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We develop a probabilistic approach to measure a country's external debt sustainability. Using data on international investment position and balance of payments from the International Monetary Fund, we estimate a vector autoregressive model for 38 countries (11 developed and 27 developing). Using the estimated parameters, we perform a Monte Carlo simulation to compute the distribution of the capacity to repay for each country. A large portion of the projected distribution to the right of current debt is a warning indicator, signalling the need for devaluation. We provide simulations for each country. One scenario is where the discount factor is lower than 1. According to the literature, this situation should prevail in the medium and long run. A quite different situation is where external sustainability is achieved because of a simulated discount factor of more than 1. Here, interest on debt is lower than GDP growth. This situation is associated with dynamic inefficiency. The results suggest that flight to safety is penalising some developing countries, whilst benefiting some developed countries.

Innovation is strongly associated with survival and growth of all kind of organizations in a global competitive economy. Moreover, nowadays companies are increasingly questioned on how they deliver innovative solutions to deep-seated problems, such as poverty. Our research aims to understand how Economy of Communion (EoC) companies respond to this challenge by applying the logic of gratuitousness and giving. This paper examines the altruistic behaviour of EoC leaders and the connection with organizational innovation, necessary for firm’s survival in the long-term. We analyse these connections through a qualitative descriptive case study of three Spanish EoC companies. The findings reveal altruistic behaviours of leaders seeking the Common Good. Innovation derives from the desire to help others, such as employees and customers. Moreover, the findings reveal that a culture of dialogue among employees, managers and the whole organisation enhances risk-taking and, therefore, innovation The paper contributes to our understanding of how EoC companies are able to reconcile innovation with the ideal of altruism, distinctive of the Economy of Communion. We believe that this study opens up a wide range of future research opportunities on the antecedents of an innovative organizational culture.

We adopt a long-run perspective to investigate the size of the shadow economy and explore the trends in this area. The analysis is based on a panel of peripheral EMU countries over the period 1965-2015. Our empirical approach relies on a multiple indicators and multiple causes (MIMIC) framework. This approach is a variant of structural equation modelling (SEM). We used two sets of variables, (i.e. potential determinants and indicator variables) to estimate an underlying (unobserved) index that measures the evolution of the shadow economy. Ascertaining the relative importance of the shadow economy enabled analysis of its relationship with other institutional and social issues (e.g. corruption, productivity and economic growth), and helped identify the channels through which the shadow economy might negatively influence the performance of different economies. In the sampled countries, shadow activity increased over the study period. It also seemed to be affected by the economic cycle.

Recent developments in inflation and M3 velocity in the euro area have raised serious doubts about the reliability of M3 growth as a pillar of the ECB’s monetary policy strategy. We develop a very flexible and comprehensive state-space framework for modeling the velocity of circulation. Our specification allows for the estimation of different autoregressive alternatives and includes control instruments, whose coefficients can be set up either common or idiosyncratic. This is particularly useful to detect asymmetries in the reaction among countries to common shocks. Our findings first suggest that the downward trend of M3 velocity is mainly explained by the evolution of permanent income, proxied by the trend component of per capita income, and also exhibits a high persistence. A second relevant result is the asymmetric impact of business cycle fluctuations in the evolution of the unobserved state that drives the varying parameters, causing the instability of velocity. Third, the estimated model emphasizes the role of changes in uncertainty and risk premia with heterogeneous and asymmetric effects for the different member countries of the euro area. Hence, although monetary aggregates can be used as a nominal anchor, it is essential, especially for the case of peripheral EMU countries, to complement these measures with other policies, not only unconventional monetary policies, but also the use of fiscal and structural initiatives.

