Does the sequencing of related and unrelated export diversification matter? Evidence from Colombian exporters

How does related or unrelated geographic diversification affect future related or unrelated product diversification of exporting firms, and vice-versa? This question addresses an unresolved debate, and it is important for firms in developing countries that seek to expand their product and geographical markets. Our study contributes to a current debate by highlighting the relevance of the temporal sequence and the relatedness of international diversification. Expanding the classic transaction costs and the resource-based explanations, we argue that organizational learning as well as organizational and sales (in-)efficiencies (notably through resource and product cannibalization, negative transfer and coordination costs) affect the interrelationships between product and geographic diversification. Using a panel dataset of over 14,000 firm-year observations from exporters based in Colombia, we find that (1) related geographic diversification tends to increase future product diversification; (2) related product diversification tends to decrease future geographic diversification; and (3) unrelated product diversification tends to increase future geographic diversification.     

How do business and financial cycles interact?

This paper analyzes the interactions between business and financial cycles using an extensive database covering 44 countries for the period 1960:1–2010:4. Our analysis shows that there are strong linkages between the different phases of business and financial cycles. In particular, recessions associated with financial disruptions, notably house and equity price busts, tend to be longer and deeper than other recessions. Conversely, while recoveries following asset price busts tend to be weaker, recoveries associated with rapid growth in credit and house prices are often stronger. These findings emphasize the importance of financial market developments for the real economy.     

How do country regulations and business environment impact foreign direct investment (FDI) inflows?

How do multinationals choose which countries to invest in? This study addresses the essential question of the impact of regulatory variables in attracting or deterring foreign direct investment (FDI). We separate regulatory variables based on different stages of a firm’s life-cycle. Using World Bank data for 189 economies, we examine which host country regulatory factors influence inward FDI. We find that countries with stronger contract enforcement and more efficient international trade regulations attract more FDI. The interaction terms suggest that multinational companies are willing to trade-off a country's poorer institutional variable in return for another where the institutional variable is stronger. For example, multinationals are willing to invest in countries with less efficient entry and exit regulations in exchange for stronger contract enforcement. These results also have important implications for government policy reform.     

Market-oriented institutional change and R&D investments: Do business groups enhance advantage?

Emerging market firms (EMFs) are increasingly relying on innovation to find their competitive advantage, but our understanding of how institutional change affects firm innovation has been limited. We analyzed Korean manufacturing firms from 1994 to 2006 to test the proposition that market-oriented institutional change in an emerging economy alleviates firms’ financing constraints and monitoring problems and improves the effectiveness of their innovation activities. Institutional evolution in the economy was found to affect Korean business groups and independent firms differently. Institutional change reduced the financing constraints on independent firms more than for business group affiliates in R&D investment. Independent firms, however, appeared less capable than group affiliates of translating the benefits of improved institutional environments into efficient R&D investment. This asymmetry may lead to a wider gap in the efficiency of R&D investment between business group affiliates and independent firms.     

Corporate governance or governance by corporates? Testing governmentality in the context of China's national oil and petrochemical business groups

Like other industrial sectors with significant – ‘pillar’ – importance in China's overall economy and development, oil and petrochemicals are governed by state-owned business groups. In this context, ‘corporate governance’ of these groups is of fundamental interest. This study probes corporate governance of 31 national oil and petrochemical business groups by examining their structure, development and business activities in the period from 2007 to 2011. The post-1998 restructuring of China's qiyejituan business groups, their related party transactions and related party corporate finance all yield insight into how property rights are decisive in how corporate governance based on governmentality – or the interrelation of corporate, state and social relations – is structured. This study sheds light on how China's big business policy and governance of the state-business interface progresses in a socialist market economy. It has clear implications international trade and investment as well as multinational corporations doing business with China.     

How may the nature of family firms explain the decisions concerning international diversification?

