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Transaction cost economics (TCE) carefully analyzes market failure while remaining largely silent about hierarchical failure. We argue this omission occurs because TCE’s opportunism assumption does not consider organizational member motivations under different hierarchical forms. Thus, TCE does not fully examine opportunistic behavior under hierarchy, resulting in an incomplete governance analysis. To fill this gap, we build a discriminating alignment theory of hierarchical choice that incorporates explicit motivations under each hierarchical form. We make three contributions to TCE with this theory. First, using the counterproductive work behavior and goal framing literatures, we predict specific motivations (effort, visceral, financial or status opportunism, or collaboration) across hierarchical forms. Second, we predict when “efficient” hierarchical forms (mapped from Williamson’s internal governance analysis) do not effectively mitigate opportunistic behavior, creating hierarchical failure. In these cases, we augment the hierarchical forms with supplemental governance mechanisms necessary to efficiently govern the exchange. Finally, we investigate how different motivations across hierarchical forms lead to excess misalignment costs to enhance our understanding of hierarchical failures. Examining how both transaction hazards and specific motivations drive particular behaviors allows for a more nuanced understanding of specific “costs and competencies” of hierarchy and in turn hierarchical failure in TCE

This article presents a theory of organizational purpose that is normatively neutral and, hence, can be deployed to study firms without prejudging their role in society. The argument employs two philosophical concepts: intentionality and speech acts. The first is used to conceptualize the corporate mind, which is a set of long-lived beliefs about the world-as-it-is and intentions about the world-as-it-will-be that drives organizational activity. Corporate minds allow for complex and valuable forms of social cooperation and, hence, the article argues that the purpose of any organization is to sustain a corporate mind. Five core attributes enable organizations to fulfil this purpose: those are authorization, property rights, the ability to contract, the capacity to deliberate, and conversability. Conversability allows organizations to perform speech acts: that is, to make statements about the corporate mind that are referred to in this article as meta-contractual avowals. The article provides a value-neutral account of corporate governance as the set of devices that ensures the consistency of an organization’s corporate mind, meta-contractual avowals, and authorized actions. This theory sheds light upon the structure of purpose discourse and the relationship between different theories of the firm.

This paper considers an entry game in which an incumbent firm operates in a number of markets and a potential entrant seeks to enter some or all of the markets. While price discrimination has usually been thought of as a barrier to entry, in our model it is not and, on the contrary, we find that charging a uniform price across the markets actually discourages entry. Partial entry occurs when the two firms’ products are highly substitutable. In this case, a ban on price discrimination raises the profits of both the incumbent and the entrant but reduces consumer and total welfare.

We assess the performance of recently developed hospital merger simulation methods in a Monte Carlo setting. We specify a theoretical model of hospital markets and generate true price eects of mergers by solving a simultaneous Nash bargaining game between the hospitals and MCOs for pre- and post-merger cases. We then take the data generated by the theoretical model that would be available in a real-world prospective merger analysis to the merger simulation methods and compare their predictions to the true price eects. We perform this exercise for multiple parameterizations, including dierent levels of competition in the hospital and insurance markets. We examine two related merger simulation methods and nd that both are preform well, although each exhibits some tendency to under- or over-predict merger price eects. We also nd some sensitivity to variation in the model parameters that govern consumer preferences over hospital networks and the division of the joint surplus in the bargaining game. 1

This paper investigates the effect of the “financialization” of commodity markets in terms of pricing. I explore whether the emergence of commodity index traders affects weekly returns and turnover during the roll periods. I split the sample (1994–2017) into the pre-financialization (1994–2003) and the post-financialization (2004–2017). I directly test whether the market share of index traders contributes to commodity returns and whether risk adjustments (based on momentum, basis, basis-momentum, open interest, crowding, and average factors) alter liquidity and insurance premiums documented in Kang, Rouwenhorst, and Tang (2020). I also examine how the financialization affects liquidity and insurance premiums. Finally, since previous results are obtained with Fama-MacBeth regressions, I use an alternative method totest how liquidity and insurance premiums determine commodity returns.