In this paper we set out a three-pillar monetary-financial framework to (i) analyze, categorize and compare past, current and emerging means of payment, to (ii) capture their creation and destruction processes through sectoral balance sheet dynamics, and to (iii) identify the inherent risks to the current monetary-financial system, also known as the fractional reserve banking system. These risks, which stem from sudden shifts in money demand and supply, are as follows: (I) risk of a cashless society, (II) risk of structural bank disintermediation, (III) risk of systemic bank runs, (IV) risk of currency substitution, and (V) risk of economic and financial bubbles. This framework will guide the assessment of the central bank digital currencies (CBDC), which are considered as the next step in monetary evolution. We will analyze two large groups of CBDC proposals: (i) proposals aimed at complementing cash and bank deposits, and (ii) proposals aimed at replacing all bank deposits with CBDCs. We find that once CBDCs are issued in both sets of proposals, there is always a trade-off between low levels of (I), (IV), (V), risks and high levels of (II) risk. This trade-off could also be defined as the CBDC dilemma, which states that in most CBDC proposals it is impossible to have both of the following at the same time: (1) low levels of (I), (IV) and (V) risks, and (2) low levels of (II) risk. Finally, we suggest that further research on CBDCs should focus on the second group of proposals on a phase-in basis in order to also mitigate the structural bank disintermediation risk and hence to overcome the CBDC dilemma.

This study examines how corporate governance and ownership structure relate to the financial performance of firms. We estimated this relationship using fsQCA. We enhanced our analysis using complementary linear and non-linear multiple regression analysis. The panel data used in this study covered 1207 companies from 59 countries across 19 sectors for the period 2013 to 2015. The study makes two main contributions. First, the multiple empirical techniques employed in this study offer a broader approach to the empirical analysis of financial performance. Second, the study aids our understanding of the role of corporate governance and ownership in the financial performance of firms.

This paper provides further analysis on the determinants of sovereign debt spreads for peripheral Eurozone countries since the start of EMU, paying special attention to episodes that characterized the global financial crisis aftermath starting in 2007. More specifically, the purpose of our research is to disentangle the role of fundamental variables and market perception about variations on risk in order to explain the evolution of sovereign spreads in EMU during the recent crisis. Our results, in line with previous literature, show the importance of three groups of observable variables, namely, changes in risk-aversion of creditors, fiscal indebtedness and liquidity variables. In addition, our model includes unobserved components that are estimated through the Kalman filter as time-varying deviation from fixed-mean parameters of spread determinants. This shows the importance of expectations (market sentiments), amplifying (or reducing) the relative importance of the spread determinants over time through the time-varying behavior of the parameters around their steady-state estimates.

The aim of this paper is to study the sustainability of public finances in the Eurozone particularly after the 2007 financial crisis. This paper goes beyond the standard analysis of the univariate properties of the fiscal variables through the estimation of a time-varying fiscal reaction function on a 11-country panel for a period spanning from 1970 to 2014. Even if panel unit root or stationary tests may provide a rough first insight on the sustainability of the public finances, they fail to highlight the adjustment mechanisms to debt overhang in recent years. The main advantage of our empirical approach is that it clearly captures the government’s dynamic response to debt accumulation, which signals its commitment to readjust public debt towards a sustainable path. Time-varying estimates of the fiscal reaction function shed new light on this respect and reveal certain heterogeneity among EMU countries on the way they manage their public finances. This paper helps ascertain whether the public resources destined to bail out troubled countries triggered effective fiscal responses.

Leadership provides a strategy to deal with intense competition and high customer expectations in the hotel industry. This paper analyses the ability of managers’ transformational and authentic leadership to predict customer satisfaction. A sample of 18,944 customers and managers of eight hotels in the Canary Islands was used for the analysis. The data were collected using the Multifactor Leadership Questionnaire-6s, the Authentic Leadership Questionnaire and ReviewPro management software. The data were analysed to confirm the ability of transformational and authentic leadership to predict overall customer satisfaction. The results indicate that the transformational subscales of idealised influence and intellectual stimulation and the authentic subscales of relational transparency and balanced processing predict overall customer satisfaction. However, there are discrepancies between the results for self-managed service departments and outsourced service departments. This study provides a novel approach to scientific research, building upon previous studies of the effectiveness of both types of leadership, especially in relation to their impact on guest satisfaction and differences between departments. The evidence provides insight into the leadership qualities that increase customer satisfaction, which is essential in the hotel industry.

