950 2007 we find that earthquake shocks measured in terms of the effect of ground motion amplitude on death toll have two contradicting effects on political change on the one hand earthquakes drive transitions into democracy due to an affective shock which we interpret to be the reaction of citizens by which they hold the incumbent government responsible for earthquake damages on the other hand earthquakes indirectly hasten transitions into a less democratic regime because they increase the income level contemporaneously possibly due to short term emergency response and recovery expenditures and thus raising the opportunity cost of contesting the incumbent government overall we show that while not leading to a full fledged regime transition earthquake shocks open a new democratic window of opportunity but this window is narrowed by improved economic conditions

the dynamic effects of aggregate demand and supply disturbances we interpret fluctuations in gnp and unemployment as due to two types of disturbances disturbances that have a permanent effect on output and disturbances that do not we interpret the first as supply disturbances the second as demand disturbances demand disturbances have a hump shaped mirror image effect on output and unemployment the effect of supply disturbances on output increases steadily over time peaking after two years and reaching a plateau after five years

probing theoretically into central and eastern europe transactions resources and institutions since the 1990s central and eastern europe cee has provided unique societal quasi experiments which represent opportunities to test the applicability of existing theories in international business and management studies and to develop new ones specifically three lines of theorising have been advanced 1 organisational economics theories 2 resource based theories and 3 institutional theories for each of these theories we discuss how they contribute to the understanding of key issues such as entry strategies of foreign investors restructuring strategies of local incumbents and entry and growth strategies of entrepreneurs on this basis we assess how cee research has influenced the overall trajectories of theory development cee research has in particular highlighted the importance of contextual influences such as institutions thus scholars have aimed at incorporating institutions into theories such as organisational economics theories and resource based theories and advancing an institution based view of business strategy as a complementary perspective we outline how future research in cee and other emerging economies may advance this research agenda further

the performance and competitive effects of school autonomy this paper studies a recent british reform that allowed public high schools to opt out of local authority control and become autonomous schools funded directly by the central government schools seeking autonomy had only to propose and win a majority vote among current parents almost one in three high schools voted on autonomy between 1988 and 1997 and using a version of the regression discontinuity design i find large achievement gains at schools in which the vote barely won compared to schools in which it barely lost despite other reforms that ensured that the british education system was by international standards highly competitive a comparison of schools in the geographic neighborhoods of narrow vote winners and narrow vote losers suggests that these gains did not spill over

overcoming export manufacturers dilemma in international expansion learning and acquiring local market knowledge from foreign distributors are central to manufacturers export market performance drawing from the resource based view we propose that manufacturers need to develop stronger local market competence while simultaneously minimizing the costs of distributor opportunism in order to compete successfully in the export market cultural distance and other barriers however may hinder the development of local market competence for the manufacturer while contributing to the occurrence of distributor opportunism in order to overcome these barriers we examine the impact of three alternative forms of manufacturer governance trust knowledge sharing and contract based relationship in export channels findings suggest that all three governance mechanisms contribute to enhancing the manufacturer s competence to exploit local market opportunity however of the three trust seems to be the only effective way to curtail distributor opportunism

stochastic trends and economic fluctuations are business cycles mainly the result of permanent shocks to productivity this paper uses a long run restriction implied by a large class of real business cycle models identifying permanent productivity shocks as shocks to the common stochastic trend in output consumption and investment to provide new evidence on this question econometric tests indicate that this common stochastic trend cointegration implication is consistent with postwar u s data however in systems with nominal variables the estimates of this common stochastic trend indicate that permanent productivity shocks typically explain less than half of the business cycle variability in output consumption and investment copyright 1991 by american economic association

the optimal timing of a foreign direct investment analyses of the optimal timing of foreign direct investment fdi decisions have been curiously lacking in the general literature on multinational enterprises cf buckley 1979a b although comparative static analyses exist comparing exporting to the host country with market servicing from a production unit sited in the host country horst 1971 hirsh 1976 the only attempt to predict the timing of the switch from exporting to foreign based production is that of aliber 1970 although vernon 1966 gives a cost based rationale for the switch this chapter attempts to fill this gap in the theory of fdi section 2 1 outlines and criticises previous attempts to deal with the problem sections 2 2 4 present a simple model which ignores set up costs and sections 2 5 and 2 6 give a more detailed analysis including such costs further extensions of the theory are considered in section 2 7 and the conclusions are summarised in section 2 8 the problem emerges as being more complex than had previously been appreciated