This study explores how the ownership structure of family firms gives these organizations a distinctive nature in terms of international diversification. We argue that the heterogeneity of family firms may cause variations in the degree of international diversification among these types of businesses. We have studied three factors related to ownership structure: the degree of family ownership and the type and degree of ownership of the second largest shareholder (another family or a financial company). The empirical evidence is provided by a sample of European and Asian family firms (2004–2008). Our results show that the degree of family ownership has a negative impact on the degree of international diversification. However, the presence and ownership share of a financial company as the second largest shareholder in a family firm favor this diversification. This study also reveals the importance of the financial company as a second owner in the preference family firms show for growth in international markets.     

Export diversification: How much does the choice of the trading partner matter?

This paper studies how a country's export diversification varies across destination markets. It develops an extension of the Romalis (2004) model which yields two testable predictions. According to the first, exports between similarly endowed countries (“South–South” and “North–North”) are more diversified than exports between differently endowed countries (“South–North” and “North–South”). The second implication is that, for given countries' production patterns, low bilateral trade costs lead to greater export diversification. These predictions find empirical support in a panel of 102 trade partners and 4998 HS-6 industries over the period 1995–2007. Results show that similarities between trading partners in physical capital, land and human capital endowments per worker are associated with more diversified bilateral exports. Exports are also more diversified when bilateral trade costs are relatively low.     

How do cross-country differences in institutional trust and trust in family explain the mixed performance effects of family management? A meta-analysis

Cross-country research finds mixed performance effects of family involvement in management (FIM) but consistently positive performance effects of family involvement in ownership (FIO). We argue that cross-country differences in institutional trust and trust in family can help explain this discrepancy. We reason that trust in family normalizes family managers’ use of firm resources to satisfy family needs. In contrast, institutional trust orientates family managers’ attention toward improving firm performance. A meta-analysis supports our theory: greater trust in family increases and greater institutional trust reduces the gap between FIM and FIO's performance effects across countries.     

How are marketing strategies of genetic material used as a mechanism for biopolitical governmentality?

The article critically examines the marketing strategy employed by Israeli sperm banks as sites for biopolitical governmentality of sperm consumers. The dataset comprise multiple sources which converge to provide evidence for the transfusion of militaristic Zionist ideology into sperm. The biopolitics of sperm marketing involves the naturalization of militaristic Zionism as a dogmatic basis for a “dividing practice” for the inclusion and exclusion of particular types of personified gametes in the symbolically constructed collective gene pool. The image of the military man is the idealized type of hegemonic masculinity in the Israeli nation-in-arms. The warrior-donor is both the supplier of the product and the core product itself, and his semen constitutes the materialistic carrier of his spiritual essence. Using Foucault's notion of biopolitical governmentality suggests why militaristic Zionism discourse has such potency in sperm marketing, and raises questions about contemporary “technologies of the self” as consumerist practices.     

How to move away from the silos of business management education?

Business management education is criticized for being too theoretical and fractional. Despite the numerous efforts to build integrated and experiential business curricula, learning is still organized in disciplinary silos. The curriculum integration efforts are carried out in separate sections of the curriculum rather than the core. There are theoretical, holistic models, but a lack of concrete examples of holistic business curriculum implementations. The authors bring the separate sections together by developing a holistic core curriculum model with three perspectives: a structure to bring intellectual coherence, people organized in learning communities, and an enterprise resource planning–supported learning environment to bring the practical training ground. The authors present a concrete implementation in a case study with first-year undergraduate business students and present their lessons learned.     

What do firms know? What do they produce? A new look at the relationship between patenting profiles and patterns of product diversification

In this work, we analyze the relationship between the patterns of firm diversification, if any, across product lines and across bodies of innovative knowledge, proxied by the patent classes where the firm is present. Putting it more emphatically, we investigate the relationship between “what a firm does” and “what a firm knows.” Using a newly developed dataset matching information on patents and products at the firm level, we provide evidence concerning firms’ technological and product scope, their relationships, the size-scaling and coherence properties of diversification itself. Our analysis shows that typically firms are much more diversified in terms of products than in terms of technologies, with their main products more related to the exploitation of their innovative knowledge. The scaling properties show that the number of products and technologies increases log-linearly with firm size. And the directions of diversification themselves display coherence between neighboring activities also at relatively high degrees of diversification. These findings are well in tune with a capability-based theory of the firm.     

