Corporate Power and Expansive U.S. Military Policy

Military defense is generally treated in economics texts as a “public good” because the benefits are presumed to be shared by all citizens. However, defense spending by the United States cannot legitimately be classified as a public good, since the primary purpose of those expenditures has been to project power in support of private business interests. Throughout the course of the 20^th century, U.S. military spending has been largely devoted to protecting the overseas assets of multinational corporations that are based in the United States or allied nations. Companies extracting oil, mineral ores, timber, and other raw materials are the primary beneficiaries. The U.S. military provides its services by supporting compliant political leaders in developing countries and by punishing or deposing regimes that threaten the interests of U.S.‐based corporations. The companies involved in this process generally have invested only a small amount of their own capital. Instead, the value of their overseas assets largely derives from the appreciation of oil and other raw materials in situ. Companies bought resource‐rich lands cheaply, as early as the 1930s or 1940s, and then waited for decades to develop them. In order to make a profit on this long‐range strategy, they formed cartels to limit global supply and relied on the U.S. military to help them maintain secure title over a period of decades. Those operations have required suppressing democratic impulses in dozens of nations. The global “sprawl” of extractive companies has been the catalyst of U.S. foreign policy for the past century. The U.S. Department of Defense provides a giant subsidy to companies operating overseas, and the cost is borne by the taxpayers of the United States, not by the corporate beneficiaries. Defining military spending as a “public good” has been a mistake with global ramifications, leading to patriotic support for imperialist behavior.     

U.S. Strategic Trade Policy and the Competitiveness of the U.S. Construction Industry in Developing Country Markets

SUMMARY

U.S. government trade policy increasingly reflects “strategic trade” beliefs that, because competition in markets is imperfect, governments can act strategically to affect trade flows and enhance national welfare. The U.S. National Export Strategy targets the infrastructure sector in twelve developing countries as a strategic opportunity for U.S. construction firms. This paper examines whether U.S. government export promotion initiatives effectively implement strategic trade policy by providing appropriate support to these firms in that target market. It concludes that, within limits, they do.     

An Examination of Proposals for a U.S. Industrial Policy

Abstract . An “industrial policy” for the U.S. appears from the writings and statements of its advocates to involve modification of federal tax laws and expenditures to allow a largely unchanged set of business institutions to better serve the public interest. It employs planning but it is planning of the sort the U.S. has always had. Those who oppose all government activity in the private sector oppose it, not realizing that the anti-trust laws, for example, do not interfere with the economy's operation but aid it to function beneficently. It is those whose activities are anti social who are loudest in their demands for business “freedom.” Does the U.S. need a more efficient economic system? Intercountry comparisons show that in many areas it lags. To achieve stability of income and employment as well as productive efficiency, the U.S. has many policy options it can consider—and it must.     

Stranded costs,access charges,and Ramsey pricing in the U.S. electric utility industry

As a consequence of expected partial deregulation in the U.S. electric utility industry, “stranded costs” may be passed on to ratepayers. This paper applies Ramsey pricing to this issue, with particular emphasis on the “elasticity of exit”. That class with the greater elasticity of exit will optimally have a larger unbundled access price mark-up. With inclusion of a one-time exit fee, the optimal access charge for every class is equal to the marginal cost of transmission and distribution. Under certain conditions, the exit fee for the competitive class decreases as the elasticity of exit with respect to the exit fee increases.     

Factors Influencing the Product Customization Decision Process of Foreign Industrial Product Manufacturers

Abstract

This study explores the product adaptation decision process of “successful” foreign industrial product manufacturers with operations in the United States. A “successful” foreign firm is operationally defined as one utilizing at least 75 percent of its U.S. production capacity. Such firms are accorded the status of “experts” and an attempt is made to study their decision making process regarding the introduction of locally designed products in the U.S. An induced rule based expert system outlines the sequential roles played by the nationality of parent firm, level of decentralization in marketing decision making, mode of entry into the U.S., length of time with manufacturing operations in the U.S., size of the U.S. subsidiary, and extent of R & D undertaken in the U.S. by the subsidiary. Such a formal system would serve senior management of the developing organization as a permanent and ever expanding repository of expertise and as an effective management training tool. The study also illustrates the use and relevance of expert system technology in an international marketing application.     

Promotion dynamics the Peter Principle: Incumbents vs. external hires

The “Peter Principle” (Peter and Hull, 1969; Fairburn and Malcomson, 2001; Lazear, 2004) suggests that individuals are “promoted to their level of incompetence”. A corollary of the “Peter Principle” prediction is that external hires should have an advantage when competing with incumbents for a higher position. Using five years of personnel records from a single large U.S. corporation, this paper contributes to the literature on internal labor markets and intra-firm job mobility by testing this prediction for career advancement. Results support the idea of differences in promotion dynamics among incumbents and external hires, since past career advancement within the firm result in a lower probability of subsequent promotion, even after controlling for workers' heterogeneity and tenure on the current job. The advantage for external hires does not hold once other job changes (lateral transfers, task reorganizations) are considered, highlighting that promotions are a very different job placement mechanism than transfers. Overall, the evidence points out towards declining performance following promotion, as opposed to alternative competing hypothesis of probation placement or “handicapping” external candidates.     

