Does ICT investment widen the growth gap?

This paper builds a model of cumulative growth to examine the dynamic interdependent relationship between Information and Communication Technology (ICT) investment and economic growth for a sample of 29 countries in the 1990s. We confirm the following facts: First, there is a positive correlation between ICT investment and economic growth. Second, non-ICT investment has as much influence on the growth gap as ICT investment. Third, those countries with a solid economic infrastructure and open trade regime experience more active ICT investments. Fourth, those countries with a comparatively lower productivity level can reduce the gap using knowledge spillovers from more advanced countries. Fifth, reinforcement of patent rights has a positive influence on economic growth by stimulating the accumulation of ICT capital. Finally, ICT investment does not have a strong interdependent relationship with economic growth, while non-ICT investment has a cumulative causal relationship with economic growth and plays a key role in the process of widening the growth gap.     

Is there a U-shaped relation between competition and investment?

We consider a two-stage game with cost-reducing investments followed by a linear differentiated Cournot duopoly. With competition inversely parameterized by the extent of product differentiation, investment in the subgame perfect equilibrium is typically minimal for intermediate levels of competition. Laboratory experiments partly confirm the U-shape in a reduced one-stage version of the game. In the two-stage version, there is no evidence for positive effects of moving from intermediate to intense competition.     

Legal separation of BT: A necessary incentive for investment?

In March 2017 Ofcom and BT agreed that Openreach would be established as a legally separate subsidiary of BT Group with some behavioural requirements built into its Articles of Association. Ofcom pushed for this arrangement with the twin objectives of deterring what it termed “strategic discrimination” by BT and increasing investment in fibre to the premises. This paper argues that strategic discrimination is an unhelpful concept as a firm under an Equivalence of Input obligation, as BT was, can gain no strategic advantage for its retail business through an investment in an access product it has to make available to all wholesale customers on the same terms. Further, it argues that legal separation does not change fundamental cost and demand conditions and so has no direct effect on incentives to invest. This paper opens the possibility for further research regarding the incentives and behaviour of vertically integrated firms more generally.     

Transmitters and receivers' investment to avoid interference: Is there an optimal regime?

The management of interference has been, and still is, the main concern in spectrum policy. Historically, interference has been dealt with by heavy regulation under an administrative control regime. Over the last decades, a new approach has been put forward based on users' property rights, better able to cope with a rapidly changing technological environment. The issue of dealing with interference across bands, however, remains crucial: What obligations should be put on users so as to keep interference at a socially acceptable level? Also, given that some unwanted emissions are bound to occur, how can private parties be provided with the right incentives to invest in high-quality reception technology? This paper assesses how well different regulatory regimes can lead to efficient outcomes. It develops an economic model of spectrum interference and identifies the efficient solution. A regime where spectrum users have the power to enjoin intruding emissions beyond a predefined level (property rights protection) is compared with a regime where users are forced to bear with intruding emissions, but are entitled to economic compensation for the harm suffered (liability rules protection). The analysis suggests that different regimes may perform differently under different circumstances depending on the cause of interference and, critically, on whether the services are organised as an open- or a close-architecture system. This suggests that regulators should pay more attention to the specific features of the different bands, and that the appropriate spectrum management regime should be designed to recognise these differences.     

Does board social capital influence chief executive officers' investment decisions in research and development?

The findings of the chief executive officer (CEO) characteristics–research and development (R&D) investment relationship remain incomplete if previous unexamined contingencies are not considered. Very few studies in this area have invariably focused on the constraints from the external environment and overlooked the important influence of board social capital on such relationship. This study uses insights from resource dependence theory to examine how the effects of CEO characteristics on R&D investment are contingent on board social capital. The results show that board social capital mitigates/enhances the negative/positive effect of CEO tenure/CEO educational level on R&D investment, supporting the view that board social capital, as an important conduit to link firms to critical information and essential resources in the environment, may offer better counsel to CEOs and enhance their decision‐making capabilities in moving toward R&D. One important implication is that firms wishing to encourage innovation through R&D spending should consider nominating directors with rich social capital to the board because they may assist CEOs in coping with R&D complexities and acquiring requisite resources, leading to a better planning of R&D.     

