Bi-sourcing in the global economy

In organizing production, many firms conduct bi-sourcing, i.e., acquiring the same set of inputs both by buying from external suppliers (outsourcing) and carrying out in-house production (insourcing). We show that, by adopting the bi-sourcing strategy, firms can use the payoff from one supplier as a backup option in negotiating with the other supplier (the cross-threat effect). When firms conduct bi-sourcing in the global economy consisting of the high-waged North and low-waged South, they need to make the location choice for both insourcing and outsourcing. We find that the low wage in the South can encourage investment by component suppliers (the cost effect). However, firms may achieve a better cross-threat effect by relocating overly strong component supplier from the cost-advantageous South to the cost-disadvantageous North (the balancing effect). The optimal bi-sourcing strategy is determined by the interplay of the cost effect and the balancing effect.     

Slow recovery in the global economy

The weakness of the world economy continued even after the end of the Iraq war, with demand and output showing only modest signs of improvement. Will the expectations of recent months, which have again become distinctly more optimistic, prove to be exaggerated? Or is the global economy, thanks to highly expansive monetary policies in many countries, on the brink of sustained recovery? Is a synchronised upswing probable, or will an economic growth engine again be needed to lead the way forward?     

Reconciling the irreconcilable: The global economy and the environment

This paper focusses on the relationship among structural adjustment policies and practices, the business activities of transnational corporations and what Robert Reich has called the coming irrelevance of corporate nationality. The argument presented is that the force of these combined factors makes environmental sustainability impossible.Dr. Deborah Poff is a professor of philosophy and the Dean of Arts and Science at the University of Northern British Columbia. Professor Poff has published extensively in the areas of feminism, equity, violence and applied ethics. She is the editor of theJournal of Business Ethics.     

Spiders and snakes: Offshoring and agglomeration in the global economy

Global production sharing is determined by international cost differences and frictions related to the costs of unbundling stages spatially. The interaction between these forces depends on engineering details of the production process with two extremes being ‘snakes’ and ‘spiders’. Snakes are processes whose sequencing is dictated by engineering; spiders involve the assembly of parts in no particular order. This paper studies spatial unbundling as frictions fall, showing that outcomes are very different for snakes and spiders, even if they share some features. Both snakes and spiders have in common a property that lower frictions produce discontinuous location changes and ‘overshooting’. Parts may move against their comparative costs because of proximity benefits, and further reductions in frictions lead these parts to be ‘reshored’. Predictions for trade volumes and the number of fragmented stages are quite different in the two cases. For spiders, a part crosses borders at most twice; the value of trade increases monotonically as frictions fall, except when the assembler relocates and the direction of parts trade is reversed. For snakes the volume of trade and number of endogenously determined stages is bounded only by the fragmentation of the underlying engineering process, and lower frictions monotonically increase trade volumes.     

Latin American firms competing in the global economy

As part of a cooperative effort between the Journal of Business Research (JBR) and the Business Association of Latin American Studies (BALAS), this special issue brings updated research on the Latin American business environment. Out of 226 papers submitted to the BALAS 2012 conference, which was hosted by the Pontifical Catholic University of Rio de Janeiro (PUC-Rio), 22 were pre-selected to run for publication in this special issue — and only 14 actually were accepted after the demanding three rounds of a double blind review process that was run after the conference. This introduction to the special issue of the JBR on the BALAS 2012 conference brings an overview of the changes that have taken place in the business environment of Latin America, the evolution of the internationalization behavior of Latin American firms and the changes in their strengths to compete both domestically and abroad.     

Competing successfully in a global economy

This commentary discusses the need for an internationalist approach in today's competitive global markets. Albert C. Bersticker, Chairman and CEO of Ferro Corporation, a US multinational in operation since 1919, draws upon his experience at the helm of a successful and growing manufacturing operation and gives several important lessons for strategic and competitive management of an international corporation. Bersticker elucidates the challenges facing today's global business manager, and puts the overall mission of any company doing business overseas into an appropriate context. Being aware of both the risks and benefits of competing in an ever-changing world is the key to success in the global economy according to the author. © 1998 John Wiley & Sons, Inc.     

Localized advantage in a global economy: The case of Bangalore

This article examines how and why firms in Bangalore, a city in southern India, have achieved success in the global software industry. We use Porter's “diamond framework” to analyze information obtained from secondary sources and interviews with engineers, managers, and top executives from software firms and officials involved in Bangalore's development. While we found some aspects of the case conform to Porter's framework, many other elements tend to diverge from the model. Thus, the article contributes to the Porter's diamond model literature by extending its application to assessing the development of successful regions in knowledge‐based industries in developing economies. The discussion in the article would be of value to officials interested in creating such successful regions, as well as international business executives interested in the opportunities afforded by locating in these regions. © 2007 Wiley Periodicals, Inc.     