Tüketici davranışlarının değişmesiyle birlikte lüks ile ilgili yeni kavramların ortaya çıktığı görülmektedir. Herkese uygun bir lüks seçeneğinin olduğu düşünülecek olursa, tüketicilerin lüks markayı nasıl algıladığı üzerinde de durulması gerekliliği ortaya çıkmaktadır. Bu nedenle, bu çalışmada tüketicilerin lüks marka algısının lüks ürün satın alma niyetine etkileri üzerinde durulmaktadır. Çevrimiçi anket yöntemiyle 426 katılımcıya ulaşılmıştır. Toplanan veri SPSS Amos 24 ile incelenmiştir. Birinci el ve ikinci el lüks ürün satın alan tüketiciler kıyaslanmıştır. Araştırmanın sonucuna göre birinci el lüks ürün satın alan tüketicilerin genel lüks marka algısı, lüks ürün satın alma niyeti, finansal marka algısı ve sosyal marka algısı arasında anlamlı bir ilişki tespit edilmiştir. Fonksiyonel marka algısı ile benzer bir etki görülmemiştir. İkinci el lüks ürün satın alan tüketicilere bakıldığında ise genel lüks marka algısı ile sosyal marka algısı arasında anlamlı bir ilişki tespit edilmesine rağmen fonksiyonel, finansal ve lüks ürün satın alma niyeti arasında benzer etkiye rastlanılmamıştır., With consumer behaviours changing, new notions of luxury appear to be emerging. Given that there is a luxury option that suits everyone, the need to focus on how consumers perceive the luxury brand is emerging. Therefore, this study focuses on the effects of consumers' perception of luxury brands on their intention to buy luxury products. The online survey method reached 426 respondents. Data were examined with SPSS Amos 24. Consumers buying first-hand and second-hand luxury products have been benchmarked. Consumers buying first-hand luxury items, according to the study's conclusion; a meaningful relationship has been identified between general luxury brand perception, intention to buy luxury products, financial brand perception and social brand perception. No similar effect has been seen with functional brand perception. When looking at consumers buying second-hand luxury products, there has been no similar effect between functional, financial and luxury intention to purchase, although there has been a significant association between general luxury brand perception and social brand perception.

ispartof: JOURNAL OF POLICY ANALYSIS AND MANAGEMENT vol:42 issue:1 pages:35-59 status: published

International audience; Using an approach that embodies an explicit tradeoff between need and governance considerations, we propose an optimal aid allocation formula. We first assume exogenous, then endogenous governance. In the former case, a central concept is need-adjusted aid effectiveness while in the second case the donor has policing instruments under the form of monitoring and sanctioning capacities. We show that external disciplining has two advantages when the donor is sensitive enough to poverty intensity: (1) to cater to poor countries to a greater extent than is possible when local governance cannot be influenced by external forces, and (2) to respond (non-perversely) to improvements in the local governance of a country by raising its aid share. In institutionally weak countries, populations should welcome wisely applied donor's discipline as a way not only to get access to financial support but also to constrain their elites to refrain from abusing their position excessively. Imposing discipline when the release of externally-provided development funds is at stake seems more acceptable than aid directed to the explicit purpose of combatting corruption.

This article proposes a methodology to calculate the effect of moral hazard on short term credit (working capital) to small and medium-sized enterprises (SMEs). The methodology incorporates four categories of moral hazard ratio defined in a previous study, which are employed to determine probability of default based on a logit model. To this end, a novel Colombian database is used to calculate a moral hazard index that considers the percentages of the odds ratios of the moral hazard variables for positive coefficients on the probabilities of default. The empirical analysis result in an index measuring the impact of moral hazard on odds ratio mainly based on underinvestment moral hazard category in the sample of analyzed companies for the period ranged from 2007 to 2014.

The crisis of 2007-08 called for a renewal of banking regulation that took the shape of a shift toward macroprudential policy. However, a comprehensive assessment of the current state of financial regulation reveals that this shift is incomplete. In particular, the notion of risk that lies at the heart of the Basel framework is still blind to extreme events. Climate risk and pandemic risk fall into this category. The purpose of this article is twofold. On the one hand, we point out why current banking regulation is not adequate to face risks whose origin is grounded outside financial markets – as is the case for both the pandemic and the climate risks –; on the other hand, we offer avenues for reforming macroprudential regulation in a way that would allow to take those risks into account.

The returns from public investment, especially during periods of scaling up, are often lower than expected. To understand the mechanisms behind this regularity we exploit original information on investment projects obtained from World Bank project reports to document the extent and the drivers of time delays in project implementation. We find that almost 60 percent of investment projects are delayed by at least one year. Time overruns are common across sectors and countries. A sound planning and preparation matter for the timing of project execution. Country characteristics also play a role, as projects undertaken in countries with weaker institutions and in periods of public investment scaling up are completed with longer delays.

Most of prudential regulations apply to national institutions while, in practice, banks operate at the global level, generating international banking flows which are not comprehensively captured by policies with a domestic remit. This may give rise to spillovers, i.e. effects not considered ex ante in the objectives and/or constraints of authorities in charge of prudential policy, the effectiveness of which may be harmed. Using BIS data on foreign bank lending over a large sample of countries, we investigate international spillovers from French prudential policies. Overall, we show that French prudential policies entail a reduction in foreign banks’ lending to French residents. Yet some measures may lead to undesired leakages that potentially undermine authorities’ goals: foreign bank affiliates’ exposure to France rose by 1.1% (1.9 Bn USD) on average over 2011-17 owing to the implementation of Basel capital requirements.