El objetivo de este artículo es analizar las características de las agencias de promoción de inversión extranjera poniendo el foco en las agencias del ámbito autonómico español, con el fin de entender el papel que desempeñan en la atracción de inversión extranjera directa. El estudio se dirige específicamente a analizar la evolución, estructura, características y organización interna. The aim of this paper is to analyse the features of foreign investment promotion agencies focusing on Spanish regional agencies, with the goal of understanding the role they play in the attraction of foreign direct investment. This study aims specifically to analyse the evolution, structure, features and internal organization. Economía

The relationship between leadership and job satisfaction has attracted considerable scientific interest, especially in relation to the quality of tourism businesses. This study investigated this relationship within the framework of authentic leadership. The study also explored differences between outsourced workers and internal hotel employees in terms of the influence of authentic leadership on job satisfaction. Fuzzy-set qualitative comparative analysis (fsQCA) offered valuable new insight. This study was based on a sample of 58 heads of department of four/five star hotels in the Canary Islands, Spain. The results suggest that high levels of leadership in the four subscales of authentic leadership (balanced processing, relational transparency, self-awareness, and internalized moral perspective) are sufficient to increase job satisfaction. The same outcome is achieved with high levels of balanced processing, even though it is accompanied by low transparency and low levels of internalized moral perspective. There are no major differences between outsourced workers and internal employees, except in terms of the importance of self-awareness. These results can help hotel managers reflect upon leadership and can provide new approaches for scientific research in this area.

After the World Health Organization (WHO) declared the COVID-19 pandemic on 11 March 2020, almost all European countries entered a lockdown. This context caused sudden changes at multiple levels, affecting the way people were working, buying, studying and even the way they were interacting. Moreover, during lockdown people showed a special attention to local and sustainable brands giving momentum to the interest on sustainability, that has been increasing in the last years. Therefore, this study aims to determine the intention of buying sustainable and local brands due to the COVID-19 lockdown. An online survey was conducted for two groups of young adults from Spain and Romania, between April and June 2020. The questionnaire respects the methodological recommendations of Azjen (1985) and related literature on how to construct a survey based on the theory of planned behavior (TPB) and it aims to gather information about the three main constructs that determine the individual’s behavioral intention: attitudes, subjective norms and perceived behavioral control. The results suggest that both Spanish and Romanian samples intended to buy more local and sustainable brands, despite the slightly different attitudes. Moreover, the data show that both subjective norms and perceived behavioral control influence attitudes toward sustainable and local brands, and hence, indirectly the intention to buy sustainable products. The outcomes are adding to the literature on sustainability, and understanding the effects of COVID-19 on consumer behavior. Additionally, the results can help better understand the importance of sustainability in Spain and Romania, and therefore, offering support to practitioners in building policies and programs that encourage a sustainable lifestyle.

This study performs a fuzzy set qualitative comparative analysis (fsQCA) on entrepreneurial recipes. The research focuses on the moderating role of the 2007 financial crisis on the antecedents of entrepreneurship. Standard regressions analysis proves insufficient to uncover asymmetrical and complex relationships that explain the effect of credit constraints on new business. Empirical results on longitudinal data suggest that the crisis moderated entrepreneurial recipes in Spain. This research contributes to QCA analysis by studying moderation effects on time-series data.

This is a pre-print of an article published in Computational Economics. The final authenticated version is available online at: https://doi.org/10.1007/s10614-019-09879-x In this paper, we develop a very flexible and comprehensive state-space framework for modeling time series data. Our research extends the simple canonical model usually employed in the literature, into a panel-data time-varying parameters framework, combining fixed (both common and country-specific) and varying components. Under some specific circumstances, this setting can be understood as a mean-reverting panel time-series model, where the mean fixed parameter can, at the same time, include a deterministic trend. Regarding the transition equation, our structure allows for the estimation of different autoregressive alternatives, and include control instruments, whose coefficients can be set-up either common or idiosyncratic. This is particularly useful to detect asymmetries among individuals (countries) to common shocks. We develop a GAUSS code that allows for the introduction of restrictions regarding the variances of both the transition and measurement equations. Finally, we use this empirical framework to test for the Feldstein–Horioka puzzle in a 17-country panel. The results show its usefulness for solving complexities in macroeconomic empirical research.