Marketing capabilities and innovation. How do they affect the financial results of hotels?

From the point of view of firms’ managers, the knowledge of the factors which explain their firms’ financial results is considered of great usefulness to propose the most appropriate and profitable marketing strategies and actions. This research sets out from this central idea and proposes a model of relationships that considers the marketing results, the marketing capabilities, and the innovation capability as key factors for achieving good financial results. This model is verified via an empirical investigation carried out among 200 directors of hotel establishments in Andalusia, a region in the south of Spain which is one of the country's main tourist destinations. The results indicate that innovation capability is strongly conditioned by marketing capabilities and resources and that this innovation capability affects the financial results of the firms analyzed. Likewise, it is deduced that a market-oriented management philosophy contributes to the development of these marketing capabilities. The implications for management are considered very relevant as they must lead these firms to invest in the development of marketing resources and capabilities, and apply a market-oriented management philosophy if they wish to improve their financial results.     

Conclusion: Korean business and management – the end of the model?

Recent financial crisis has raised questions about the underpinnings and longevity of economic success in Asia, and has reminded us to be sceptical of pundits and the eponymous populist predictions relating to the region. Several perspectives can guide the analysis and evaluation of industrialization, from ‘state’ versus ‘market’, ‘internal’ versus ‘external’, and ‘macro’ versus ‘micro’. Companies in Korea as ‘latecomers’ have pursued ‘catch-up’ strategies. However, Korean corporate capabilities reside in a restricted number of industries, firms and functions (production), and are poor elsewhere, such as in marketing, technology (design and development) and organization, and small and medium-sized enterprises. Furthermore, many factors regarded once as sources of Korea's success are now seen as weaknesses. The future challenges facing Korea include its dirigiste economy, organizational structures and governance, financial transparency and labour market flexibility. While there are undoubted problems, its urgent tasks are not insurmountable.     

Entrepreneurship and survival over the business cycle: how do new technology-based firms differ?

We investigate the survival performance of new technology-based firms (NTBFs) over the business cycle and compare them against other entrepreneurial firms. Our data comprise the entire population of entrepreneurial firms entering the Swedish economy from 1991 to 2002, which we follow until 2007. Discrete-time duration models are employed to investigate whether the business cycle impacts differently on the survival likelihood of NTBFs vis-à-vis other entrepreneurial firms. Our main findings are three. First, NTBFs generally experience a lower hazard rate compared to other entrepreneurial firms, which is interpreted as a sign of their high ‘quality.’ Second, all entrepreneurial firms are sensitive to and follow a pro-cyclical pattern of survival likelihood over the business cycle. Three, when comparing NTBFs with the broader group of other entrepreneurial firms, we find that NTBFs are more sensitive to business cycle fluctuations. The above results come with a qualification, though. The sensitivity during the business cycle mainly pertains to self-employed NTBFs. Also, NTBFs’ higher survivability is only linked to not being characterized as self-employed.     

Are business ethics and engineering ethics members of the same family?

The thesis of the paper is that there are no important differences between problems in business ethics and problems in engineering ethics. The problems are both of the same logical type. What keeps this contention from being obvious is that many view engineers as professionals and business persons as nonprofessionals. If you accept the traditional definition of professional neither engineering nor business qualify. If you adopt the attitudinal definition of a profession which I propose, both practitioners could be professionals. This thesis is then tested by applying it to six specific issues in business and/or engineering ethics. Norman E. Bowie is Director at the Center for the Study of Values and Professor of Philosophy at the University of Delaware. Previously, he was Executive Secretary at the American Philosophical Association and received the Phi Beta Kappa Award. Important publications: Ethical Theory and Business, co-editor with Tom Beauchamp, Prentice Hall, 1979, Ethics, Public Policy and Criminal Justice, co-editor with Fred Elliston, Oelgeschlager, Gunn & Hain, 1982, Ethical Theory in the Last Quarter of the 20th Century, editor, Hackett Publishing, 1983, and Making Ethical Decisions, editor, McGraw-Hill (forthcoming). He has also written numerous articles in professional journals.An earlier version of this paper was read at a conference on applied ethics as part of an NEH sponsored project, National Project on Philosophy and Engineering Ethics, University of Florida, January 13–15, 1982.     

