How do large multinational companies implement open innovation?

This paper addresses a major gap in reported research on open innovation (OI): how do companies implement open innovation? To answer this question a sample of 43 cross-sector firms were reviewed for their OI implementation approaches. The study analyzed how firms moved from practising closed to open innovation, classifying the adoption path according to the impetus for the adoption of the OI paradigm and the coordination of the OI implementation. The way firms adopted OI was found to vary according to (1) their innovation requirements, (2) the timing of the implementation and (3) their organizational culture.     

How can investors build a better portfolio in small open economies? Evidence from Asia’s Four Little Dragons

This study investigates the role of hedging and portfolio design among stocks, exchange rates, and gold in small open economies (SOEs) from 4 January 2000 to 31 March 2020. We adopt the trivariate dynamic conditional correlation-fractionally integrated asymmetric power ARCH model and unconditional quantile regression model, and our findings show that the hedging role of the U.S. dollar (USD) and gold against stocks differs under regular and extreme market conditions. The USD can act as a powerful hedge asset for stocks in regular market periods. Moreover, during the global financial crisis and COVID-19 outbreak, the safe-haven effect of gold becomes stronger for almost all stocks, whereas the USD can serve as a strong safe haven against stock markets of Korea, Taiwan, and Singapore when stock returns are extremely low. In terms of portfolio designing, we find that adding the USD and gold to portfolios improves their hedging effectiveness, and the optimally weighted stock-USD-gold portfolio is the best portfolio strategy, irrespective of referring to return or risk.     

How do socially controversial companies do during a stressful time? Evidence from the Great Recession

This study investigates the performance of socially controversial companies during a financial crisis. Companies are usually considered controversial if they are involved in controversial businesses such as alcohol, tobacco, firearms, nuclear etc. The results show that controversial firms exhibit higher firm value as well as better accounting performance during the Great Recession than otherwise similar, albeit non-controversial, firms. The results are consistent with the notion that the demand for controversial products remains relatively stable even during a stressful time. Further analysis confirms the results, including random-effects analysis, GMM dynamic panel data analysis, and instrumental-variable (IV) analysis. The results of this paper are particularly relevant to portfolio management, where controversial firms may be added to portfolios to inoculate them from a negative shock brought about by an economic crisis.     

Why do some economies benefit more from climate finance than others? A case study on North-to-South financial flows

The Copenhagen and Paris Agreements, in which developed countries committed to mobilise USD 100 billion a year by 2020, indicate that climate finance will continue to grow. Even though economic development is not the aim of climate finance, climate-related disbursements will generate an economic impact on recipient countries’ economies. This impact will also reach other countries (including climate finance donors) through induced international trade. In this paper, we apply a structural decomposition analysis to study why the economic impact of climate finance varies between countries. We focus on specific climate actions and quantify the contribution of four drivers: value-added intensity, domestic multiplier, foreign multiplier and trade structure. The paper helps identifying the factors with the greatest potential to enhance the economic gains of climate finance in each country. This information can be useful for policy-makers trying to design national strategies that exploit the synergies between climate action and economic development.     

How much do online consumers really value free product returns? Evidence from eBay

Consumer return rates have been steadily rising in recent years, resulting in growing costs for retailers who must manage the returns process and the disposition of returned products. This cost pressure is driven in part by extremely generous return policies, such as giving consumers a full refund upon return. Interestingly, this common retail practice of full refunds is inconsistent with the recommendations of many analytical models of returns, which nearly always show that a partial refund is optimal. Such inconsistencies between theory and practice might arise when the decision drivers included in the analytical models do not match the decision drivers in practice. It might also be the case that retailers are overly optimistic about the value that consumers assign to a full refund, and thus assume that the value of such a policy outweighs its costs. In this paper, we use data collected from eBay, where identical products are sold with different return policies, to investigate these open questions in the literature. We analyze both the return policy drivers from the retailer's perspective and the return policy value from the consumer's perspective. Our results suggest that the value of a full refund policy to consumers may not be as large as one might expect, and it also exhibits a large heterogeneity across buyers with different levels of online purchase experience. In addition, we provide empirical evidence for what has long been suspected by online retailers – that a non-refundable forward shipping charge quickly erodes any value that consumers assign to return policies. The generality of our results is limited by the fact that eBay differs from traditional retail contexts in many respects, including the fact that eBay buyers may not be representative of the general buyer population. However, our study of how eBay consumers value free returns provides new insights into an understudied area, and it can serve as a starting point for future studies of the value of return policies in other retail contexts.     