Item comparability in cross-national surveys: results from asking probing questions in cross-national web surveys about attitudes towards civil disobedience

This article focuses on assessing item comparability in cross-national surveys by asking probing questions in Web surveys. The “civil disobedience” item from the “rights in a democracy” scale of the International Social Survey Program (ISSP) serves as a substantive case study. Identical Web surveys were fielded in Canada (English-speaking), Denmark, Germany, Hungary, Spain, and the U.S. A category-selection and a comprehension probe, respectively, were incorporated into the Web surveys after the closed-ended “civil disobedience” item. Responses to the category selection-probe reveal that notably in Germany, Hungary, and Spain the detachment of politicians from the people and their lack of responsiveness is deplored. Responses to the comprehension probe show that mainly in the U.S. and Canada violence and/or destruction are associated with civil disobedience. These results suggest reasons for the peculiar statistical results found for the “civil disobedience” item in the ISSP study. On the whole, Web probing proves to be a valuable tool for identifying interpretation differences and potential bias in cross-national survey research.     

Verifying the state of financing constraints: Evidence from U.S. business credit contracts

Many policymakers are concerned that tight financing constraints for small businesses are stalling the recovery from the Great Recession. This paper empirically assesses two agency problems that induce such financing constraints—one resulting in a “firm balance sheet channel” and one resulting in a “bank balance sheet channel”. Evaluating specific models of these two agency problems against a comprehensive data set of U.S. small business credit contracts, I find strong support for the firm balance sheet channel but only weak support for the bank balance sheet channel. A complementary regression analysis confirms this result. Hence, policies seeking to improve firms’ balance sheets may be desirable to support small business lending in the recovery from the Great Recession.     

Discrete choice models and the housing price and travel to work elasticities of location demand

Multinomial logit and nested logit models of mode choice in travel to work and housing location choice are estimated from 1970 U.S. census data aggregated to small zones of the Chicago SMSA. The estimated models are then used to derive the “housing rent,” “travel time,” and “travel cost” elasticities of location demand. The effects of sampling variation, sample size, attribute inclusion, model specification, and estimation method on the estimated elasticities are evaluated and found to be important. The elasticities are also compared and found to agree with those obtained from other discrete choice models and, in the case of “housing rent,” with estimates obtained from models based on other theoretical structure.     

Outsourcing of Services and the Productivity Recovery in U.S. Manufacturing in the 1980s and 1990s

Manufacturing productivity growth recovered during the 1980s and 1990s, while other sectors, particularly services, did not. In the same period U.S. manufacturing has engaged in the “outsourcing” or “contracting-out” of service functions. Has the recovery of manufacturing been accomplished by industrial reorganization--sloughing off sluggish services--rather than technical progress? We analyze this question by reducing service inputs to their consituent elements of material inputs. Service productivity growth is thus imputed to the goods sectors, reducing the recovery of manufacturing productivity growth in the 1980s by one fifth. The recovery lasted through the 1990s, when high productivity performers in manufacturing have been relatively successful at outsourcing sluggishservices.

     

Relative productivity growth and the secular “decline” of U.S. manufacturing

There has been considerable debate about the causes of the “decline” of U.S. manufacturing over the post-war period. We show that the behavior of employment, prices and output in manufacturing relative to services over this period can be explained by a two-sector growth model in which productivity shocks are the only driving forces. Household preferences turn out to play a key role in our model. The data are consistent with a specification where households are unwilling to substitute goods for services (the estimated elasticity of substitution is statistically indistinguishable from zero), so the economy adjusts to differential productivity growth entirely by re-allocating labor across sectors.     

Ansätze und Ergebnisse anglo-amerikanischer M&A-Forschung

Based on a review of established U.S. management journals (1995–2003), six schools of thought are identified within the Anglo-American M&;A research: “Capital Market”, “Principal/Agent”, “Industrial Organization”, “Organizational Behavior”, “Human Resources” and “Strategic Management”. The literature review shows that the definition of M&;A success, the methods applied, and insights from empirical research differ according to the respective school of thought. Empirical studies focus on the resource combinations of merger partners, the specific circumstances of merger negotiations, and on integration management as antecedents of merger performance. Unfortunately, empirical findings have not yet provided reliable explanations for M&;A success. Based on the current state of Anglo-American M&;A research, the authors discuss implications for business practice, identify research gaps, and propose areas for future research.     

