The role of institutions and immigrant networks in firms’ offshoring decisions

The offshoring of production by firms has expanded dramatically in recent decades, increasing their potential for economic growth. What determines the location of offshore production? How do countries’ policies and characteristics affect a firm's decision about where to offshore? Do firms choose specific countries because of the countries’ policies or because they know them better? In this paper, we use a rich dataset on Danish firms to analyze how decisions to offshore production depend on the institutional characteristics of the country and firm-specific bilateral networks. We find that institutions that reduce credit risk and corruption increase the probability that firms will offshore there, while those that increase regulation in the labour market decrease this probability. We also show that a firm's probability of offshoring increases with the share of its employees who are immigrants from that country of origin. Finally, our analysis reveals that the negative impact of institutions that hinder offshoring is attenuated by a strong bilateral network of foreign workers.     

Canada–US productivity gap: The role of competition intensity differential

The relative lack of competitive pressure in product markets and lower investment in both fundamental and applied innovation are among the potential factors that have been put forward to explain Canada’s weak productivity performance with respect to the US. Since competition is generally seen as the single leading catalyst for fundamental and applied innovation, this paper analyzes the role of product market competition in the Canada–US productivity level gap. We develop an empirical framework in which competition exerts both direct and indirect effects on productivity, with the indirect impact coming through fundamental and applied innovation. We find statistically significant evidence that the competition intensity differential (between Canada and the US) has contributed to the Canada–US productivity level gap directly, as well as indirectly through lower investment in both R&D activities and M&E (including ICT) investment. We also find statistically significant evidence that Canada’s relatively poor performance in both productivity and M&E (including ICT) investment have acted as a self-reinforcing mechanism, which further causes detriment to the country’s productivity.     

Decentralized planning in a market economy? On the nature of Coase’s research program

By drawing attention to the planning islands of firm organizations in a market economy, Coase makes us believe that besides the price mechanism, there is another means of coordination, namely deliberate coordination. With the firm as an exemplary case of deliberate coordination was introduced into landscape of economics, Coase initiated a new research program which is to inquire into how efficiency is (and could be) achieved via various kinds of institutional arrangements, from the price mechanism, to firms, to government regulations. This paper acknowledges the positive role Coase has played in drawing economists’ attention to the generally neglected field of organizational research. It criticizes, however, his research program for viewing the economy, or society, from the perspective of some concrete decision-making entity.     

Firms’ leverage and labour productivity: a quantile approach in Portuguese firms

We show that the leverage of Portuguese firms tends to negatively affect its labour productivity for firms with relatively lower labour productivity but to positively affect this variable for firms in the right-hand side of the productivity distribution. This is particularly important in a country where labour productivity is persistently lower compared with the richer countries in Europe. Thus, we have concluded that, controlling for the usual effects, increasing leverage cannot be a solution for the less productive (and consequently the majority) of Portuguese firms.     

The effects of human resource management on small firms’ productivity and employees’ wages

This paper analyses whether employees and firms differently benefit from particular human resource (HR) practices. The focus is on small firms that may be badly informed on the impact of HR practices on firm performance. In this study on Dutch pharmacies, it is found that firms do not reward employees’ skills according to their contribution to firms’ productivity, as (1) employees are over-rewarded for their sector-specific skills and under-rewarded for the productivity enhancing effect of their computer skills and (2) employees’ work experience positively affects their wages but does not have real productivity effects. Moreover, it is found that training employees in case of vacancy problems seems to be an adequate HR practice, since it increases productivity without affecting the average wage level. The opposite holds for offering higher wages to newly recruited employees. Furthermore, we find that only the employees benefit from performance evaluation interviews, whereas employing many employees by temporary contracts appears to have a negative effect on productivity, without affecting the wage level.     