the role of path dependency and managerial intentionality a perspective on international business research several decades of research in the field of international business have advanced various theories and studies on the internationalization of firms our assessment of the literature on internationalization shows that the focus has been primarily on path dependency and learning based aspects of internationalization while managerial intentionality and the possibility of managers making deliberate strategic choices towards further internationalization have not been very prominent in the ib literature we argue that internationalization paths and processes should be approached as a joint outcome of management intentionality and experience based learning in other words managers are assumed to have the ability and the intention to influence the evolutionary paths of the firm we derive a future research agenda that calls for the pursuit of this promising and emergent research stream moreover we develop a model integrating managerial intentionality knowledge experience and other factors institutional and selection forces to explain heterogeneous outcomes of internationalization positions paths and processes

internationalising in small incremental or larger steps we argue that companies may enter foreign environments either incrementally as suggested by long established theory or by taking larger steps that may result in lower initial performance but through learning and experience lead to increased performance in future expansions this idea is corroborated by the experience of dutch companies entering into central and eastern europe we also find that expansion steps may be too large thereby limiting the exploration of foreign environments our study suggests that sequential internationalisation strategies do still matter and that companies have to balance exploitation and exploration in internationalisation

transaction cost determinants and ownership based entry mode choice a meta analytical review entry mode choice is a critical ingredient of international entry strategies and has been voluminously examined in the field the findings however are very mixed especially with respect to transaction cost related factors in determining the ownership based entry mode choice this study conducted a meta analysis to quantitatively summarize the literature and empirically generalize more conclusive findings based on the 106 effect sizes of 38 empirical studies the meta analysis shows that the findings of the existing studies are moderated to varying degrees by both study setting factors and statistical artifacts although the combined overall effects of transaction cost based determinants are consistent with the predictions of transaction cost economics we extensively discuss the implications of meta analytical results especially moderating effects of location country of origin industry type and statistical artifacts highlight the measurement adequacy equivalence and multidimensionality of transaction cost determinants and present our suggestions to improve theoretical inquiries and empirical verifications on entry mode choice

taxing the multinational enterprise on the forced redesign of global value chains and other inefficiencies the taxation of the multinational enterprise mne has been a continuing concern for policymakers we argue that the changing nature of the mobile mne e g its improved ability to fine slice the value chain and disperse it geographically makes it increasingly important to rethink current tax policies first there should be more focus on the inefficiencies that arise when taxation leads to the inefficient location of mne activities thus mnes may shift activities to low tax jurisdictions that offer lucrative pecuniary and non pecuniary incentives but do not enable their investments to maximize their contribution to global value creation second international tax regimes should ensure that mnes pay for their consumption of local public goods and public finance scholars have long known that the taxation based distortions are minimized when the tax objects are immobile however the bulk of current tax policies are aimed at corporate profits that are both poor proxies for the consumption of local public goods as well as extremely mobile integrating theory from international business public finance and economic geography our analysis demonstrates that moving the incidence of taxation from corporate profits to dividends and consumption would unambiguously improve both wealth creation and efficiency

long run identifying restrictions for an error correction model of new zealand money prices and output abstract dynamic interactions among money prices and output are modeled for new zealand we find evidence of one cointegrating relationship and two stochastic trends among these series and base structural inferences on long run identifying restrictions of the type proposed for vec models by king plosser stock and watson kpsw under the assumption that a monetary shock has no effect on output in the long run a productivity shock for which there is partial monetary accommodation explains most of the variability of output at all forecast horizons whereas the monetary shock is the most important determinant of levels of money and prices an alternative identifying restriction that imposes a long run impact of a monetary shock on output results in less plausible dynamic effects

