Inward investment and industrial competitiveness

Inward investment—foreign direct investment in subsidiaries and joint ventures—has played an important part in Europe's post-war development as multinational firms, particularly American multinationals, became a major feature of many European economies. Latterly, we have seen an increasing presence also from Japan and other South-East Asian countries, as well as a resurgence of intra-European investment. What has been the effect of this on the competitiveness of European industry?     

Ten years andean pact: A reexamination

On May 26 the heads of state of five Andean countries—Bolivia, Colombia, Ecuador, Peru and Venezuela¹—celebrated in Cartagena (Colombia) the tenth anniversary of the so-called Cartagena Agreement which forms the legal base of economic integration within this Latin American subregion. Has the Andean approach to integration proved to be feasible in the first decade of its application? What have been the main achievements and failures, and what are the future perspectives of cooperation within the subregion?     

International portfolio diversification of real assets: An inquiry

American multinational firms have grown in size and number over the past two decades. Some of this growth has been due to the search for the valuable natural resources such as oil and copper, but the search for low cost labor also has been a factor. In addition, technological advances, especially in the drug and computer industries, have stimulated the foreign investments of many firms. Another possible— and more subtl—reason for this growth in foreign business is far different from these traditional “gains from trade”; i.e., the firms could be achieving a greater stability through an international diversification of their operations. The purpose of this study is to investigate the possible benefits of internationally diversified portfolios of real assets in reducing the variance of returns.     

Managing Opportunism in China: The Roles of Guanxi,Environmental Uncertainty,and Management Culture

ABSTRACT

This cross-cultural comparison aims to understand whether the influence of consumer ethnocentrism (CE) on consumer preference for domestic versus foreign products is product category and country-of-origin dependent. Three countries with dissimilar cultural orientation and economic status—China, South Korea, and the United States—were examined. American consumers were found to be more ethnocentric than Chinese and South Korean consumers. CE was found to significantly and positively predict American and Korean consumers’ preference for domestic products across product categories, while Chinese consumers’ CE did not translate into their preference for Chinese products. In addition, the relationship between CE and purchase preference varied across product categories as well as countries of origin.     

Common Market—A step towards unification

The focus of the Conference of the Organisation of American States held in April 1967 at Punta del Este was the efforts to achieve the economic integration of South America. The most important item in the “Declaration by the American Presidents” at Punta del Este is the projected creation of a Common Market for the whole of Latin America. The Latin American Free Trade Association (ALALC) and the Central American Common Market (MCC) are to be the foundation for economic integration over a vast area. The statement put out by the Punta del Este Conference is, however, only the first step along the road towards the economic consolidation of South America. It is now up to the Latin American countries to bring true these oft-repeated protestations of Latin American solidarity. All the Latin American countries will have to co-operate purposefully to tackle the tasks ahead of them and they will need the support of the larger industrial nations, particularly the United States. Nothing less than economic collaboration between the countries of the american sub-continent, forgetting all national rivalries, would enable Simón Bolivar's dream of a strong and united Latin America to become a practicable reality. The following contribution discusses the ways and means of Latin American integration, the results achieved hitherio and the prospects for a comprehensive unification of South America—including political unification.     

Is Non-discrimination Really Dead?

‘The most-favored-nation clause in American commercial treaties, as conditionally interpreted and applied by the United States, has probably been the cause in the last century of more diplomatic controversy, more variations in construction, more international ill-feeling, more conflict between international obligations and municipal law and between judicial interpretation and executive practice. more confusion and uncertainty of operation, than have developed under all the unconditional most-favored-nation pledges of all other countries combined’— Jacob Viner, in the Journal of Political Economy (February 1924)     

Exploring the Antecedents of Brand Loyalty and Electronic Word of Mouth in Social-Media-Based Brand Communities: Do Gender Differences Matter?

ABSTRACT

Recently, social media have emerged as key marketing communication channels. In this context, consumers are increasingly gathering in online communities which have been identified as social-media-based brand communities (SMBBCs). However, notwithstanding scholars' attention towards SMBBCs, the role of consumers' gender in developing brand loyalty intention (BLI) has been scarcely explored by literature. Moreover, scant attention has been given to the analysis of whether gender is related to different propensities towards brand recommendation—identified as a proactive behavior towards a positive electronic word of-mouth diffusion (E-WOM)—in the social media context. Hence, this research aims to explore the antecedents of BLI and E-WOM by focusing on consumers' gender differences. A structural equation model has been created based on 250 surveys collected among SMBBCs of an American sportswear brand. The results showed that male consumers' BLI is influenced by engagement in SMBBCs. Instead, brand trust was the main antecedent of females' BLI.     