The Dixit–Stiglitz economy with a ‘small group’ of firms: A simple and robust equilibrium markup formula

In a general version of Dixit–Stiglitz two-sector economy, we present three variants of the concept of oligopolistic equilibrium in price-quantity pairs (d’Aspremont and Dos Santos Ferreira, 2016) integrating income feedback effects in three different ways. For the first two variants (Ford effects ignored or restricted to profits), a single and simple equilibrium markup formula is derived involving, for each firm, a conduct parameter indicating its degree of competitive toughness. Different specifications of these conduct parameters lead to different oligopolistic equilibria in prices and/or in quantities. In particular in the standard Dixit–Stiglitz economy, we show, that the first order conditions of a symmetric oligopolistic price equilibrium correspond to a unique degree of competitive toughness in the general markup formula, This degree is decreasing (and the markup increasing) as more feedback effects are taken into account by firms. On the contrary, for the third variant, introducing full Ford effects leads to lower markups and higher competitive toughness in the standard Dixit–Stiglitz economy and under conditions ensuring the equilibrium markup to remain in tne right interval,     

Board of directors’ quality and firms’ debt financing: the moderating effect of insider ownership – evidence from Omani firms

This study aims to examine the direct effects of board of directors’ quality and insider ownership on firms’ capital structure and the moderating effect of insider ownership on the relationship between board of directors’ quality and firms’ capital structure. The sample of this study consists of the time period 2005–2011. The final sample consists of 535 firm-year observations of public nonfinancial firms listed on the Muscat Securities Market (MSM). The hypotheses are tested using a random effects model. The results reveal that the coefficient sign on the board of directors’ quality is as predicted, but the coefficient sign is insignificant. Further, the results show that insider ownership is positively associated with leverage at the significant level of 10%, suggesting that the inside substantial shareholders employ higher leverage. With regard to the moderating effect of insider ownership, the findings show that the effect of the board of directors’ quality-leverage relationship becomes negative and stronger with increasing insider ownership.     

Incubator interdependence and incubation performance in China’s transition economy: the moderating roles of incubator ownership and strategy

Taking an ecological perspective, we examine how two types of interdependence among business incubators located in the same region – mutualism and competition – affect the performance of these incubators. Using a dataset on Chinese National Technology Business Incubators (NTBIs) from 2008 to 2012, we show that incubator interdependence, measured by regional incubator density, has an inverted U-shaped relationship with a focal NTBI’s performance. We further explore how incubator ownership (government-owned vs. non-government-owned) and strategy (specialised vs. diversified) moderate the above relationship in China’s transitional economy. The results indicate that the linkage between incubator interdependence and incubation performance is stronger for non-government-owned and diversified business incubators. Theoretical and managerial implications are discussed.     

The management function of entrepreneurs and countries’ productivity growth

This article examines the determinants of the equilibrium number of entrepreneurs and the level of productivity in economies where individuals make occupational choices between being self-employed or working as an employee. The results of the theoretical model explain some observed empirical regularities, such as the negative association between productivity and self-employment rates in cross-country data. The article also derives and empirically tests an unexplored relationship between entrepreneurship and economic growth, in the form of a positive association between productivity growth in t and the proportion of the self-employed in t???1, providing a new perspective on cross-country productivity convergence over time.     

The role of Chinese stock market in global stock markets: A safe haven or a hedge?

The contribution of the study is threefold. First, the paper proposes a new empirically testable definition for a safe haven and a hedge from the viewpoint of extreme and regular dependences measured by a modern statistical tool of copulas. Second, this paper investigates the extreme and regular dependences between the Chinese and the G7 stock markets, using a mixture copula specification, and the results reveal that the Chinese stock market has been not only a hedge but also a safe haven for the G7 stock markets all these years. Finally, this study suggests that the Chinese stock market is the target market for global stock fund managers and international investors, who are seeking a hedge or a safe haven for their portfolios, under turbulence.     

Trade liberalization,intra-industry trade and the environment: competition mode and the order of firms’ moves

This paper explores the implications of trade liberalization by extending the intra-industry trade framework à la Fung and Maechler (J Int Trade Econ Dev 16(1):53–69, 2007) to the case of sequential move and taking the mode of firms’ competition into consideration as well. It is shown that the existing results obtained for the case of simultaneous price competition are robust in quantity competition and sequential move cases. Moreover, it studies the likelihood that the environmental effects of trade liberalization occur.

Reconsidering the modernization hypothesis: The role of diversified production and interest‐group competition

The modernization hypothesis attributes democracy to higher incomes. The hypothesis has been controversial with claims of no relationship or opposite causality. Using data on a large sample of countries over the period from 1995 to 2015, we show empirically that the hypothesis is valid by studying the role of diversified production and interest-group competition. Increases in income associated with production diversification foster the emergence of competing organized interest groups representing the different diversified sectors. The interest-group competition underlies democracy by restraining rent seeking for benefits that would otherwise be sought through single-decision-maker authoritarian government.     

