Trends in international commodity prices: Panel unit root analysis

The purpose of this paper is to examine the behavior of international commodity prices within the context of the Prebisch–Singer hypothesis. To this end, I utilize a panel unit root approach which is able to account for multiple structural breaks and cross-section dependency. The unit root analysis for 24 international commodity prices during the period 1900–2003 shows evidence in favor of the trend stationary process in the commodity prices. The results thereby imply that shocks to commodity prices are temporary in nature and tend to be corrected over time. The estimation of the trend stationary models indicates that the Prebisch–Singer hypothesis is not a universal phenomenon.     

The eclectic theory of international production: A case study of the international hotel industry

This paper presents comprehensive data on the growth, structure and forms of involvement of multinational enterprises in the international hotel industry, and uses this data to provide empirical support for the eclectic theory of international production. Our understanding of the international hotel industry is that the ownership of a hotel often has the characteristics of portfolio investment and that the owners may have little knowledge of hotel operations. In these circumstances they will invariably employ a professional management company to run the hotel under a long term contract providing them with full control over the operation of the hotel. A particular feature of this paper is therefore to distinguish between, what we term, ‘equity-based control’ and ‘contract-based control’ of the enterprise and to point out the implications of this distinction for the analysis of the multinational enterprise.     

A methodology for comparing manufacturing industry costs at the state level

This article develops and applies a methodology for a comparative cost analysis for manufacturing industries. Location variations in labor, energy, transportation and tax costs are analyzed for representative firms constructed for the twenty two-digit Standard Industrial Classifications. The results of the analysis include an estimate of the interstate variation of these business costs for manufacturing industries and an idea of the relative importance of these four business cost components among industries and across states.     

An analysis of firm-level innovation strategies in the US biotechnology industry

This study examines factors that may affect innovation strategies and performance of firms in the biotechnology industry. Specifically, differences between factors common to firms with high R&D intensity and those to firms with low R&D intensity are investigated. Biotechnology firms with relatively higher levels of R&D intensity attribute their innovation performance to research-based innovation factors and strategies such as strengthening their own research capabilities, entering into research collaborations with universities, industry leaders and other biotech firms, and licensing their technology. These strategies can be summarized as alignment within the industry. Firms with relatively lower R&D intensity have a hybrid focus—they invest in R&D but may also have products on the market. These firms attribute their innovation performance more so to production-based innovation factors and strategies such as gaining market access and maintaining connections with customers. Their strategy focuses on competitiveness, marketing, and distribution channels, while not ignoring the importance of a strong research base and the need to advance technologically. In a sense, strategies employed to achieve successful innovation reflect the stage of innovation in which a firm is operating for a particular product or process.     

Nonparametric analysis of returns to scale in the US hospital industry

This paper presents new estimates of scale economies for US hospitals. We show that the common translog specification of hospital costs is a misspecification, and employ nonparametric, local linear estimation with both continuous and discrete covariates. A bootstrap method is used to provide inferences regarding ray scale economies and expansion path scale economies for a large sample of hospitals covering 1984–1996. We find evidence of changes in the structure of hospital costs over the sample period, as well as evidence of locally optimal hospital sizes. Copyright © 2004 John Wiley & Sons, Ltd.     

International project finance: review and implications for international finance and international business

This literature review analyzes the global phenomenon of international project finance (PF) as both a management and finance instrument, allowing practitioners to realize large scale infrastructure projects in high risk contexts. After describing the characteristics of PF, its historical origins and its unique benefits for empirical inquiry, I summarize the findings of academic research from an interdisciplinary perspective. Based on this integration of Finance, Management and International Business research, I discuss the theoretical implications for each field that emanate from PF. Finally, I identify possibilities for future research and propose a more balanced, interdisciplinary academic treatment of PF.     

New unit root asymptotics in the presence of deterministic trends

Recent work by Phillips (Econometrica 66 (1998) 1299) has shown that stochastic trends can be validly represented in empirical regressions in terms of deterministic functions of time. These representations offer an alternative mechanism for modelling stochastic trends. It is shown here that the alternate representations affect the asymptotics of all commonly used unit root tests in the presence of trends. In particular, the critical values of unit root tests diverge when the number of deterministic regressors K→∞ as the sample size n→∞. When they are appropriately recentered and standardized, unit root limit distributions are shown to be normal as K→∞.     

Strategic international human resource management approaches in the maquiladora industry: a comparison of Japanese,Korean and US firms

The maquiladora option has made Mexico an increasingly attractive off-shore manufacturing site for multinational enterprises (MNEs) seeking global competitiveness. However, MNEs often encounter human resource management (HRM) challenges as they attempt to leverage these maquiladora benefits. MNEs use three approaches to international human resource management (IHRM) design in addressing these challenges – a mechanistic, ‘control’ approach; a paternalistic, ‘human relations’ approach; and a developmental, ‘human resource’ approach. This paper compares and contrasts these IHRM design approaches in Japanese, Korean and US maquiladora manufacturing operations in Mexico, identifies implications for the management of diversity based on these findings, and discusses the related competitiveness implications.     

Stochastic convergence analysis of US state economic freedom sub-components: Evidence from unit root tests for bounded processes

This study tests for convergence of the three main sub-components of economic freedom (government spending, taxation, and labor market freedom) for the 50 US states from 1981 to 2019. In particular, we test for stochastic convergence using unit root tests that account for structural breaks and bounded processes. By controlling for these sources of parameter instability, we find limited evidence in favor of stochastic convergence across the three sub-components of economic freedom. However, we find more evidence of stochastic convergence with respect to the sub-components than in the case of the overall economic freedom at the US state level. Our results highlight the distinct nature of the institutional quality across states as represented by government spending, taxation, and labor market freedom.     