How do European firms adjust their labour costs when nominal wages are rigid?

Although workers' nominal wages are seldom cut, firms have multiple options available if they require adjustments in their wage bills. We broaden the analysis of relative (in)flexibility in labour costs by investigating the use of other margins of labour cost adjustment at the firm level beyond base wages. Using data from a unique survey, we find that European firms make extensive use of other components of compensation to adjust the cost of labour. Interestingly, firms facing base wage rigidity are more likely to use alternative margins of labour cost adjustment; therefore there appears to be some degree of substitutability between wage flexibility and the flexibility of other cost components. Changes in bonuses and non-pay benefits are some of the potential margins firms use to reduce costs. We also show how the margins of adjustment chosen are affected by unionisation and firm and worker characteristics.     

How do stock prices respond to fundamental shocks in the case of the United States? Evidence from NASDAQ and DJIA

In this paper, we use both the Dow Jones and NASDAQ indices to test the robustness of Binswanger's (2004c) finding that US stock market dynamics are governed mostly by nonfundamental shocks or speculative bubbles after the 1982 debt crisis. We estimate a total of 72 SVAR models and 36 SVECM models. We determine that the findings are robust indeed and that fundamental shocks have become less and less important over the years, irrespective of which US stock market index is considered.     

How are internally oriented HRM policies related to high-performance work practices? Evidence from Singapore

This examination of policies relating to the internal cultivation of human resources and high-performance work systems among a sample of Singapore-based organizations shows that the HRM practices under consideration reflect three distinct dimensions: internal staffing, employee development, and employment stability. Of the three dimensions, only employee development was significantly and positively related to high-performance work systems. Contrary to the arguments in the literature relating to internal labour markets, mutual commitment HRM, and high-performance work systems, policies involving internal staffing and employment stability were not found to be necessary components of the internally oriented HRM package.     

How Do Financial Constraints Relate to Financial Reporting Quality? Evidence from Seasoned Equity Offerings

This paper examines how constraints on firms’ financing capacity relate to managers’ discretionary accounting choices. Three hypotheses of earnings management – the opportunism hypothesis, the rational expectations hypothesis, and the signaling hypothesis – predict that constrained firms engage in greater upward earnings management than unconstrained firms when selling equity. Using a sample of seasoned equity offerings (SEOs) announced between 1983 and 2014, I find support for this prediction. The relation between financial constraints and earnings management is robust to including controls such as offer size, growth opportunities, analyst following, and chief executive officer equity holdings, as well as to using the instrumental variable approach. Investors’ reaction around and following the SEO announcement supports the rational expectations hypothesis. I find that aggressive earnings management by constrained issuers is associated with lower SEO announcement returns but is not followed by negative abnormal returns in the long run. The evidence suggests that constrained issuers’ aggressive use of income-increasing accruals is an outcome of managerial myopia caused by capital market pressure, not managerial opportunism intended to mislead investors.     