Selling a business after the pandemic? How crisis and information asymmetry affect deal terms

Prepandemic, small business exits were expected to increase dramatically owing to pent-up supply and the aging business owner population. COVID-19 may have dampened those expectations because of increasing information asymmetries that limited selling options for the small business owner (SBO). SBOs exit for many reasons (e.g., illness, family, retirement), so postponing a sale may not be a viable option. Alternately, SBOs can absorb crisis uncertainty by accepting different deal terms. We propose that one such strategy is to include seller financing as part of the deal terms, thereby signaling to the acquirer the SBOs’ confidence that the purchase is sound. We examine the results of 1,909 exit transactions from both before and after the financial crisis of 2007–2009 and over a 10-year postcrisis horizon. We find that sellers accept a lower price and less favorable terms with increased seller financing in the 24 months postcrisis, and that waiting longer to sell after the crisis improves deal terms for sellers, as this affords SBOs time to exit. Additionally, reduced information asymmetry improves deal terms. Finally, we provide strategies for SBOs to lower information asymmetry in small business exits.     

What makes crisis response strategies work? The impact of crisis involvement and message framing

This study investigates the moderating impact of crisis involvement and message framing on the effect of crisis response strategies on post-crisis attitude toward an organization. In the experiment, 274 respondents participate in a 2 (crisis response strategy: match vs. mismatch) × 2 (crisis involvement: low vs. high) × 2 (message framing: emotional vs. rational) between-subjects factorial design. The results show that in the case of high crisis involvement or in the case of rational framing of crisis communication, crisis response strategies that match the crisis type increase the post-crisis attitude toward the organization. In the case of low crisis involvement or in the case of emotional framing of crisis communication, the impact of a matched or mismatched crisis response strategy on the post-crisis attitude toward the organization does not differ. In addition, the study suggests that crisis involvement has a moderating impact on the efficacy of message framing in terms of post-crisis attitude toward the organization, which depends on whether the crisis response strategy matches the crisis type or not.     

How do ownership control position and national culture influence conflict resolution strategies in international joint ventures?

In this study, we investigate the relationship between ownership control position, national culture, and selection of conflict resolution strategies (CRS) of multinational corporations (MNCs) in their attempts to solve conflicts with local partners in international joint ventures (IJVs). The empirical evidence is based on a survey of 89 Nordic MNCs. The results show that MNCs select their CRS depending on their national culture and their ownership control position in IJVs. In addition, interesting results were found related to the interaction effects on the choice of CRS of national culture and ownership control position as well as of the trust between partners and national culture.     

Not for turning? Power,institutional ethos and the ethics of irreversibility

Adoption of an ‘ethics of reversibility’ can seem fashionably enlightened, even democratic, but appears less radical when issues of power are opened up. Adopting the motif of keeping, this paper sets its questioning of an on-going individuation of ethics within the context of an insidious reduction of institutional mores to business parlance. Keeping Derrida's ‘philosophy of reversals’ in view, the discussion resists the double bind of attempts to make higher-level decisions ever more ‘irreversible’ on the one hand, while devolving ethical responsibilities for outcomes downwards on the other. In criss-crossing, back and forth, on variations of these themes, the aim of the paper is to contest a division of moral labour in which the more powerful style themselves as ‘not for turning’, while those dispossessed of authority are left to vacillate within the market agendas of flexibility and transparency.     

How do Expatriate Managers Draw the Boundaries of Moral Free Space in the Case of Guanxi?

Journal of Business Ethics - This paper explores expatriates’ ethical evaluations of and responses to guanxi in China through the lens of integrative social contracts theory. We conducted...