We assess if capital ratios reduced the occurrence of banking crises in the European Union from 1998 to 2017. We use a Probit model and estimate the effect of two measures: the bank capital to total assets ratio and the bank regulatory capital to Risk Weighted Assets (RWA). We found that both measures affect negatively the probability of crisis. This result is robust to the exclusion of outliers, to the inclusion of various control variables for banking, financial and macroeconomic risks. Finally, we show that while the bank regulatory capital to RWA has always a negative effect on the probability of crisis, the bank capital to total assets ratio is only significant above a threshold, estimated between 10 ​% and 12 ​%.

Since 2020, the world is facing a huge pandemic crisis caused by an acute respiratory coronavirus syndrome. Beyond the impact on the population's health or on normal social interaction, the virus led to a huge economic slowdown, requiring the prompt EMU's authority's reaction. The current paper explores how the sovereign yield spreads of EMU countries with respect to German bonds were affected during the pandemic period. To this end, I employ dynamic panel methods, the Pooled Mean Group estimator of Pesaran et al. (1999) and the Dynamic Common Correlated Effects estimator of Chudik and Pesaran (2015), which accounts for heterogeneous effects across countries and the non-stationarity of spreads and of their determinants. The model uncertainty is studied with a Bayesian VAR (BVAR) approach. The results reveal that, in addition to fundamentals (economic growth, large public debt, inflation, financial instability, country's competitiveness and domestic investment), pandemic risk puts also substantial upward pressure on sovereign bond yields both, in the long-run and short-run on the selected period. Pandemic risk seems to raise yield spreads in the 14 EMU countries in the short-run, while disease mitigation measures reduce them in the long-run. Same negative effect of disease mitigation measures on yield spreads are also found with BVAR model. Results are relatively robust across different empirical methods and considered scenarios.

This paper explores how social interactions among consumers shape markets. In a two-country model, consumers meet and exchange information about the quality of the goods. As information spreads, the demands evolve, affecting the prices and quantities manufactured by profit-maximizing firms. We show that market prices with informational frictions reach the duopoly price with full information, at the limit. However, this convergence can take two different paths depending on the size asymmetry between countries. In particular, when countries are of very different sizes, the single market does not immediately turn into a duopoly and monopoly prices may persist for several periods. Hence, the price-reducing trade effects may take longer to appear. In view of an intense globalization process, understanding how social meetings affect market outcomes is critical for understanding the performance of international economic integration.

ispartof: FEMINIST ECONOMICS vol:29 issue:1 pages:266-297 status: published

Using a formal model, we develop a theory of how value capture by a firm with market or bargaining power dampens the incentives of other agents in its ecosystem, showing that the implications for v...

Any single competition is rarely a “one-off” event, and instead is often part of a larger sequence of related competitions. Thus, we contend that, in order to better understand people’s competitive...

The European Parliament (EP) as one of the key institutions of the European Union has gained considerable powers over time and often presents itself as a constant gender equality promoter. Whilst gender equality in the EP tended to be analysed in terms of women's descriptive, substantive and symbolic representation, this article shifts the focus to the concept of power itself in assessing gender equality achievements in and through the EP. Applying Amy Allen's conceptualization of power as power to, power over and power with to a critical reading of recent literature, it explores who can exercise power over what in the EP and the consequences for gender equality. The article challenges the EP as a unified gender equality actor and highlights its highly gendered nature in which power over and power to are intertwined, with power to occurring without power over and power with unfolding through alliances and coalitions.

We study the impact of the boycott on Japanese products, initiated in July 2019, in the Korean beer market. First, we find that sales of Japanese beer decreased by 75 percent on average during the 14-month boycott period in the data. Second, the decrease in Japanese beer sales during the boycott period mostly reflected an increase in domestic beer sales, while demand for outside alternatives has been relatively stable. Third, the post-boycott demand curve of Japanese beer seems to be less elastic than the pre-boycott demand curve. Lastly, the intensity of the boycott effect has remained strong and stable despite a substantial decrease in traditional media coverage since the outbreak of the boycott movement. Our analysis addresses both price endogeneity, as firms may respond to the boycott by adjusting prices, and consumers' substitution to non-Japanese beers from Japanese beers by simulating the post-boycott beer sales had the boycott not occurred. The approach may provide more complete delineation of the effects of a boycott in the market, compared to previous studies that focused only on the boycotted products. Our empirical findings suggest that political tensions can severely distort market outcomes and disturb international trade in an extended period, and that the magnitude and persistence of the boycott may depend on consumer preferences and market conditions such as the existence of close substitutes along with social and political factors.