The persistence of firms’ knowledge base: a quantile approach to Italian data

The paper investigates the patterns of persistence of innovation and of the properties of firms’ knowledge base (KB) across a sample of Italian firms in the period 1998–2006. The analysis draws upon a theoretical representation of knowledge as a collective good, stemming from the recombination of knowledge bits that are fragmented and dispersed across economic agents. On this basis, we derived properties of the KB like the coherence, the cognitive distance and the variety, and investigated their patterns of persistence over time. The empirical analysis is implemented by exploring the autocorrelation structure of such properties within a quantile regression framework. The results suggest that the properties of knowledge are featured by somewhat peculiar patterns as compared with knowledge stock, and that such evidence is also heterogeneous across firms in different quantiles.     

The concept of capital before and after industrial revolution： Islamic versus market economy

The concept of capital and ownership of capital in market economy and Islamic economy is different. Also the role that capital is expected to play in the economy is different in two economic systems. One of the key elements in creation of the capital （capital formation） is interest rate. In Islam interest is strictly forbidden. This paper reviews the concept of capital and the process of capital formation both before and after industrial revelation. In that context it also looks at the function of interest rate during the time of Prophet Mohammed and the present time.     

The phenomenon of equifinality in innovative development of the monetary private ownership economy —An axiomatic set-up

The phenomenon of the equifinality can be understood as a possibility to achieve a given final state in many potential ways, regardless of the initial state. The study of this phenomenon is particularly relevant in today's world, where one of the main problems is the transformation of post-communist countries' economies so that they reach the states close to the economic systems of developed countries. This transformation takes place in the process of economic development stimulated by innovation, with the active role of the banking sphere.Thus, the main purpose of this study is to define the concept of equifinality achieved in a finite time, in an innovative development of the economic system controlled by the banks and the analysis of its properties. For this purpose the possible trajectories of development are studied here in a space of innovative extensions of private ownership economy with money, for which the target state is an innovative extension of a given model.This analysis uses the apparatus of an Arrow–Debreu general equilibrium theory and the theory of dynamical systems. Simultaneously, the work presented is a development of earlier studies in modeling of the Schumpeter's vision of the economic development (Ciałowicz and Malawski, 2007, 2011).     

Nonlinear adjustment in the real dollar–euro exchange rate: The role of the productivity differential as a fundamental

In this paper we analyze the influence of productivity differentials in the dynamics of the real dollar–euro exchange rate. Using nonlinear procedures for the estimation and testing of ESTAR models during the period 1970–2009 we find that the dollar–euro real exchange rate shows nonlinear mean reversion towards the fundamentals represented by the productivity differential. In addition, we provide evidence about the ability of this variable to capture the overvaluation and undervaluation of the dollar against the euro.     

Knowledge spillovers,absorptive capacity and total factor productivity in China’s manufacturing firms

Applying the stochastic frontier framework, this study explores the diffusion and absorption of technological knowledge in China’s manufacturing firms, based on a panel of more than 10,000 local and foreign-invested firms over the period 1998–2001. Our empirical approach allows us to distinguish between technological progress (TP) and technical efficiency (TE) in analysing whether R&D, exports and the presence of foreign direct investment simultaneously enhance TP through knowledge spillovers in a single framework and whether different types of domestic absorptive capacity moderate external knowledge spillovers in relation to TE. The results show that there are positive inter-industry productivity spillovers from R&D and foreign presence, whereas evidence of intra-industry productivity spillovers from FDI to Chinese firms is less robust. We find evidence that absorptive capacity is one of the key determinants to quantitatively explain intra-industry differences in productivity of local Chinese firms. The findings have important policy implications.     

The determinants of cybersecurity risk disclosure in firms’ financial reporting: Empirical evidence

This paper examines the relationship between cybersecurity risk disclosure and financial reporting deficiencies. Using a difference-in-difference approach based on a large, matched sample of breached and non-breached US firms for the period 2006 to 2016, a differential effect is seen between cybersecurity risk disclosures in pre- and post-Breach financial reporting related to cybersecurity incidents. The association between the cybersecurity risk disclosure and subsequent reported financial deficiencies is positive and significant, providing some evidence for regulators that more firm-specific disclosure may provide increased audit quality, to which the auditor responds by increasing audit effort. The empirical findings suggest that firms with prior cybersecurity risk disclosures are more likely to experience financial reporting deficiencies. The results obtained are robust to a variety of sensitivity checks.