Structural evolution of the postwar U.S. economy

We consider a time-varying parameter vector autoregressive model with stochastic volatility and mixture innovations to study the empirical relevance of the Lucas critique for the postwar U.S. economy. The model allows blocks of parameters to change at endogenously estimated points of time. Contrary to the Lucas critique, there are large changes at certain points of time in the parameters associated with monetary policy that do not correspond to changes in “reduced-form” parameters for inflation or the unemployment rate. However, the structure of the U.S. economy has evolved considerably over the postwar period, with an apparent reduction in the late 1980s in the impact of monetary policy shocks on inflation, though not on the unemployment rate. Related, we find changes in the Phillips curve tradeoff between inflation and cyclical unemployment (measured as the deviation from the time-varying steady-state unemployment rate implied by the model) in the 1970s and especially since the mid-1990s.     

Working Capital Management,the Credit Crisis,and Hedging Strategies: Canadian Evidence

This study uses a sample of Canadian natural resource firms during the global financial crisis (GFC) of 2007–2008 to examine the influence of firm hedging strategies on their working capital management. Our evidence implies that increased cash holdings and derivatives are alternative ways of hedging risk, and also provides another perspective on the U.S. “trapped cash” controversy as our sample firms are not R&D intensive and do not face the same tax regime as U.S. multinationals.     

U-type versus J-type tournaments as alternative solutions to the unverifiability problem

This paper discusses the properties of stylized U.S. (“U-type”) and Japanese tournaments (“J-type”), which can both solve the unverifiability problem of labor contracts. Under a zero-profit condition, both tournament types will yield first-best efforts if workers are homogeneous and risk neutral. This result will no longer hold for J-type tournaments if the employer has all the bargaining power. Moreover, if workers are risk averse, or if there is intermediate information, heterogeneity or unfairness, J-type tournaments may dominate U-type tournaments.     

The evolution of U.S. monetary policy: 2000–2007

A vector autoregression with time-varying parameters is used to characterize changes in Federal Reserve policy that occurred from 2000 through 2007 and describe how they affected the performance of the U.S. economy. Declining coefficients in the model׳s estimated policy rule point to a shift in the Fed׳s emphasis away from stabilizing inflation over this period. More importantly, however, the Fed held the federal funds rate persistently below the values prescribed by this rule. Under this more discretionary policy, inflation overshot its target and the funds rate followed a path reminiscent of the “stop-go” pattern that characterized Fed behavior prior to 1979.     

Transforming Transformers into Militainment: Interrogating the DoD‐Hollywood Complex

This article examines how the U.S. Department of Defense (DoD) and Hollywood collaborated to manufacture the blockbuster films Transformers (T) and Transformers: Revenge of the Fallen (TRF) to sell in global markets and to sell a positive image of DoD personnel, policy, technology, and practice to the world. T and TRF are global militainment films made by the “DoD‐Hollywood complex” to make money in markets and put the U.S. military before the world in a positive light. To show how, the article's first section defines the “DoD‐Hollywood complex,” presents a brief 20^th‐century history of its formation, and describes the current DoD institutions, policies, and practices that fuse DoD publicity agencies to Hollywood filmmakers. The second section highlights how DoD assisted T and TRF's production and contemplates why Hollywood solicited DoD support. The third section shows how T and TRF put DoD in a positive light. The conclusion addresses some of the consequences of T and TRF with regard to democratic theory. By showing T and TRF to be global militainment commodities, this article interrogates the nexus of “reel” and “real” U.S. military power and sheds light on how DoD interacts with Hollywood studios to influence how it gets screened by entertainment media and seen by global spectators.     

Family ownership and stockholder reactions to environmental performance disclosure: A test of secondary agency relationships

Using the first ever Newsweek “Green Rankings” of the 500 largest U. S. firms in 2009 as a significant historical event, we test for the stockholder reaction to ratings of corporate environmental performance. Both the conventional null hypothesis significance testing and Bayesian approaches show that stockholders react significantly more positively to corporations with higher ratings of corporate environmental performance and that this effect is stronger in family owned firms. Our findings suggest that majority shareholders do not necessarily appropriate minority stockholders' rents when investing in environmental activities, as would be the case in the presence of “Type II” agency conflicts between majority family owners and minority stockholders. The family ownership effect is also found to be stronger in dirty (heavy polluting) industries as well as in more competitive and more opaque industry contexts.     

HR's role in corporate governance: Present and prospective

Corporate wrongdoing is damaging investor confidence and tarnishing the credibility of the U.S. business community, guilty and innocent alike. Some misdeeds are clearly criminal, others simply unethical or damaging to reputations. They range from “massaging” numbers (“managed earnings”), which tests the limits of financial prudence, to outright fraud. Caught in the limelight are U.S. corporate giants representing some of the world's best‐known brands and most famous CEOs, many only yesterday lionized in the business press. We have explored this issue from the perspective of the HR function through a survey of the senior HR professionals who attended the Human Resources Forum. The survey was augmented with focus groups. Our purpose was to understand current practices, attitudes, and behaviors with respect to legal standards and professional and ethical codes. We also explored the roles of the CEO, HR leadership, and the HR function in minimizing ethical breaches that have diminished investor and public trust. We hope to shed light on the responsibilities, actions, and risks of the HR function and its leadership now and in the future. © 2004 Wiley Periodicals, Inc.