Quality circles—The latest fad or a real winner?

Quality circles have existed in America since the early '70s, but only in more recent years have they been widely used. This survey attempts to discover how they operate, and whether they are a fad or a permanent addition to American industry.     

The Links between Early‐Life Cognition and Schooling and Late‐Life Financial Knowledge

Using the Wisconsin Longitudinal Study, a sample of Wisconsin high school graduates from the class of 1957, we explore the relationship between late‐life financial knowledge and human capital formed in early life. Specifically, we examine the associations between early‐life cognition and schooling experiences—such as academic performance and coursework—and late‐life financial knowledge. Financial knowledge is measured as individuals' knowledge of their own financial situations, which we argue is a prerequisite for good financial behavior. We find that those with lower early‐life cognitive functioning, especially those without college degrees, have lower levels of financial knowledge in late life. We find more limited evidence for independent associations of academic performance and math course work with late‐life financial knowledge.     

Thailand: Opportunities and risks in a fast‐changing business environment

Thailand's business environment is changing dramatically in the wake of the worst financial crisis and economic recession in the country's recent history. Some of these changes may be ephemeral, and Thailand will return to old business practices once the crisis eases, but many of the economic and political reforms now being implemented can make trade and investment in Thailand easier, more transparent, and less affected by corruption. Some of the reforms will not deliver the expected results. Others may increase uncertainty that will be counterproductive in the short run. But some of the constitutional changes—the restructuring of family controlled conglomerates, better regulation of the financial sector, demands for stronger corporate governance, and new incentives for private investment—can have profound impacts on the country's business climate and the way American companies do business in Thailand. © 2001 John Wiley & Sons, Inc.     

Internationalizing Business Education in Latin America: Issues and Challenges

This article examines the extent of internationalization of business education in Latin America and identifies the key challenges facing the Latin American business schools. Based on a survey of the business schools that are members of CLADEA (Consejo Latinoamericano de Escuelas de Administracion—Latin American Council of Management Schools), and also from available information from various public sources and the literature, this study finds that most Latin American universities recognize the importance of internationalization of curricula and have undertaken measures to provide a business education that creates a global awareness among students and sensitizes them to differences across countries. The study also identifies the areas that need further attention and resources for widening the extent of internationalization of business education in Latin America and recommends ways to address these challenges.     

Revisiting a Theory-Supported Approach to Teaching Cross-Cultural Management Skills

Abstract

Cross—cultural skills are a major criterion for success in the global business environment. For American managers in multinational organizations, this means learning to manage cultural difference at three levels: self, interpersonal, and organizational. Since literature indicates that training programs based on cross—cultural and learning theories are more effective, this paper examines a training program that Serrie first reported in a 1992 issue of JTIB. The five related and synergistic activities discussed in the paper give participants experience in dealing with and solving real—world problems in cross-cultural management at all three levels. The process is reassessed in terms of recent theory, and to confirm the efficacy of this approach, a pretest—posttest experiment was conducted with a treatment group and control groups. Results show that the treatment group was the only one to show a significant (at p < 0.05) increase in intercultural expertisea measure of cross—cultural skill. Limitations and implications are discussed.     

Market efficiency across securities exchanges

Considerable empirical evidence has been presented in the literature of finance in recent years addressed to the question of the informational efficiency of the American capital market. The present paper adds to that evidence. In particular, securities traded off the NYSE—on the American Stock Exchange, on regional exchanges, and over the counter—are found to exhibit return characteristics that imply rather more frequent price departures from equilibrium than for their NYSE-listed counterparts. The data consist of the actual investment experiences of a large sample of individual investors with securities traded in the various locales.     

Pricing American Options Fitting the Smile

This paper is a compendium of results—theoretical and computational—from a series of recent papers developing a new American option valuation technique based on linear programming (LP). Some further computational results are included for completeness. A proof of the basic analytical theorem is given, as is the analysis needed to solve the inverse problem of determining local (one‐factor) volatility from market data. The ideas behind a fast accurate revised simplex method, whose performance is linear in time and space discretizations, are described and the practicalities of fitting the volatility smile are discussed. Numerical results are presented which show the LP valuation technique to be extremely fast—lattice speed with PDE accuracy. American options valued in the paper range from vanilla, through exotic with constant volatility, to exotic options fitting the volatility smile.     