Homeownership rate for young households in the United States has declined significantly since 1976. An examination of the ownership-age profile of college and non-college households suggests that while college graduates are postponing home purchasing, a large fraction of non-college graduates have become permanent renters. This paper shows that the diverging homeownership dynamics between college and non-college graduates can be accounted for by an inelastic supply of houses combined with a change in the income distribution due to a higher population share of college graduates and a widening gap in household income between college and non-college graduates. The change in the income distribution drives up aggregate housing demand and leads to higher house prices. As a result, non-college graduates find owning less affordable while college graduates with steeper earning profile postpone home purchasing. Using data for the 105 largest metropolitan areas in the U.S. over 1980 to 2010, I find that cities with more college graduates tend to have higher local house prices, lower young homeownership rate for both college and non-college households, and lower middle-aged homeownership rates especially among the non-college households. Moreover, a rise in the household income of college graduates further increases local housing price and lowers homeownership rates for non-college graduates. The changing income distribution can account for the majority of the observed changes in young and middle-aged homeownership rates for both college and non-college graduates.

Research has shown that most ventures fail, yet there has been limited work on investors’ views of entrepreneurs who have failed in the past. We address this gap and call attention to an innate asymmetry between past failure and success. This asymmetry arises because success requires skill and luck jointly, whereas failure materializes due to either lack of skill (mistakes) or bad luck (misfortune). We ask: Are investors “failure-averse” and discount a failed entrepreneur even in the presence of additional information about entrepreneurial skill? Or do they make “rational inferences” in light of the additional skill information and proceed to fund the new startup? To test whether investors are failure-averse or engage in rational inference, we use experiments in the context of equity crowdfunding. The results suggest that prospective crowdfunding investors rationally integrate informational cues regarding past outcomes and entrepreneurial skill.

This study builds on the behavioral theory of the firm to show that firm performance is an essential antecedent of succession planning activities in family firms. A sample of 209 family firms reveals that (i) when family firm performance is further below historical aspirations, the level of succession planning is higher and (ii) when family firm performance is further above social aspirations, the level of succession planning is lower. Thus, this study sheds light on potential differences in family firm behavior depending on the feedback mechanism family firms use. Furthermore, integrating a mixed gamble perspective on the interaction between socio-emotional and financial wealth, this study shows that the effect of family firm performance below historical aspirations on the level of succession planning is negatively influenced when the family firm strongly focuses on the goal of family control and influence. However, this effect is positively influenced when the family firm strongly focuses on the goal of renewing family bonds through dynastic succession. Thus, this study embraces family firm heterogeneity in socio-emotional wealth and empirically substantiates that particular socio-emotional wealth dimensions differently affect family firm behavior.

Over the early twentieth century, urban centers adopted full-time public health departments. We show that opening full-time administration had little observable impact on mortality. We then attempt to determine why health departments were ineffective. Our results suggest that achievements in public health occurred regardless of health department status. Further, we find that cities with and without a full-time health department allocated similar per capita expenditures towards health administration. This health department funding also better predicts infant mortality declines. Our conclusions indicate that specific campaigns, public health systems, and funding may have been more meaningful for local health over this era.

We provide an integrative account of how springboarding emerging market multinational enterprises (EMNEs) traverse the distinct contexts of their home and host markets by synthesizing the composition-based view with the Springboard Perspective to offer a novel, holistic, and dynamic Compositional Springboarding Perspective of EMNE evolution. We argue that EMNE internationalization entails a meta-duality between a compositional logic (home market) and springboarding logic (host market), and that the capabilities associated with springboarding – amalgamation, ambidexterity, and adaptability – help balance these two logics’ interplay and integration. We elaborate on the differential roles that these capabilities play across the upward spiral’s five stages (the process of EMNE evolution), which have differing emphases in terms of these logics.

We develop the construct of global dynamic managerial capability (GDMC) and identify its underlying sources: (1) international human capital, (2) international social capital, and (3) international managerial cognitions. Consistent with dynamic capabilities view and upper echelons theory, we suggest that GDMC leads to global asset orchestration, which in turn, results in superior company performance in a two-stage process. First, GDMC leads companies to adopt global strategies that spread the risk of internationalizations across different entry modes and geographic regions. Second, the (re)configuration of global assets positively influences subsequent firm performance and thus mediates the relationship between GDMC and performance. Recognizing the triad of factors that form global dynamic managerial capability is crucial when selecting future managers of multinational corporations. Hence, firms with increasing international exposure – both domestically via foreign competition and internationally via foreign market presence – may seek to compose their upper echelons with a suitable combination of international human and social capital as well as internationally diverse cognitions in the pursuit of sustained competitive advantage.