The benefits of global teams for international organizations: HR implications

Abstract

In this special issue we aim to advance the theoretical, conceptual and empirical knowledge about the relationship between global teams and human resource management in international organizations. We argue that although the prevalence of global teams in international organizations is rapidly rising, simultaneously affecting the management of firms on global, regional and local levels, the response of firms and scholars alike to such changes has been slower, especially in the area of IHRM. The HR function in organizations could play a vital role in understanding, managing and leveraging the benefits of global teams to ensure that they contribute positively to the performance of firms, organizational units, and people. We demonstrate that there is still a disconnect in this respect and we highlight several areas in which the increasing use of global teams may challenge our conventional understanding of IHRM issues, and at the same time offer solutions for improvement in international organizations. The selected articles in this special issue provide both theoretical and practitioner implications by highlighting the need to explore the relationship between global teams and IHRM more generally and fully, as well as the need for HR practitioners and IHRM scholars to focus more on the ‘human’ and less on the ‘resources’ aspect. We trust that readers of this issue will agree that the articles all offer novel insights into key issues that open new avenues for further research in this nascent yet promising area.     

A typology of international human resource management in Japanese multinational corporations: Organizational implications

This article outlines a typology of approaches to the design of international human resource management (HRM) systems in multinational corporations based on a ten-year study of Japanese affiliates in the United States, Europe, and Asia. After outlining four different approaches based on the dimensions of parent company imprint, problem attribution, and diffusion of HRM innovations, the article discusses the implications for organizations in the areas of flexibility, organizational learning, integration and coordination, and cost. © 1998 John Wiley & Sons, Inc.     

Dollarization in Latin America: seigniorage costs and policy implications

This paper examines the seigniorage costs of official dollarization in 15 Latin American countries. We show that the total costs can be decomposed into two components: seigniorage transferred to the U.S. and seigniorage lost due to greater financial stability in the dollarized country. Results indicate that seigniorage costs and their components are significant, yet differ considerably across countries. A cluster analysis is performed to sort countries into homogenous sub-groups. At a stage with five sub-groups we find groups with increasing seigniorage burdens. At a stage with two sub-groups we can identify candidates for possible seigniorage revenue-sharing agreements with the U.S.     

Expected income and labor market choices of US married couples: A locally weighted regression approach

This paper applies a locally weighted scatterplot smoothing (loess) method to estimate the spatially heterogeneous wages of demographic groups of workers across precisely defined US labor markets. We estimate a location choice model using data from the National Longitudinal Survey of Youth (NLSY79) using these estimates of labor market specific wages for men and women as determinants of their place of residence. We compare estimates of this model to a model using more aggregated measures of wages and locations from CPS. We show that potential wages based on these more refined definitions of labor markets and demographic groups provide more explanatory power in a simple migration model than do those based upon less detailed definitions of labor markets and demographic groups.     

Patterns of international fragmentation of production and the relative demand for labor

Growing shares of international trade flows consist of intermediate and unfinished goods shipped from one country to another to combine manufacturing or services activities at home with those performed abroad. This configuration of the productive structure has been named “internationally fragmented.” The purpose of our work is to analyze the labor market effects of international fragmentation of production, looking at how it affects relative labor demand. Models of trade due to fragmentation of production suggest that when international fragmentation takes place we might observe changes in factor proportions in the affected industries. We use outward-processing-trade data – specifically related to international fragmentation of production – to test if the shift in the ratio of skilled and unskilled labor employed in Italy and Germany during the 1990s is related to fragmentation.     

A dynamic oligopoly game of the US airline industry: Estimation and policy experiments

This paper studies the contribution of demand, costs, and strategic factors to the adoption of hub-and-spoke networks in the US airline industry. Our results are based on the estimation of a dynamic game of network competition using data from the Airline Origin and Destination Survey with information on quantities, prices, and entry and exit decisions for every airline company in the routes between the 55 largest US cities. As methodological contributions of the paper, we propose and apply a method to reduce the dimension of the state space in dynamic games, and a procedure to deal with the problem of multiple equilibria when implementing counterfactual experiments. Our empirical results show that the most important factor to explain the adoption of hub-and-spoke networks is that the sunk cost of entry in a route declines importantly with the number of cities that the airline connects from the origin and destination airports of the route. For some carriers, the entry deterrence motive is the second most important factor to explain hub-and-spoke networks.     

A comparison of MRP lot sizing methods considering capacity change costs

Capacity management is the planning and leveling of resources required (load) against the resources available (capacity). In this study, the lot size models used by Material Requirements Planning (MRP) had a major effect on the work center load profiles generated by Capacity Requirements Planning (CRP). Therefore, the selection of lot size models for MRP systems is an important decision for capacity management as well as materials management.The results of this study highlight the operating characteristics of specific lot size models considering setup, inventory carrying, and capacity associated costs. For example, the Economic Order Quantity model and the Lot-For-Lot model in certain situations can help level load. The Periodic Order Quantity and Least Total Cost models especially for high cost structure ratios tend to result in erratic and lumpy work center load profiles. The reasons for such operating behavior are examined. Other concepts and relationships important to capacity management are discussed.     

Thick-market effects and churning in the labor market: Evidence from US cities

Workers change occupation and industry less often in more densely populated areas, a relationship that had not been previously reported. This reduced-form result is robust to standard demographic controls, as well as to including aggregate measures of human capital and sectoral mix. Analysis of displaced worker surveys shows that this relationship is present in cases of involuntary separation as well. In contrast, we actually find the opposite result (higher rates of occupational and industrial switching) for the subsample of younger workers. These results provide evidence consistent with increasing-returns-to-scale matching in labor markets. Results from a back-of-the-envelope calibration suggest that this mechanism has an important role in raising both wages and returns to experience in denser areas.