Doing business in Russia: Lessons from early entrants

The business climate in Russia during the first half of the 1990s has been uncertain and difficult. Many companies would hesitate to invest in such a risky environment. Yet some have, and many others will do so, in light of President Boris Yeltsin's continued commitment to a market economy, and other positive developments. A survey of 49 American firms compares 24 American early entrant companies which began doing business in Russia before 1990, with 25 later arrivals. Companies in both groups shared many views about doing business there. However, differences between the two groups concerning motives, attitudes, and strategies suggest characteristics which might contribute to longer term staying power in this uncertain environment. Analyses are supplemented with examples of recent company activities, particularly those of early entrants. The article concludes with lessons based on early entrants' experiences. These lessons may benefit other firms like the newer entrants if they too choose a similar long-term horizon. © 1998 John Wiley & Sons, Inc.     

Shopping While Nonwhite: Racial Discrimination among Minority Consumers

“Shopping While Black” refers to negative experiences that African American consumers endure in the marketplace. The term was coined before the turn of the century and the tabulation of the 2000 census. However, this term may be antiquated—not because African Americans no longer have disparate consumer experiences, but because these experiences impact all American minorities. This study examines the prevalence of racially motivated discriminatory experiences across consumer contexts. Specifically, it offers an empirical look at ways that racial minorities believe they are treated in a variety of consumption environments. Results show that minority groups experience similar levels of perceived discrimination: Asian Americans and Hispanic Americans are as frequently victims of marketplace discrimination as are African Americans. Interestingly, these shared experiences do not necessarily translate into similar beliefs in the continued existence of discrimination as a derogatory force for American minority consumers.     

ASSET PRICE BUBBLES IN INCOMPLETE MARKETS*

This paper studies asset price bubbles in a continuous time model using the local martingale framework. Providing careful definitions of the asset's market and fundamental price, we characterize all possible price bubbles in an incomplete market satisfying the “no free lunch with vanishing risk (NFLVR)” and “no dominance” assumptions. We show that the two leading models for bubbles as either charges or as strict local martingales, respectively, are equivalent. We propose a new theory for bubble birth that involves a nontrivial modification of the classical martingale pricing framework. This modification involves the market exhibiting different local martingale measures across time—a possibility not previously explored within the classical theory. Finally, we investigate the pricing of derivative securities in the presence of asset price bubbles, and we show that: (i) European put options can have no bubbles; (ii) European call options and discounted forward prices have bubbles whose magnitudes are related to the asset's price bubble; (iii) with no dividends, American call options are not exercised early; (iv) European put‐call parity in market prices must always hold, regardless of bubbles; and (v) futures price bubbles can exist and they are independent of the underlying asset's price bubble. Many of these results stand in contrast to those of the classical theory. We propose, but do not implement, some new tests for the existence of asset price bubbles using derivative securities.     

THE EARLY EXERCISE PREMIUM REPRESENTATION OF FOREIGN MARKET AMERICAN OPTIONS1

The note deals with the pricing of American options related to foreign market equities. the form of the early exercise premium representation of the American option's price in a stochastic interest rate economy is established. Subsequently, the American fixed exchange rate foreign equity option and the American equity-linked foreign exchange option are studied in detail.     

The characteristics and stock-market performance of international joint ventures located in three host-country groups: An extension and empirical validation

In a well-known study of joint venture (JV) characteristics, Beamish (1985) compared the attributes and performance of JVs located in developed and developing countries. This study advances Beamish's (1985) work by circumventing some of its key limitations. It compares the structure and stock-market performance of two-party equity JVs across three host-country groups: (i) developed countries, (ii) newly industrialized countries, and (iii) developing countries (including Emerging markets and transition economies). Based on a cross-sectional sample of nearly 1100 JVs involving American firms and non-American partners, this study finds that JV characteristics diverge as well as converge vis-à-vis three host-country groups. Interestingly—unlike Beamish (1985)—differences in JV configurations across these groups do not result in differences in abnormal returns to American parents. However, some JV characteristics consistently influence firms’ shareholder value (albeit sometimes in opposite directions) whereas the valuation impact of other characteristics depends upon a particular host-country group.     

America's addiction to tontines

Tontines—that is, investment contracts which are essentially death gambles—permeate the American and international landscape in varieties that sometimes obscure their tontine-like qualities. Some of these financial devices serve valuable functions and are funded by the appropriate parties, and therefore their use should be encouraged. Other tontines place funding obligations on those not fully consenting to that burden, however, and promote undesired behavior by the beneficiaries of the tontines. This article categorizes tontine-like contracts by analyzing their funding sources and behavioral impacts. Further, it recommends the use of some tontines—such as defined-benefit pension plans—be discouraged.