The addition or deletion of companies to/from a stock index has major consequences, with a change in demand from index-tracking investors and funds constituting the most obvious one. Numerous event studies since the 1980s have evidenced the existence of abnormal returns and trading volumes ('index effect') around the announcement and actual change dates for stock indices. This paper presents a model-driven approach to predicting changes in the index membership itself. Index rules are combined with models for the evolution of parameters such as market capitalization that drive a company's potential inclusion or exclusion. Special attention is paid to the inherent model risk. The 2021 revision of Germany's blue-chip and mid-cap indices, DAX and MDAX, both in terms of the number of index members and admission criteria, serves as a case study.

In Germany, employers used to pay union members and non‐members in a plant the same union wage in order to prevent workers from joining unions. Using recent administrative data, we investigate which workers in firms covered by collective bargaining agreements still individually benefit from these union agreements, which workers are not covered anymore and what this means for their wages. We show that about 9 per cent of workers in plants with collective agreements do not enjoy individual coverage (and thus the union wage) anymore. Econometric analyses with unconditional quantile regressions and firm‐fixed‐effects estimations demonstrate that not being individually covered by a collective agreement has serious wage implications for most workers. Low‐wage non‐union workers and those at low hierarchy levels particularly suffer since employers abstain from extending union wages to them in order to pay lower wages. This jeopardizes unions’ goal of protecting all disadvantaged workers.

This article contributes to the relationship between fiscal fraud and tax collection in the Spanish economy, creating a composite suspicion tax fraud indicator (STFI) based on Google Trends searches to study the dynamics and foresee tax revenues evolution in Spain. Also, we expand knowledge in the field of fraud tax indicators, following the UNODC (2020) and OECD (2016) recommendations. To this purpose, we apply factor analysis to create the composite indicator and next we utilize techniques centred on fractional integration (ARFIMA) and fractional cointegration VAR (FCVAR) to assess the STFI behavior against tax collection and GDP. The outcomes indicate that the d is less than 1 in all the time series analyzed. As we can see, the tax collection and the leading indicator have a similar statistical behavior (d = 0.49 and d = 0.40, respectively), which implies mean reversion. On the other hand, GDP will behave similarly to the other two time series, with d = 0.05, which implies that the shocks will have a temporary effect on the GDP behavior, and these effects will disappear by themselves in the short term and in less time than the other two time series. FCVAR results indicate a short-lived duration of the shock due to the error correction term and their short-run stationary behavior. In the end, applying wavelet analysis, we determine that the composite suspicion tax fraud indicator maintains a negative association with tax collection, except in 2017 and 2018, when the high economic growth offsets the fiscal fraud.

In this empirical paper, we revisit the financial development-impact of financial globalization using a panel dataset comprising the OECD countries for the period 1996–2017. We rely on a multidimensional financial development index and the KOF financial globalization index. We find that financial globalization has a positive impact on financial development. Considering the heterogeneity in the conditional distributions of financial development, we also discover that financial globalization favourably impacts financial development across all the conditional distributions (quantiles) albeit with varying magnitude. These findings are robust to the KOF de facto and de jure measures of financial globalization as well as an alternative measure of financial globalization–financial openness index.

Foreign aid is one of the most important policy tools that developed countries used to help poor countries improve population well-being and facilitate economic and institutional development. However, the effectiveness of aid as an instrument of development has been questioned several times, especially for its deleterious effects on governance. This study examines the effect of foreign aid on economic complexity in developing countries. Using annual data for 78 developing countries over the period 1990-2017, the empirical findings show that foreign aid exerts a negative effect on economic complexity. Although the effect of aid on economic complexity differs across donors, we also find a U-shaped relationship between foreign aid and economic complexity. In addition, the empirical results of this paper show that democracy mitigates the negative effect of foreign aid on economic complexity. Thus, in order to benefit from the effects of foreign aid for better economic complexity, the governments of developing countries would benefit from putting more effort into improving democracy.

In this paper we investigate whether long run time series of income per capita are better described by a trend-stationary model with few structural changes or by unit root processes in which permanent stochastic shocks are responsible for the observed growth discontinuities. For a group of advanced and developing countries in the Maddison database, we employ a unit root test that allows for an unspecified number of breaks under the alternative hypothesis (up to some ex ante determined maximum). Monte Carlo simulations studying the finite sample properties of the test are reported and discussed. When compared with previous findings in the literature, our results show less evidence against the unit root hypothesis. We find even fewer rejections when relaxing the assumption of Gaussian shocks. Our results are broadly consistent with the implications of evolutionary macro models which posit frequent growth shifts and fat-tailed distribution of aggregate shocks.

Research on CEO political ideology has demonstrated the construct’s impact on many firm outcomes. Yet, political ideology does not exist in a vacuum; beyond representing a CEO’s values, political i...