international corporate governance a review and opportunities for future research we review four decades of research about the corporate governance of multinational corporations mncs which we label international corporate governance icg we identify and discuss three main streams of research that draw on different conceptualizations and theoretical lenses of corporate governance after synthesizing their respective findings we propose several avenues for future research that integrate these three streams of research with the goal of developing a more nuanced understanding of icg we hope this review article will inspire international business scholars to continue examining how corporate governance can be an effective tool for mnc success

managerial cognition and internationalization how do the senior decision makers within a multinational enterprise mne think through and determine an internationalization decision despite the cognitive foundations of several key constructs standard internationalization models do not explicitly incorporate managerial cognition we argue that the boundedly rational decision maker is underspecified in international business models and this oversight contributes to weak empirical findings on experience learning internationalization strategy and mne performance drawing on these extant models we identify seven knowledge domains and interdependencies that may make up decision makers mental models granted rare access to senior executives and board members engaged in a foreign direct investment decision we find substantial heterogeneity in the mental models these individuals used to make sense of the opportunity this variance aligns with differences in individuals experience along four dimensions international breadth depth diversity and prior strategic decision making we argue these cognitive processes how individuals exercise judgment about information search parameters assessment and decision integration and how decision teams coalesce in their thinking are crucial microfoundations for modeling heterogeneity in firm level internationalization strategies and performance

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

mode of international entry an isomorphism perspective the determination of entry modes is examined using an institutional theory framework two sources of isomorphic pressures affect a strategic business unit s sbu entry mode choice 1 host country institutional environment and 2 internal institutional environment the parent organization sbus were hypothesized to adopt similar organizational forms structures policies and practices thus becoming isomorphic based on felt pressures to conform to behavioral norms within the environments the results indicated that sbus using wholly owned entry modes demonstrated high levels of internal parent isomorphism those using exporting joint ventures or licensing agreements demonstrated external isomorphism and those using multiple or mixed entry mode demonstrated low levels of isomorphic pressures

on the determinants of fiscal centralization theory and evidence abstract this paper presents a simple model that unifies most of the results of the literature on fiscal federalism the model describes an economy characterized by two levels of government one public good and a private good the predictions of the model are tested by using a new set of measures of fiscal centralization the main findings are that country size income per capita ethnic fractionalization and level of democracy are negatively correlated with the degree of fiscal centralization the model is tested using ols tobit and semi parametric estimators the paper also shows that the variables included in the regression are helpful in the prediction of changes in the level of centralization

natural disasters impact factors of resilience and development a meta analysis of the macroeconomic literature abstract we systematize 64 primary studies published in 2000 2013 on the macroeconomic impact of natural disasters by providing ols and generalized ordered probit meta analyses for 1858 and 1991 regressions respectively we investigate how the reported results in the primary studies are influenced by the empirical design the estimation technique and or publication bias we analyze primary studies on disaster direct costs and indirect costs separately according to our meta analysis disasters on average have a negative impact in terms of direct costs and an insignificant impact in terms of indirect costs mst and fat pet peese estimates motivate the meta analyses showing the need for a multivariate approach to consider strong systematic research heterogeneity time based characteristics of the data and publication bias strongly impact on the results of the primary studies thus implying the need for authors to carefully consider the selection of time period and for research institutions to understand the sources of selection bias in disseminated results we argue that further research is necessary on the heterogeneity of results of indirect cost studies and suggest that future studies on the macroeconomic impact of disasters should explore more often the mitigation role of education investment and openness by including these as explanatory variables

the effect of specificity of experience on a firm s perceived importance of institutional knowledge in an ongoing business we study how three types of firm experience ranging from the specific to the general influence the perceived importance of institutional knowledge in the ongoing business of internationalising firms based on a sample of 101 small to medium sized firms the three types of firm experiences are international country and ongoing business the results show that firm experience within the ongoing business and the experience from multiple past business deals in various countries develop institutional knowledge whereas experience from multiple past business deals in a specific country does not the theoretical contribution of this paper is that it establishes a link between different kinds of experience and managerial cognition in terms of institutional knowledge in addition it emphasises that firms develop institutional knowledge from multiple diverse country experiences and experience in the specific ongoing business rather than experiences at the level of the country

