International Growth Orientation of Knowledge-Intensive SMES

As a response to the increasing interest in the internationalisation of knowledge-intensive firms, a measure for analysing their international growth orientation was developed. This measure was applied in empirical setting of Finnish information and communication technology companies. The development of the measure as well as the empirical findings are described in detail, and the validity and the reliability of the measure was secured in various ways. The measure seems both viable and valid, and also the findings appear to be logical, and they give a good basis for further research on the topic.     

Highly skilled globetrotters: mapping the international migration of human capital

In the final years of the twentieth century, brain drain, skills shortages and lack of career opportunities have become issues of major concern for policy-makers concerned with R&D in government, academia, and industry. Labour mobility across political borders, especially among highly skilled labour, provides a solution for the aforementioned concerns to some actors, but engenders problems to others. Drawing on various empirical investigations and on previous studies, this paper attempts to provide a mapping of the various types of human resources mobility across national borders. It argues that various groups of highly skilled persons are driven by different push and pull factors. In addition to immigration legislation, other factors, such as taxation, studying abroad, quality of work, openness in communication, business expansion overseas, labour market supply and demand signals, etc. play important role in the choice of highly skilled migrants to relocate overseas.     

An Extension of the Trade Restrictiveness Index to Large Economies*

The Trade Restrictiveness Index (TRI) introduced by Anderson and Neary (1994 ) provided the first theoretically satisfying measure of a country’s tariff structure by overcoming the problem of ad hoc specification of indexing weights and the related index number problem. We observe, however, that the TRI may not exist or may not be unique when countries are large. As a remedy, we propose a simple extension.     

Design of optimal policies: A variable structure control approach

This paper introduces methods of variable structure control (VSC) theory to economists. The VSC design is based on closed loop optimal control solutions. It is shown that VSC can yield stable solutions in the presence of parameter errors whereas conventional closed loop optimal control solutions become unstable. The methodology is applied to a simple economic model.The authors wish to thank John Burkett and Berc Rustem for constructive comments on earlier versions of the paper.     

Portfolio performance and accounting measures of earnings: an alternative look at usefulness

Measures of economic performance, such as accounting earnings, working capital and cash flows, have been evaluated in tests of relative explanatory power of regressions of market returns on earnings, working capital and cash flows. We employ a different test. Using Basu’s (J Finance 663–682, 1977) investment trading strategy, we measure portfolio returns based on these three accounting measures of earnings. The objective is to ascertain whether investment performance also supports the findings of the explanatory power studies that accounting earnings is the premier measure of performance. The evidence does not support this conclusion. Our findings are at variance with prior conclusions that accounting earnings is more useful than cash flow. The Basu trading strategy is effective for all three measures. Excess market returns are observed for all three measures, even when controlled for risk and for low priced stocks. But accounting earnings portfolios do not dominate working capital or cash flow portfolios. In fact, the raw returns to cash flow portfolios are marginally (statistically) larger than accounting earnings portfolios. Economically, a dollar invested in a portfolio using accounting earnings to select the stock would have an accumulated value of 22.73 while the same dollar investment using cash flow instead of accounting earnings would accumulate a value of22.73 while the same dollar investment using cash flow instead of accounting earnings would accumulate a value of 33.94 over the same 16 years starting with the second quarter of 1988 and concluding at the end of the first quarter of 2004. Thus, our results have implications for the studies of explanatory power of different measures of earnings and their comparison in the US and other markets.     

Towards a functional framework for measuring national innovation efficacy

In an increasingly globalised economy, the ability to draw in innovations and ideas from elsewhere and build on them to create value at home has become a powerful facility for economic growth. Since some places are better at adopting and adapting borrowed ideas than others, the function of ‘innovation through adoption’ deserves more attention at both scholarly and policymaking levels. Based on such beliefs, this paper elaborates the notion of ‘innovation through adoption’ and develops it further to advance the notion of ‘innovation efficacy’. The latter is interpreted here as the efficiency and effectiveness of innovation systems in terms of accessing, anchoring, diffusing, creating and exploiting innovations. This notion is further illustrated in a measurement tool based on a composite index, which we name the ‘Innovation Efficacy Index’.The ultimate contribution of the paper lies in its aim to shift the traditional focus of attention from a fixation with developing and exploiting new knowledge locally to the prospect of value creation through accessing, anchoring or diffusing knowledge acquired from elsewhere.     

The role of cross-listing,foreign ownership and state ownership in dividend policy in an emerging market

In this paper, we investigate if dividend policy is influenced by ownership type. Within the dividend literature, dividends have a signaling role regarding agency costs, such that dividends may diminish insider conflicts (reduce free cash flow) or may be used to extract cash from firms (tunneling effect) – which could be predominant in emerging markets. We expect firms with foreign ownership and those that are listed in overseas markets to have different dividend policies and practices than those that are not, and firms with more state ownership and less individual ownership to be more likely to pay cash dividends and less likely to pay stock dividends. Using firms from an emerging economy (China), we examine whether these effects exist in corporate dividend policy and practice. We find that both foreign ownership and cross-listing have significant negative effects on cash dividends, consistent with the signaling effect and the notion of reduced tunneling activities for firms with the ability to raise capital from outside of China. Consistent with the tunneling effect, we find that firms with higher state ownership tend to pay higher cash dividends and lower stock dividends, while the opposite is true for public (individual) ownership. Further analysis shows that foreign ownership mediates the effect of state ownership on dividend policy. Our results have significant implications for researchers, investors, policy makers and regulators in emerging markets.