We study how domestic firms adapt to increased import competition from China. Using a Danish employer-employee matched dataset covering firms over the 1995–2007 period, we find that import competition significantly increases manufacturing firms' expansion of their business activities in the service industry (partial servitization); their probability of offshoring production activities abroad and of exiting the market. Import competition, however, does not induce firms to cease all of their involvement in manufacturing production by completely switching into service sector (complete servitization). These findings are confirmed using various robustness tests as well as an analogous analysis of a Portuguese employer-employee matched dataset.

We examine how individual heterogeneity can be managed across geographically dispersed units of the multinational enterprise (MNE) to facilitate effective knowledge sourcing. To explore individual heterogeneity, we adopt the componential theory of creativity, which links heterogeneous features of individuals to creativity performance. We propose that these features shape individuals’ responses to unit-level practices, stimulating international knowledge sourcing and sharing. We further acknowledge that MNE units are subject to the pressures for global integration and local adaptation. Individuals’ responses to unit-level knowledge transfer practices may be inconsistent with one or both of these pressures. We explore, in a nuanced fashion, conditions that can lead to such inconsistencies, and investigate how they can be resolved at the unit level to ensure effective knowledge sourcing by the MNE. Ultimately, our model challenges the assumption that individual knowledge-related efforts automatically accrue to the MNE level. We argue that effective knowledge sourcing by the MNE is the result of successful unit-level processes in managing individual heterogeneity and ensuring consistency with global integration and local adaptation pressures. Our multi-level model contributes to both the MNE- and individual-level perspective on international knowledge sourcing, and the growing microfoundations research on the role of the individual in an MNE.

This article examines institutions’ investment strategies towards environmental and social (E&S) stocks in the first quarter of 2020, coinciding with the COVID-19 pandemic outbreak. Backed with both institutional- and firm-level analyses, we find that institutional investors shift towards stocks with higher E&S performance. The high E&S portfolios exhibit lower risk and return characteristics, outperforming (underperforming) their peers on market-down (-up) days. Further analysis shows this shift towards E&S is not a permanent transition, rather it reversed with the market rebound in the second quarter, thereby suggesting that the underlying driver of institutional E&S investment strategy in the pandemic is downside-risk protection. JEL Classification: G01, G12, G23, M14

Employing a panel (1995-2015) of large R&D spending pharmaceutical firms, we investigate how internal basic research increases a firm’s innovative performance. We disentangle two mechanisms through which internal basic research affects technology development: (1) as strengthening of the firm’s absorptive capacity to build on externally conducted science, and (2) as a direct source of the firm’s innovation. We find that the positive relationship between internal basic research and innovation performance is significantly mediated by these two mechanisms, with the absorptive capacity mechanism relatively more important. The mediation relationships are more pronounced in recent years, with basic research as a direct source of innovation increasing in importance. This pattern is associated with a decline of corporate investments in basic research over time, and suggests that firms have adopted a more judicious and targeted approach to basic research aimed at getting more leverage out of a smaller commitment to basic research. ispartof: Industry And Innovation vol:29 issue:3 pages:396-424 status: Published online

Two prominent features in current world affairs are the unprecedented level of global economic integration and the growing incidence of intrastate violence. We develop and test a novel argument linking global integration through foreign investment to intrastate armed conflict. The presence of multinational corporations in developing countries can cause market concentration, resulting in high rents. Disputes between governments and would-be challengers over the appropriation of these rents are likely to turn violent, increasing the incidence of armed conflict. State capacity mitigates this positive association between foreign investment and intrastate war. Strong states have the capacity to deter rebellions, address citizens’ demands through institutionalized mechanisms, and credibly commit to the peaceful resolution of conflicts. Using data from developing countries for over four decades and addressing potential endogeneity and selection biases, we find strong support for our hypotheses. Our findings have important implications for understanding the link between economic interdependence and conflict.

Dans les affaires internationales, ainsi que dans de nombreux autres domaines des sciences sociales, les recherches de réplication ont longtemps été mal appréciées, découragées et traitées comme parents pauvres et « non originales ». Nous argumentons qu’en élucidant les facteurs de confusion, validant les mécanismes de causalité et testant les limites spatiale et temporelle, les recherches de réplication peuvent stimuler les débats, enrichir notre corpus de connaissances et affiner la théorie. Cet éditorial a pour objectif de promouvoir les recherches de réplication. Nous plaidons en faveur de celles-ci en reconnaissant leurs valeurs et présentant leurs différents types. Nous proposons également un canevas méthodologique permettant de les réaliser avec rigueur académique. Enfin, nous élaborons les recommandations concrètes sur la manière d’augmenter leur nombre de publication., In international business, as well as in many other social sciences, replication studies have long been treated as a poor relative, discounted and discouraged as “not original”. We argue that by teasing out confounding factors, validating causal mechanisms, and testing spatial and temporal boundaries, replication studies can stimulate debate, add to our body of knowledge, and fine-tune theory. Our goal in writing this editorial is to promote replication studies. We build a case for them by recognizing their value and showcasing their different types. We also offer a methodological template for carrying them out with academic rigor. Finally, we make concrete recommendations on how to go about increasing the number of them published.