on decentralization and life satisfaction abstract we empirically analyze the impact of fiscal and political decentralization on subjective well being in a cross section of 60 000 individuals from 66 countries more spending or revenue decentralization raises well being while greater local autonomy is beneficial only via government consumption spending

fiscal decentralization and natural hazard risks at least to some extent due to pressure from international donors many countries have become more fiscally decentralized the underlying premise being that greater decentralization might improve the provision of local public goods and services we test this proposition by determining whether relatively more decentralized countries fare better when natural disasters strike in terms of its effects on the population overall we find evidence supporting our maintained hypothesis though the effect appears much more robust in developing countries

causes of the difficulties in internationalization we study the causes of the difficulties faced by firms when they internationalize in search of new markets we build on the resource based theory to argue that the difficulties in internationalization can be separated into three main sets based on their relationship to advantage loss of advantage provided by resources transferred abroad creation of a disadvantage by resources transferred abroad and lack of complementary resources required to operate abroad in each set we further distinguish difficulties that are specific to a firm from those that are common to a set of firms we argue that only a few of the resulting types of difficulties of internationalization are exclusive to the cross border expansion and propose solutions that address the root cause of each type

decentralization and corruption evidence across countries the relationship between decentralization of government activities and the extent of rent extraction by private parties is an important element in the recent debate on institutional design the theoretical literature makes ambiguous predictions about this relationship and it has remained virtually unexamined by empiricists the authors make a first attempt at examining the issue empirically by looking at the cross country relationship between fiscal decentralization and corruption as measured by a number of different indices their estimates suggest that fiscal decentralization in government spending is significantly associated with lower corruption moreover they find that the origin of a country s legal system for example civil versus common legal code performs extremely well as an instrument for decentralization the estimated relationship between decentralization when so instrumented and corruption is even stronger the evidence suggests a number of interesting areas for future work including investigating whether there are specific services for which decentralized provision has a particularly strong impact on political rent extraction and understanding the channels through which decentralization succeeds in keeping corruption in check

from internationalization to evolution the uppsala model at 40 years abstract the original uppsala model that was published in 1977 explains the internationalization process of firms we have further developed the model several times in the intervening years the present article is our latest effort a general model of the evolution of the multinational business enterprise mbe from early steps abroad to being a global firm the updated augmented model explains mbe evolution in general not only characteristics of the internationalization process in a narrow sense we believe that the newest iteration anchored in process ontology will be useful in conducting longitudinal empirical studies

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

international joint venture instability a critique of previous research a reconceptualization and directions for future research this paper conducts an in depth critique of previous research on international joint venture instability by pointing out its major limitations lack of clear conceptualizations and consistent operationalizations lack of clarity in the relationship with performance static focus on the eventual destination rather than developmental processes and lack of managerial relevance to overcome these deficiencies we propose a significant reconceptualization in which instability is defined as a neutral dynamic process based and multifaceted phenomenon directions for future research are provided

can extreme rainfall trigger democratic change the role of flood induced corruption using a new dataset of extreme rainfall covering 130 countries from 1979 to 2009 this paper investigates whether and how extreme rainfall driven flooding affects democratic conditions our key finding indicates that extreme rainfall induced flooding exerts two opposing effects on democracy on one hand flooding leads to corruption in the chains of emergency relief distribution and other post disaster assistance which in turn impels the citizenry to demand more democracy on the other hand flooding induces autocratic tendencies in incumbent regimes because efficient post disaster management with no dissent chaos or plunder might require government to undertake repressive actions the net estimated effect is an improvement in democratic conditions

