The Chinese business system and its authoriliberal economic model

China's position as one of the most powerful nations in the world is undisputed. However, in an evolving landscape, China's utilization of a path-dependent business system may hinder the ability of the country's institutions to undergo necessary change, which will have important implications for international business literature. Through business system theory, empirical evidence, and a mixed methods approach, we discuss China's business system explaining how the system may impair sustainable growth and the transformation required by a less dependent industrial society. Our research suggests that the Chinese business system is still very arrested due to its recent past, and the Chinese Communist Party has only partial interest in improving some of the most important bases for the development of modern enterprises, even if fostering a somewhat liberal economic approach. Since similar political (authoritarian) and economic (liberal) approaches are found elsewhere, we theorize on what we called an authoriliberal economic approach.     

Nowcasting and monitoring SDG 8

Empirica - We propose a nowcasting approach for indicators assigned to the Sustainable Development Goal (SDG) 8, calling for decent work and economic growth. The nowcasts of SDG indicators are...     

Support for bigger government: The principle-implementation gap and COVID-19

We study the COVID-19 pandemic's effect on government and market attitudes using within-subject comparisons of survey responses elicited before and after the onset of the pandemic. We find that participants develop significantly less favorable opinions toward government and markets; and that participants increase support for bigger government significantly and for redistribution, in general, marginally significantly. There is no evidence this leads to an increase in support for specific redistributive policies, nor for government to play a larger role in specific functions. Our results echo the stubbornness of American preferences for redistribution and suggest the presence of a principle-implementation gap.     

Herbal Pharma Inc.: Conducting an Effective Group Audit*

As the relative weight of global economic activity continues to shift toward non-OECD countries (OECD 2018), audit firms are more likely to encounter clients with significant business operations in foreign jurisdictions. The associated need to engage and oversee local component auditors in these jurisdictions can lead to challenges arising from different business cultures and the resulting intra-audit miscommunications. Audit deficiencies related to these challenges have been detected by regulators (PCAOB 2011, 2010; CPAB 2012, 2015). Standard setters such as the IAASB and the Auditing and Assurance Standards Board (AASB) have responded by issuing an exposure draft proposing revisions to ISA 600 (IAASB 2020) and CAS 600 (AASB 2020) to strengthen the auditor's approach and provide enhanced guidance to practitioners. In light of this evolving area of assurance, this case was developed to deepen students' understanding of both group and component audits in an international context. The case takes the perspective of the group auditor and features an audit senior in a specialized role overseeing the component audit of a client's increasingly material Chinese subsidiary. Deficiencies in the prior year component audit, along with a change in the component auditor, further underlines the importance of robust risk analysis for the upcoming engagement.     

Does income inequality really matter for credit booms?

This paper addresses the question whether income inequality is associated with credit booms, alongside other macroeconomic factors. We distinguish between the different types of credit booms—real estate credit booms, household credit booms, firm credit booms and credit booms that turn into crises. Furthermore, our analysis of a sample of 70 countries between 1990 and 2016 does not provide any evidence of credit booms driving income inequality. We observe that capital inflows increase the likelihood of credit boom occurrence, while countries experiencing high economic growth tend to have more credit booms. Finally, we note that credit booms are more frequent in countries with fixed exchange rate regimes.     

Fostering creative selling through ethics. An emotion-based approach

Research on salesperson creativity remains as one of the most under-researched topics in the sales literature despite the evidence that encouraging creativity in the sales domain is a source of competitive advantage. This paper aims to fill this research gap by exploring the influence of perceived ethical climate on salesperson creative performance, paying special attention to the role that emotions play in this process. Data provided by 176 supervisor–salesperson dyads confirm that the trust/responsibility dimension of an ethical climate is positively related to salesperson creative selling by increasing salespeople's organizational pride. Similarly, the perception of unethical selling practices negatively affects salesperson organizational pride, reducing the expression of creative behaviors. Moreover, the negative effect of unethical selling practices on creative performance is stronger (more negative) when salespeople's identification with an organization increases. Managerial implications and future research directions are also addressed.