Building on legitimacy and social strategy theories, this research proposes a conceptual and empirical framework that links social entrepreneurial activity (SEA) with foreign direct investment (FDI). Investing in foreign countries with a high degree of SEA contributes to increasing foreign investors’ legitimacy. Additionally, firms may consider SEA as a constituent of their social strategy. A key contribution of this study is the comprehensive conceptual framework used to analyze the link between social entrepreneurship and international business. The second key contribution is the econometric analysis of SEA's effect on greenfield FDI, foreign employment, and foreign projects. The estimation results of the gravity equation suggest that social entrepreneurship fosters FDI. This research offers theoretical insight on legitimacy theory's relevance in explaining the link between FDI and SEA. Copyright © 2015 ASAC. Published by John Wiley & Sons, Ltd. Resume En s'appuyant sur la theorie de la legitimite et la theorie de la strategie sociale, cet article propose un cadre conceptuel et empirique qui lie l'activite d'entrepreneuriat sociale (SEA) a l'investissement etranger direct (FDI). Investir dans les pays etrangers ayant un haut niveau de SEA contribue a augmenter la legitimite des investisseurs etrangers. Par ailleurs, les firmes considerent la SEA comme un element constitutif de leur strategie sociale. L'une des principales contributions de cette etude est le cadre conceptuel detaille utilise pour analyser la relation entre l'entrepreneuriat social et le commerce international. La deuxieme contribution principale est l'analyse econometrique de l'effet de la SEA sur les FDI en installations nouvelles, l'emploi etranger et les projets etrangers. Les resultats des estimations de l'equation de gravite suggerent que l'entrepreneuriat social favorise les FDI. L'etude offre un eclairage theorique sur la capacite de la theorie de la legitimite a expliquer la relation entre le FDI et la SEA.

Firm-level heterogeneity shapes foreign direct investment (FDI) flows, whereby a few firms are responsible for most of the world's FDI. Aggregate outcomes of FDI are highly skewed, and the estimates of FDI's antecedents vary largely depending on FDI level. The incidence of individual firms, however, varies across FDI's quantiles. To study the individual firms' effect on FDI flows, this study develops a quantile regression method for bilateral FDI panel data. This study estimates the differential incidence of individual firm-level projects on aggregate flows among 161 countries from 2003 to 2012. Results suggest that FDI's determinants vary across quantiles. In particular, the effect of individual projects on FDI flows increases in the upper quantiles. Policymakers may use this insight to target polices on the few to benefit the many.

The purpose of this chapter is to better understand the growth of EoC, analysing this movement from the perspective of social innovation and examining the innovative activities of EoC businesses. We have found that EoC is based on solid values and principles, and has a clear objective, which is to fight for a better world, eliminating poverty. Companies inspired by human-oriented management practices are those which move to achieve this objective. We argue in this chapter that EoC is a radical social innovation, as it is social in both its ends and its means, meeting social needs and creating new social relationships and collaborations. This paper analyses three Spanish EoC companies, using a qualitative case study methodology. The study reveals that innovation appears as a result of the desire to help others, such as customers and employees. Moreover, findings show that a culture of dialogue among employees, managers and the organisation as a whole enhances risk-taking and, therefore, innovation. We conclude by highlighting the need to address the social and economic challenges faced by individuals and communities and the need for a cultural change to humanise business.

The relationship between social and environmental performance and financial performance in companies has been a subject widely debated in the literature but the results obtained to date are not conclusive. This research employs the fuzzy-set qualitative comparative analysis (fsQCA) and offers new evidence on the relationship between both types of performance in a sample of companies listed in the Spanish capital market. Financial performance is measured by the return on equity (ROE) ratio, variable that is widely used in Finance and Accounting related research. The corporate performance of the company is measured by its inclusion or not in the sustainability index used as reference for the Spanish capital market, the FTSEGood4 IBEX. The model also incorporates other business variables that might affect the relationships between both types of performance, such as return on assets (ROA) ratio, company size, debt ratio, and industry. The results suggest that, for specific industries, return on assets is a necessary condition for companies with leverage to reduce the cost of debt due to their sustainability profile and consequently boost their ROE.

The social media space has become a common place for communication, networking, and content sharing. Many companies seek marketing and business opportunities via these platforms. However, the link between resources generated from these sites and business performance remains largely unexploited. Both managers and financial advisors can profit from the lessons learned in this study. We conceptualize four channels by which social media impacts financial, operational, and corporate social performance: social capital, customers’ revealed preferences, social marketing, and social corporate networking. An empirical test of our framework shows that ‘followers’ and ‘likes’ positively influence a firm's share value, but only after a critical mass of followers is attained. Our estimates suggest that Twitter is a more powerful tool to enhance business performance than Facebook.