En los artículos Initial and final finance in the monetary circuit and the effective demand theory (2016), y Endogenous money and the theory of long period effective demand (2020), este último escrito con Stefano di Buccianico, el economista Sergio Cesaratto propone un marco interpretativo para integrar algunos de los elementos de la teoría de la demanda agregada y la teoría monetaria heterodoxa en un solo cuerpo teórico coherente. El objetivo de este texto es presentar de la forma más clara y esquemática posible la propuesta teórica de Sergio Cesaratto, teniendo en cuenta la escaza difusión de las teorías pos-keynesianas en español, y la importancia teórica y analítica para la comprensión del funcionamiento del actual sistema económico capitalista.

This article investigates the employment effect of short-time work in the Netherlands during the Great Recession (2009–2011). Short-time work was introduced during the period as a special arrangement with the aim of reducing unemployment hikes by offering firms the possibility of adjusting the working time of specialised workers rather than adjust the size of their workforce. The authors focus on the effect of short-time work at the individual level of the worker and study whether short-time programme participants in surviving firms had a lower job turnover rate and transition rate to unemployment compared to workers who did not participate in the programme. Furthermore, the authors study whether the flexibility policies of the firm had a substantial influence on the effectiveness of short-time work in protecting workers from unemployment. Specifically, they investigate whether the effect of short-time work is related to the intensiveness of its use by the firm and the extensiveness of the use of external flexibility arrangements – i.e. temporary contracts and temporary agency workers – by the firm. For this purpose, the authors apply a discrete-time survival model using a unique dataset with monthly register data from Statistics Netherlands. Participants in the short-time work programme are compared with non-participant workers from firms that used short-time work and workers from firms that did not make use of the programme. The findings indicate that, in surviving firms, short-time work had a positive effect: the risk of unemployment and job separation is, in most cases, lower for short-time work participants than non-participants. Short-time work is most effective in protecting workers from unemployment in firms that extended the use of the programme to many workers and for a relatively small number of hours, and that made either moderate use of temporary agency workers or extensive use of fixed-term contracts.

This study introduces Stackelberg-Nash equilibrium to neoclassical growth theory. It attempts to make neoclassical economic growth theory more robust in modelling the complexity of market structures. The model is constructed within the framework of the Solow-Uzawa two-sector model. The economy is composed of two sectors. The final goods sector is the same as in the Solow one-sector growth model which is characterized by perfect competition. The consumer goods sector is the same as the consumer goods sector in the Uzawa model but is characterized by Stackelberg duopoly. We model household behavior with Zhang’s concept of disposable income and utility. The model endogenously determines profits of duopoly which are equally distributed among the homogeneous population. We build the model and then identify the existence of an equilibrium point through simulation. We conduct comparative static analyses of some parameters. We also compare the economic performance of the traditional Uzawa model and the model with the Stackelberg-Nash equilibrium. We conclude that the imperfect competition increases national output, national wealth, and utility level in comparison to perfect competition. JEL Classification: D43, L13, B40. Resumen: Este estudio introduce el equilibrio de Stackelberg-Nash en la teoría neoclásica del crecimiento. Intenta hacer que la teoría neoclásica del crecimiento económico sea más robusta en el modelado de la comple- jidad de las estructuras de mercado. El modelo de Solow-Uzawa se construye en el marco dos sectores. La economía se compone de dos sectores: el sector de bienes finales es el mismo que en el modelo de crecimiento de un solo sector de Solow, caracterizado por una competencia perfecta. El sector de bienes de consumo es el mismo que en el modelo de Uzawa, pero se caracteriza por el duopolio de Stackelberg. Se modela el comportamiento de los hogares con el concepto de Zhang de ingresos disponibles y utilidad. El modelo determina endógenamente los beneficios del duopolio que se distribuyen equitativamente entre la población homogénea. Se construye el modelo y luego se identifica la existencia de un punto de equilibrio a través de la simulación. Se realizan análisis estático-comparativos de algunos parámetros. También, se compara el rendimiento económico del modelo tradicional de Uzawa y el modelo con el equilibrio de Stackelberg-Nash. Se concluye que la competencia imperfecta aumenta la producción nacional, la riqueza nacional y el nivel de utilidad en comparación con la competencia perfecta. Résumé : Cette étude introduit l’équilibre de Stackelberg-Nash dans la théorie néoclassique de la croissance. Elle tente de rendre la théorie néoclassique de la croissance économique plus robuste dans la modélisation de la complexité des structures du marché. Le modèle Solow-Uzawa est construit dans le cadre de deux secteurs. L’économie est composée de deux secteurs. Le secteur des biens finaux est le même que dans le modèle de croissance d’un secteur unique de Solow, caractérisé par une concurrence parfaite. Le secteur des biens de consommation est le même que le secteur des biens de consommation dans le modèle d’Uzawa, mais se caractérise par le duopole de Stackelberg. Nous avons modélisé le comportement des ménages avec le concept de Zhang de revenu disponible et de bénéfices. Le modèle détermine de manière endogène les avantages du duopole qui sont répartis équitablement au sein de la population homogène. Nous construisons le modèle, puis identifions l’existence d’un point d’équilibre par simulation. Nous effectuons des analyses statiques-comparatives de certains paramètres. Nous avons également comparé la performance économique du modèle traditionnel d’Uzawa et du modèle avec l’équilibre de Stackelberg-Nash. Nous concluons qu’une concurrence imparfaite augmente la production nationale, la richesse nationale et le niveau d’utilité par rapport à la concurrence parfaite.