How do market conditions impact price-TOM relationship? Evidence from real estate owned (REO) sales

Empirical evidence on the relationship between real estate price and selling time (time-on-market (TOM)) is mixed as to whether the price-TOM relationship is positive or negative. Competing theories also suggest opposite predictions about TOM’s impact on selling price. The article examines the price-TOM relationship against the background of varying market conditions and highlights the impact of these conditions on the relationship. The theoretical analysis extends search theory and Lazear’s model to changing market conditions and reconciles their predictions on the relationship. The empirical analysis refines the investigation of the price-TOM relationship by revealing the cross-effect of market conditions and TOM on price. The findings confirm that the price-TOM relationship can indeed be positive or negative depending on these conditions. However, except for the case of an extremely bad market, the relationship is generally positive. This outcome occurs because search effort (indicated by TOM) brings significant price benefit that is large enough to offset all but the worst market price declines. Additional analysis confirms that the findings are not altered by the potential endogeneity between price and TOM.     

How do supply chain management and information systems practices influence operational performance? Evidence from emerging country SMEs

This study first provides a comparative analysis of the impact of supply chain management (SCM) and information systems (IS) practices on operational performance (OPER) of small- and medium-sized enterprises (SMEs) operating in two neighbouring emerging country markets of Turkey and Bulgaria. Then, we investigate moderating effects of both SCM–IS-linked enablers and inhibitors on the links between SCM and IS practices and OPER of SMEs. To this end, we first empirically identify the underlying dimensions of SCM and IS practices, and SCM–IS-related enabling and inhibiting factors. Second, a series of regression analyses are undertaken to estimate the impact of the study's constructs on OPER of SMEs. The results are discussed comparatively within the contexts of both Turkish and Bulgarian SMEs and beyond. The study makes a significant contribution to the extant literature through obtaining and analysing cross-national survey data of SCM and IS practices in emerging country markets.     

Business start-ups or disguised unemployment? Evidence on the character of self-employment from transition economies

We study the character of self-employment, drawing upon household survey evidence from six transition economies. Multinomial-logit analysis distinguishing employers from own-account self-employed and comparing both groups to employees and unemployed finds that own-account status is intermediate in most characteristics; tests reject the pooling of any of these categories. Selectivity-bias-corrected earnings premia are large for employers and smaller for own-account. A structural polychotomous model shows that employers respond strongly to predicted earnings premia in all countries, while the own-account response is estimated to be negative, supporting the interpretation that individuals may be pushed into own-account status by lack of work opportunities.     

How does risk transference to private partner impact on public-private partnerships’ success? Empirical evidence from developing economies

This work analyses how risk transference to the private partner affects the success of public-private partnerships (PPP). For this purpose, a broad sample from the World Bank database of 6,022 PPP infrastructure projects in 59 developing countries in the period 1997 to 2016 is analysed. Using multilevel logistic models our results show that PPPs' success is more likely when the private partner takes more risk and the economic and institutional environments are better. Another interesting finding is that an excessive transference of risks to the private party when certain institutional features show good records could prejudice PPPs’ performance.     

Does recession drive convergence in firms’ productivity? Evidence from Spanish manufacturing firms

This paper provides evidence on the effect of recessions and expansions on the productivity growth rate of productivity leaders and followers. We use data of a representative sample of the Spanish manufacturing sector for the period 1991 and 2005. These data allow us to estimate firm level productivity for a relatively long period of time and provide us with firm level perception of the business cycle. We find that productivity tends to converge in recessions because, in these periods, the productivity growth of followers is higher than the productivity growth of leaders. This fact is consistent with theoretical models of managerial incentives and competition. A recession can be seen as an exogenous increase in competition that reduces demand and poses a threat of liquidation. This threat is higher for followers and is high enough to create asymmetric incentives to become more productive. We test the robustness of our results to sample selection and different productivity measure.     

How does entrepreneurs’ socialist imprinting shape their opportunity selection in transition economies? Evidence from China’s privately owned enterprises

Drawing on imprinting theory and the attention-based view of strategy, this study extends previous literature on the implications of imprinting for opportunity selection by examining how Chinese entrepreneurs’ socialist imprinting from their formative experiences in the Danwei system guides them to pursue lucrative policy-induced opportunities arising from government deregulation, reform, and incentives in certain industries. Using data from 3803 privately owned enterprises in China, we find that (1) privately owned enterprises with entrepreneurs bearing the socialist imprint are more likely to act on policy-induced opportunities to make a quick profit; (2) the relationship between socialist imprinting and the selection of these opportunities is mediated by the entrepreneurs’ attention to government policies; (3) the positive association between socialist imprinting and the selection of these opportunities is less salient for privately owned enterprises located in regions with higher institutional development.     