the boundaries of the firm revisited why do firms exist what is their function and what determines their scope these remain the central questions in the economics of organization they are also central questions for business executives and corporate strategists the worldwide volume of corporate mergers and acquisitions exceeded 1 6 trillion in 1997 it is hard to imagine that so much time effort and investment bankers fees would be spent on adjusting firm boundaries unless there was some underlying economic gain indeed the exceptional levels of merger and acquisition activity over the past two decades are a strong indication that economically significant forces do determine organizational boundaries the study of firm boundaries originated with the famous essay by coase 1937 who raised the question of why we observe so much economic activity inside formal organizations if as economists commonly argue markets are such powerful and effective mechanisms for allocating scarce resources coase s answer was in terms of the costs of transacting in a world of imperfect information when the transaction costs of market exchange are high it may be less costly to coordinate production through a formal organization than through a market in large part thanks to the work of williamson 1975 1985 recent decades have seen a resurgence of interest in coase s fundamental insight that firm boundaries can be explained by efficiency considerations our understanding of firm boundaries has been sharpened by identifying more precisely the nature and sources of transaction costs in different circumstances in the process the focus of

social ties and foreign market entry the social dynamics which precede international exchange are considered in light of data collected on 133 foreign market entries from a sample of highly internationalized manufacturing firms consistent with research done in the social network field the findings support the hypothesis that knowledge of foreign market opportunities is commonly acquired via existing inter personal links rather than collected systematically via market research this study thus contributes towards an understanding of those antecedent conditions that lead to the formation of export exchange relationships

extending the internationalization process model increases and decreases of mne commitment in emerging economies the internationalization process model suggests that firms internationalize by building positions in foreign markets and networks following iterative cycles of learning and changes in commitment however as subsidiaries evolve commitments may be decreased as well as increased a phenomenon that has rarely been studied moreover it remains an open question why strategic intentions at the outset of an investment project differ from the actual operations established we address these questions by extending the model and combining it with mintzberg and waters framework of strategy formation specifically we suggest that commitment decisions correspond to statements of intended strategy while network positions correspond to realized strategies the processes of learning opportunity creation and trust building triggered by commitment decisions are however moderated by institutional influences that lead to divergences between realized and intended strategies we test propositions derived from this framework on a survey data set of subsidiaries of multinational enterprises in hungary lithuania and poland and find that institutional voids and institutional uncertainty affect subsidiary strategy implementation but in opposing directions under high institutional uncertainty investors prefer low commitment but flexible modes that enable later commitment increases whereas institutional voids increase up front information search and adaptation costs that reduce the likelihood of early post entry adjustments our analysis reinforces the need for more differentiated theoretical analyses of how institutions affect business strategies over time

decentralization and the productive efficiency of government evidence from swiss cantons advocates of fiscal decentralization argue that among other benefits it can increase the efficiency of delivery of government services this paper is one of the first to evaluate this claim empirically by looking at the association between expenditure decentralization and the productive efficiency of government using a data set of swiss cantons we first provide careful evidence that expenditure decentralization is a powerful proxy for legal local autonomy further panel regressions of swiss cantons provide robust evidence that more decentralization is associated with higher educational attainment we also show that these gains lead to no adverse effects across education types but that male students benefited more from educational decentralization closing for the swiss case the gender education gap

adapting the uppsala model to a modern world macro context and microfoundations vahlne and johanson 2017 present the multinational business enterprise mbe as a new form of cross border organization that supersedes the multinational enterprise mne they offer a general model of the evolution of the mbe arguing that the mbe evolves through ongoing internationalization processes by proactively and entrepreneurially engaging in business exchange rather than production in this counterpoint we focus on two critical dimensions absent from vahlne and johanson s 2017 arguments the impact of the digital context as a defining macro level feature of our modern world and the role of the individual as a core microfoundation of the internationalization process we argue that a robust theory of the evolution of the modern firm must necessarily account for these dimensions to explicate these impacts we draw from a range of complementary research streams across international business entrepreneurship and international entrepreneurship we identify research implications for scholars seeking to further advance the uppsala model of internationalization and those who will use the revised model to study the modern multinational