This article studies the effect of credit constraints on the jobs created by multinational enterprises in host countries. Although most FDI is labour intensive, few studies delve into the determinants of foreign direct employment (FDE). This article constructs a model of limited commitment between the financed and financing parties to explain how FDE is affected by financial frictions. Moreover, this study examines FDE’s determinants empirically on a global data set including FDE data from 161 countries during 2003–2010 by means of the gravity equation. Results show that credit constraints during the Great Recession roughly halved FDE, tripling the effect on FDI and suggesting that domestic jobs slightly outpaced foreign jobs.

Ethical and economic perspectives on foreign direct investment (FDI) often appear in opposing frameworks. To combat this antagonism, this research proposes a consolidation between foreign private wealth and general welfare in host countries. The first contribution of this study is to provide a comprehensive conceptual approach to the study of FDI ethics. The second key contribution is to present empirical analysis of the differential influence of the level of democratic rights on foreign employment, new projects, and FDI capital flows. Results suggest that FDI incentivizes general welfare in least developed countries with high degrees of volatility. Additionally, policymakers face a dilemma in which democracy and legal rights seem to be mutually incompatible with fostering foreign employment. Practitioners find a way to evaluate the ethical implications of international business activities. The study analyzes FDI data from 161 countries between 2003 and 2010 by means of the FDI gravity equation.

This study examined how social media (Twitter and LinkedIn) relates to the operating revenue by investigating the effect of the use of social media by the board of directors. To tackle this question, we analyzed the mediating and moderating relationship of social media on the effect of board size in operating revenue (turnover). We studied the implications of the use of social media by the board members by using structural equation modeling (SEM). The data consisted of a random sample of 100 companies listed on the NASDAQ. The study makes two main contributions. First, it shows interesting differences in the use of social media for the operating revenue. Our results suggest that while Twitter mediated and inhibited the negative effect of board size on revenue, LinkedIn moderated and re-enforced this effect. Second, it offers marketers and managers some useful hints about the relationship between social media and financial performance.

Economic crises have mixed effects on entrepreneurship. Through demand shocks, credit constraints, and unemployment, systemic banking crises affect the rate of start-up business creation, although the extent of their impact varies. Consequently, previous studies on the effect of crises on Entrepreneurship are inconclusive. The surge of global demand coupled with low credit availability reduces the prospects for new businesses. On the other hand, job losses caused by an economic crisis might lead many entrepreneurs to undertake new projects. These inconsistent conclusions highlight the need for more studies that explore the effect of systemic banking crises on entrepreneurship. This article presents analysis of a global panel database consisting of data on new business activity and density for 106 countries during 2004–2012. A range of regression techniques yielded robust results that show that systemic banking crises have a consistently negative impact on entrepreneurship.

The literature on innovation and entrepreneurship policy has yet to deepen its analysis of Young Innovative Companies (YICs). To fill this gap in the literature, the aim of this study was to provide empirical evidence of the special features of YICs versus the full scope of innovative firms, within the context of innovation policy and social entrepreneurship. We carried out an initial diagnosis of the features that enable access to public innovation programs in the field of innovative companies. This study of innovative firms was then contrasted with analysis of samples comprising YICs. The results of this comparison show that YICs access innovation policies by virtue of their status as innovative firms and not because of their own specific features.

En este trabajo se estudian las propiedades cíclicas de las variables fiscales macroeconómicas de la economía española utilizando la metodología de los "hechos estilizados" de los ciclos económicos. Además, se intenta clasificar los distintos cambios de régimen de la política fiscal española, utilizando recientes contrastes econométricos capaces de captar la existencia de cambios estructurales y detectar endógenamente el posible punto en que se producen. Classification-JEL : E3, E6, H3, H6.

This paper presents a conceptual and empirical framework to analyse international knowledge brokerage from an ethical perspective through political and corporate incentives on foreign employment. Exploiting nonlinear regressions on a global dataset covering bilateral jobs created by Foreign Direct Investment (FDI) between 161 countries during a seven year period, we find empirical evidence to support an ethical trilemma where knowledge, democracy and corporate openness seem to be mutually incompatible in less developed countries. This paper responds to a theoretical and empirical need since the dynamic link between FDI, knowledge brokerage and ethics has often been neglected in the specialised literature.