Fixed-asset investment in textile industry slows in Q1-Q3 as cubs weigh on economy

Fixed asset investment growth in China's textile industry slowed in the first three quarters this year, mainly resulting from the yuan appreciation, the rising material and labor costs, as well as dismal overseas market hit by the subprime lending crisis. From January to September, the total fixed-assets investment in the textile industry was up 10.15% to RMB 202.269 billion year-on-year,     

Inventory investment and production in Europe during the “Great Recession”: Is there a pattern?

The paper examines the nexus between inventory investment and the change in aggregate production during the “Great Recession” of 2008/09 for 29 European countries. A fairly uniform pattern emerges. Inventory investment is positively correlated with changes in production and follows the latter with a time-lag of two to three quarters. Very few countries (Austria, Greece, Spain and Switzerland) diverge from the typical pattern. This might hint to problems with respect to data quality.     

Once bitten twice shy? Experience managing violent conflict risk and MNC subsidiary‐level investment and expansion

Research summary : Researchers have increasingly emphasized the need to better understand how context affects the value of experiential learning. We address this gap by investigating when corporate‐level experience can be leveraged across borders and when experience needs to be country‐specific to be valuable. We test our hypotheses using a unique multi‐source panel dataset of 379 large MNCs from 29 home countries and their subsidiaries in 117 host countries over a 10‐year period, 1999–2008. In contrast to prior research, we find that the ability of a firm to leverage its experience with political risk across borders is limited by the type of risk involved. Experience with nonstate violent conflicts may be transferrable, but only country‐specific experience appears to yield measureable benefits for conflicts involving the host country government . Managerial summary : Violent conflicts not only increase social unrest but also impose added costs of doing business. For managers who find themselves in the midst of violent conflicts or who wish to survive and potentially gain a competitive advantage in operating in such challenging environments, is it possible to learn to manage such a seemingly “unmanageable” problem? In contrast to studies that have examined other types of political risk, we find that the ability of a firm to leverage its experience with violent conflict risk across borders is limited. Specifically, only country‐specific experiential knowledge about how the host government prepares and manages such conflict risks yields measureable economic benefits for MNCs and their subsidiaries operating in countries during conflict . Copyright © 2016 John Wiley & Sons, Ltd.     

Labor market evaluation versus legacy conservation: What factors determine retiring CEOs' decisions about long‐term investment?

Do CEOs nearing retirement attempt to boost short‐term firm performance or do they care more about what type of legacy they will leave behind? The two opposing predictions about the behavior of CEOs upon retirement suggest that retiring CEOs' decisions about certain long‐term investment items may be more complex than suggested in the literature. In search of an answer to this question, we examine the relationship between CEO retirement and the level of firm commitment to corporate social responsibility (CSR). The results show that CEO retirement has a negative effect on firm commitment to CSR. However, we found that the negative effect becomes weaker when CEOs retire at relatively older ages or are retained on the board of directors of their own firms. Our finding suggests that CEOs who face weaker pressure from the labor market for corporate directors may pay more attention to preserving their legacy. Copyright © 2014 John Wiley & Sons, Ltd.     

Long term risk sharing contracts as an approach to establish public–private partnerships for investment into next generation access networks

This paper develops an investment/pricing model for the deployment of basic broadband networks which, along with other applications, is applicable to public–private partnership projects. In particular, a new investment model is suggested to be used for finance deployment over a longer term by enabling both private and public investors to participate in the roll-out of next generation access (NGA) infrastructure. This so-called “long-term risk sharing concept” has several notable benefits compared with the traditional regulatory approach. Above all, the model enables both private operators and public authorities to share the risk of investing in NGA infrastructure. Thus the model offers a way for public authorities to achieve a timely and countrywide roll-out of NGA networks, including in areas where NGA investment would otherwise not occur.