mnc subsidiary channel relationships as extended links implications of global strategies foreign subsidiaries of multinational corporations mncs rely on external partners such as channel partners to achieve global objectives we conceptualize the subsidiary s channel partner as an extended link of the mnc s internal network thus the subsidiary s adaptation and execution of the mnc s global strategies should influence the subsidiary s channel relationship and performance building on the strategy environment alignment framework we study the influence of mnc global strategies global efficiency multinational flexibility and worldwide learning on a subsidiary s channel commitment and the moderating influence of the host country environment survey data from german and japanese mncs in the united states indicate the importance of global strategies to a channel relationship for example we find that an emphasis on multinational flexibility is detrimental but worldwide learning benefits the subsidiary s channel commitment we also find that the host country environment plays a contingent role for example a global efficiency strategy is beneficial for channel commitment in a stable environment but detrimental in a dynamic environment our research offers key implications for mncs we suggest that when mncs decide to lay emphases on global strategies the mncs should consider not just their internal subsidiary network but also their extended channel partner links that function in foreign markets

managerial governance adaptation in the multinational enterprise in honour of mira wilkins we propose an analytical business history approach informed by new internalisation theory to study managerial governance adaptation in the multinational enterprise mne we shed new light on the timing and the scale of managerial governance adaptation these two issues have remained largely unaddressed in mainstream international business theory we uncover the importance of delayed larger scale governance adaptation as a response to cumulative localised commitment failures we illustrate our new perspective on managerial governance adaptation by providing a short retrospective of wilkins and hill s american business abroad ford on six continents cambridge university press cambridge 1964 classic historical account of ford motor company s expansion across six continents between 1903 and 1963 our brief retrospective highlights the value of in depth historical analysis informed by umbrella behavioural assumptions such as those adopted in new internalisation theory based research to gain improved understanding of international strategy and governance trajectories of large mnes

information overload and the internationalization process model an implementation attempt this article presents a theoretical equation set based on the information interactions that result in experiential learning we attempt to link our equation set to the uppsala internationalization process model in order to quantify information overload and operationalize the uppsala model under longitudinal time series settings the internationalization process has generated an increase in the diversity and overall quantity of information resulting in an increase of the variation and amount of information that a firm needs to process this challenges a firm s capacity to simultaneously expand and learn market knowledge is acquired essentially through current business activities all of which proceed from a firm s market experience to generate experiential knowledge market experience is situation specific and therefore difficult to generalize nonetheless firms tend to use general failsafe proven courses of action when confronted with new situations in an effort to reduce diverging larger quantities of incoming and often discrepant information information overload refers to situations where the quantity of information pending analysis and consideration compels a firm to revert to older and trusted information processing methods instead of seeking adaptive solutions clearly adopting a short term efficiency posture leading to suboptimal performance

organizational innovation in the multinational enterprise internalization theory and business history this article engages in a methodological experiment by using historical evidence to challenge a common misperception about internalization theory the theory has often been criticized for maintaining that it assumes a hierarchically organized mne based on knowledge flowing from the home country this is not an accurate description of how global firms operate in recent decades but this article shows it has never been true historically using longitudinal data on individual firms from the nineteenth century onwards it reveals evidence of how entrepreneurs and firms with multinational activity faced with market imperfections changed the design of their headquarters and their organizational structures

modes of foreign entry a transaction cost analysis and propositions a frontier issue in international marketing is the appropriate choice of entry mode in foreign markets the objective of this paper is to offer a transaction cost framework for investigating the entry mode decision this framework provides 1 a theoretical basis for systematically interrelating the literature into propositions 2 propositions about interactions which resolve the apparently contradictory arguments advanced to date specifically the paper illustrates the feasibility of clustering 17 entry modes into the degree of control the mode provides the entrant proposes that the most appropriate i e most efficient entry mode is a function of the tradeoff between control and the cost of resource commitment advances testable propositions delimiting the circumstances under which each mode maximizes long term efficiency

stochastic trends and economic fluctuations in a small open economy in this paper we describe how restricted vector autoregressions can be employed to examine the sources of macroeconomic fluctuations we show how cointegration restrictions can be used to identify a var system with common stochastic trends subject to transitory and permanent changes in average growth and how we may investigate the system s responses to permanent shocks i e to innovations to the trends theoretical cointegration vectors are derived from a small open economy growth model for terms of trade real gdp real consumption and real investments applying these methods to swedish annual data 1875 1986 we find that permanent real supply shocks account for most of the fluctuations in gdp even in the short run