How much does a single graduation cohort from further education colleges contribute to an open regional economy?

How much does a single graduation cohort from further education colleges contribute to an open regional economy? Spatial Economic Analysis. This paper combines elements of growth accounting and numerical general equilibrium analysis to produce an alternative micro-to-macro modelling approach. This is used to evaluate the macroeconomic impact on the Scottish economy of the human capital generated by a single graduation cohort from further education colleges. The macroeconomic impact is found to be significant and larger than growth accounting would suggest due to the associated endogenous investment, employment and competitiveness effects. From a policy perspective this identifies the importance of the conventional teaching role of education institutions and the key function played by further education colleges in this process.     

How do environmental regulations influence resource misallocation in China? The role of investment flows

In recent years, the Chinese government has implemented numerous regulations to address environmental deterioration. Several studies have examined the effect of environmental regulation policies on China's economic performance. However, whether environmental regulations can alleviate China's resource misallocation problem—a critical issue in transitional economies—remains unclear. This study fills this gap in the literature by employing the difference-in-differences method to examine how environmental regulations affect resource misallocation. We found that stringent environmental regulations have reduced the extent of resource misallocation in China, with resource reallocation being the driving force behind this improvement. The emission reduction mandate reduces investment inflows and hinders firms' entry into regions with low total factor productivity, while directing the flow of resources to highly productive areas.     

How Does Childbirth Alter Intrahousehold Resource Allocation? Evidence from Japan*

Exploiting unique panel data that include direct measurements of resource allocation within households, we investigated the impact of childbirth on intrahousehold allocation for married Japanese couples. Based on a collective model of the household, we developed reduced‐form and structural‐form estimation equations that allow us to focus on private goods to track the changes in intrahousehold resource allocation. We found one additional child is associated with a reduction in the wife's private expenditure share by at least two percentage points. This may be because she substitutes more say in decisions on the children for her own private expenditure share.     

How do social scientists use link data from search engines to understand Internet-based political and electoral communication?

As link data become more available from search engines, the data can play an important role in understanding socio-political activities in cyberspace. However, the majority of social scientists have not engaged in link data collection, transformation, and analysis to perform research using publicly available search engines. This article offers two case studies of Internet-based political and electoral communications conducted in Korea, where online communication is among the most well-established in the world. These cases reveal that link data collected from search engines have several merits for political communication research, including inexpensive access to web resources and ease of use. However, link data have some weakness, such as reliability issues: internal algorithms are not made in public and there are inconsistencies among search engines. This article examines the two case studies to draw conclusions about the use of link data drawn from search engines for research purposes.     

How do trade openness,public expenditure and institutional performance affect unemployment in OIC countries? Evidence from the DCCE approach

This study explores the relationship between trade openness, public expenditure, institutional performance, and unemployment in member countries of the Organization of Islamic Cooperation (OIC) (formerly the Organization of the Islamic Conference). The conventional panel data techniques overlook cross-sectional dependence and yield-biased results. A new methodology called dynamic common correlated effects (DCCE) is employed to deal with the issue of cross-sectional dependence. The long-run results demonstrate that trade openness is inversely and significantly associated with overall unemployment and youth unemployment in lower-income as well as all the OIC economies and positively correlated in the higher-income OIC group. Public expenditure has an inverse and significant correlation with unemployment in OIC countries overall and higher-income OIC countries. Moreover, institutional performance and foreign direct investment are negatively related to unemployment in all OIC economies. The research shows the need for the continuation of open trade policies, strong institutions, and higher public expenditure in the OIC countries in order to decrease overall unemployment—in particular, youth unemployment.