BACKGROUND: Privatisation policies have aroused enormous interest in both developed and developing countries. Previous research findings reveal that privately owned companies are more efficient and profitable than comparable state owned enterprises (SOEs). Moreover, it has been argued that these reforms would be even more effective if accompanied by privatisation. As a result, privatisation that aims to enhance the performance of SOEs has been regarded as one of the key features of emerging economies. OBJECTIVE: The purpose of this study is to examine the extent to which the benefits of privatisation have been achieved in emerging economies. In particular, the study assesses the developmental changes and improvements in the performance of privatised companies in Egypt as an emerging economy. METHODS: This study was carried out in three stages. First, it was felt necessary to obtain a broad overview of the effect of the Egyptian privatisation programme on the performance of the privatised companies by analyzing secondary data of privatized companies. Second, in an attempt to obtain a more precise understanding of the impact of privatisation, an online questionnaire survey was distributed to the finance managers of 56 privatised companies during the period September 2020 to January 2021. Third, a series of semi-structured interviews were undertaken with senior managers in 8 different privatised companies. The purpose of these interviews was to supplement and amplify the themes and issues that had arisen from stages I and II of the research. RESULTS: The findings reveal that privatisation improved the process of accountability within the company and efficiency gains is the most important advantage of privatisation. CONCLUSIONS: The study concludes that privatisation leads to more difficulty in safeguarding the interests of the weaker groups in society.

This study argues that the ability to mitigate risks associated with international trade is particularly important at times of heightened uncertainty, such as the economic crisis caused by the Covid-19 pandemic. Risk mitigation can be achieved through letters of credit (LCs), trade finance instruments providing guarantees to trading partners. As their use varies across products, exports of some products are more resilient than others during times of increased uncertainty. This situation reverses in times of financial crises when distressed banks may limit the supply of LCs. Our analysis using data on US and EU-15 exports during the Covid crisis and the Global Financial Crisis provides empirical support for these hypotheses. © 2021, International Monetary Fund.

Mexico's fiscal response to the pandemic has been modest compared to its peers, reflecting the authorities' desire to not issue new debt for spending. This approach, however, resulted in a more severe recession in 2020 and a weaker economic recovery, notwithstanding spillovers from the United States. Balancing the need for stronger near-term fiscal support for the people and the recovery against medium-term discipline, this paper lays out an alternative strategy. We show that credibly announcing a pro-growth and inclusive medium-term fiscal reform upfront—including increased tax capacity, higher public investment and strengthened social safety nets—would open space for larger short-term support and close medium-term fiscal gaps. Model simulations suggest that this package would boost output, limit lasting economic damage from the pandemic, and put debt trajectory on a declining path in the medium term as tax reforms pay off and risk premia decline.

Stock markets are volatile and continue to alter based on the functioning of the company, historical documents, market-rate, and news updates with the timings. Stock price prediction is the utmost stimulating assignment. In the present communication, a study with data on the stock prices of the top small and medium-sized enterprises (SMEs) in the National Stock Exchange of India (NSE) was utilized to estimate the functioning of the technique executed. The results of this study demonstrate the impact of COVID-19 on the financial distress of SMEs and also helps us in understanding how a better prediction model can help in predicting financial distress. Many studies have been conducted to estimate the bankruptcy of the SME sector using accounting-based financial. But in this study, the leading principle was to exemplify the means to utilize machine learning (ML) algorithms in the bankruptcy prediction of SMEs. The outcomes from the proposed a decision tree and a random forest prototype are observed to be effective with a high accuracy rate. The study has practical implications on the prediction accuracy and practical value for banks in supporting the financial decision and can be used to access the loan applications of SMEs.