Learning and knowledge diffusion in a global economy

I develop a dynamic general equilibrium model to understand how multinationals affect host countries through knowledge diffusion. Workers in the model learn from their managers and knowledge diffusion takes place through worker mobility. Unlike in a model without learning, I present a novel mechanism through which an integrated equilibrium represents a Pareto improvement for the host country. I go on to explore other dynamic consequences of integration. The entry of multinationals makes the lifetime earning profiles of host country workers steeper. At the same time, if agents learn fast enough, integration creates unequal opportunities, thereby widening inequality. The ex-workers of foreign multinationals also found new firms which are, on average, larger than the largest firms under autarky.     

The role of innovation in driving the economy: Lessons from the global financial crisis

The global financial crisis hit nearly every country in the world, devastating their economies, decimating the financial resources of their companies and citizens, and nearly collapsing the banking systems in their countries. While risky financial instruments and bad home lending practices receive much of the blame for this downturn, too few innovations introduced in the years leading up to the crisis also contribute to this collapse or, at a minimum, deepening the resulting recession. This paper draws on theoretical literature and contemporary media accounts, building the argument for a significant impact of innovations on the economy and its potential role in pulling the US economy out of the financial crisis. The paper develops propositions based on this review and discusses implications for staving off future economic difficulties.     

全球经济失衡与调整的政治经济学分析

美国金融危机爆发以来,全球经济失衡及其调整逐渐成为世界主要国家争论与战略博弈的一个焦点问题。本文在分析全球经济失衡的内涵及其成本的基础上,重点探讨了全球失衡的国内调整与国家间调整,认为寻求国内不同利益集团的利益平衡和主要相关国家之间失衡调整成本分担的平衡是决定全球经济失衡调整能否成功的关键。     

2004年全球经济回顾与展望

"过山车"式的油价波动和外汇市场上的风云变幻对2004年世界经济形成了现实的重大冲击,仅高油价就导致2004年世界经济增长率足足损失了0.5个百分点;但2004年世界经济的增长仍然十分强劲,且增长相当广泛,从美国、欧盟、日本等发达国家到东亚新兴     

Fair wages, unemployment and technological change in a global economy

This paper analyzes the effects of global and national technological change on employment and relative wages in an integrated two-country world (“Europe” and “America”), where both countries are characterized by equilibrium unemployment due to fair wage constraints. The asymmetry between the countries arises from country-specific preferences towards wage inequality, with Europe's preferences being more egalitarian. Furthermore, we look at integration between this two-country world and a third country (“low-wage south”). We derive an analytical tool, the Virtual Integrated Equilibrium, that allows us to adapt Dixit and Norman's Integrated Equilibrium approach to a situation where both countries have endogenous unemployment levels.     

Commentary on “The role of innovation in driving the economy: Lessons from the global financial crisis”

This commentary reacts to an article by Hausman and Johnston advocating innovation and entrepreneurship as keys to solving the current global financial crisis published in this special issue. The commentary is a valuable resonance board for my own ideas that, in some respects, deviate from those of the authors. I start from a partially different paradigm than the authors, as my theoretical platform is a new science of marketing and service that emerged during the 2000s. I find many of the suggestions logical and thoughtful, but primarily academic and US-centric. Will they work in practice, and especially on a global scale? I think the suggested solutions will work under certain conditions, but the world is imperfect and the necessary conditions are often absent. For example, the article shows confidence in the ability of governments to regulate and control and of research to contribute with more advanced metrics. Here I have doubts. I also find economic and management disciplines require new aspects for proposed solutions to work. Among these new aspects are the lack of genuine corporate social responsibility, growing corruption and crime, and the role of financial leaders whose behavior opened a new research field called “corporate psychopathy.”     

Getting what we wish for: The realities of business education for a global economy

Business schools around the world have embraced globalization and, as a result, attempted to attract international students to their programs. Teaching diverse student groups has many advantages, but is not without its challenges, including cultural differences in educational expectations and student self-efficacy. The goal of this article is to suggest that we can create plans and activities capable of helping Asian students adapt more quickly to the expectations of Western education. We herein describe Rotterdam Business School's experiences in working with a diverse—mainly Asian—population of students, focusing on strategies that may assist them in adapting to the expectations of the global business school classroom.     

后9·11时代世界经济变局

毫无疑问,2001年的"9·11恐怖袭击"完全可以被列入那些被我们称作"惨烈、震惊、改变人类命运"的事件行列当中,尽管身受其害的美国人声称:"恐怖袭击不能改变美国人的生活方式",但随之而来的一系列震荡不可抗辩地将本就疲惫的美国经济带入了一个"不确定"的年代。