Restructuring FDI policy in emerging economies: The republic of Korea case

This article presents several frameworks for examining the effect of a national financial crisis as a stimulus for economic reform and applies them to the Korean case 1997–2001. The author lists significant dimensions of reform and restructuring, presents a schema showing macro reform measures and some possible micro ramifications regarding a country's policies toward incoming foreign direct investment, and extends the schema to the concept of a trade‐off between macro and micro determinants of a country's attractiveness to foreign direct investment. There is also a chart highlighting the extent of government allowance of foreign equity participation. The author uses all these concepts to analyze the Republic of Korea's response to the financial crisis of 1997–1999. © 2005 Wiley Periodicals, Inc.     

Financial flows to mexico: implications for foreign investors

The 1994–1995 Mexican peso crisis occurred with the presence there of a “new” financial force, namely nonbank private funds. Mexico's economic reforms have in recent years led to massive amounts of highly liquid (and volatile) foreign capital inflows. As the country further embraces market-based principles, long- and short-term capital will flow at an even larger scale across its border, subjecting providers as well as recipients to greater risks. This paper examines the trends in both the “traditional” as well as the “new” forms of capital inflows for the period 1981–1996. Our analysis should help the two sides of this issue: foreign investors to be better prepared in managing future economic challenges, and emerging economies—including several in Southeast Asia that suffered Mexican-style exchange-rate crises in 1997—to implement more appropriate policies, especially as they pertain to currency stability.     

HRM in Singapore: change and continuity

This essay traces the development of human resource management (HRM) in Singapore from the mid 1990s until the present day, with particular reference to the impact of the 1997 Asian financial crisis. In particular, it explores the changes in employment relations since the publication of Yuen (1997). National HRM concerns and strategies to maximize human capital as Singapore transforms itself and the knowledge economy is highlighted. The issue of convergence versus divergence in the management of human resources (HRs) will be touched upon. Current and future HR challenges that are most likely to impact on the country's competitiveness and economic performance are also explored.     

Prolonged Stagnation,Hesitant Recovery: Japan from an ‘Austrian’ Perspective

Tentative indications of recovery at the turn of the millennium offer the prospect of an end to the economic crisis that has afflicted the world's second largest economy since 1991. Both the duration of these difficulties and their insusceptability to conventional policy stimuli have presented challenges to mainstream macroeconomic thinking. It is argued here that the business cycle theory developed by Friedrich Hayek on the basis of the Austrian economic tradition, although eclipsed by the contemporary writings of Keynes, offers insight into the intractable nature of the Japanese crisis. This contrasting perspective stresses the links between monetary policy and the evolution of capital structure to provide an explanation for the inevitable dislocation following a credit‐financed boom. On these grounds, the application to Japan emphasises relaterd monetary and exchange rate developments in the 1980s as the underlying cause of the long stagnation of the 1990s. It therefore contradicts the view of the IMF and other multilateral bodies that the country's financial sector deficiencies were the primary factor. The structural focus of the analysis also suggests that the current (uncharacteristic) Fund emphasis on the need for demand stimulation is misplaced. Arguing that the surrounding economies have a particular interest in the means chosen to consolidate economic recovery in Japan, a policy approach consistent with the Austrain diagnosis is set out. It provides a framework in which fiscal consolidation and monetary policy normalisation, as desired by some elements of the country's administration, would be an appropriate strategy for the promotion of recovery.     

How Economic Incentives May Destroy Social,Ecological and Existential Values: The Case of Executive Compensation

Executive compensation has long been a prominent topic in the management literature. A main question that is also given substantial attention in the business ethics literature—even more so in the wake of the recent financial crisis—is whether increasing levels of executive compensation can be justified from an ethical point of view. Also, the relationship of executive compensation to instances of unethical behavior or outcomes has received considerable attention. The purpose of this paper is to explore the social, ecological, and existential costs of economic incentives, by discussing how relying on increasing levels of executive compensation may have an adverse effect on managerial performance in a broad sense. Specifically, we argue that one-dimensional economic incentives may destroy existential, social, and systemic values that influence the manager’s commitment to ensure responsible business conduct, and have negative spillover effects that may reduce the manager’s performance. There are well-documented findings that demonstrate that reliance on sources of extrinsic motivation (such as economic incentives) may displace intrinsic motivation. Our perspective is a holistic one, in the sense that we will explore the influence of sources of extrinsic motivation on the manager’s intrinsic commitment to different types of values. We will in particular investigate how it may influence the manager’s ethical reflection and behavior or lack thereof.     

The Business(es) of the Chinese State

The state industrial sector is the Achilles heel of China's otherwise remarkable economic performance over the past two decades. Most other countries in transition from socialism have transformed SOEs into commercial entities through systematic, market‐driven restructuring and privatisation to become more efficient and competitive. In China, a series of innovative, if often administrative, insitutional reforms since 1978 have begun to achieve the Chinese authorities' goal of ‘separating governemtn from business.’ But the Chinese State still maintains ownership of key enterprises, and government agencies carry out shareholder functions typically performed by private owners in a market economy. Although privatisation and restructuring of SOEs is occurring, it mostly pertains to small and medium sized firms. For the principal businesses, by contrast, the creation of large state enterprise groups and holding companies (and experiments in other forms of ‘state asset management’) have become the main form of restructuring. Today, China's SOEs still account for more than one‐quarter of national production, two‐thirds of total assets, more than half of urban employment and almost three‐quarters of investment. While direct budgetary subsidies have declined, explicit and implicit subsidies are still making their way to prop up loss‐making SOEs through the financial system and other routes. At the same time, SOEs are still producing non‐marketable products, resulting in a sizeable inventory overhang. These inefficiencies and distortions represent a drain on the country's resources and thus present a challenge to the Chinese leadership for reform. This paper sheds light on these challenges by analysing the incentives and constraints on China's SOE reform programme. Four critical aspects of the reforms are highlighted and evaluated against the backdrop of international experience: clarification of property rights; establishment of large group/holding companies and other new organisational structures; improved corporate governance incentives; and implementation of international financial accounting and auditing practices. The paper concludes with policy recommendations.     

The Chinese business system and its authoriliberal economic model

China's position as one of the most powerful nations in the world is undisputed. However, in an evolving landscape, China's utilization of a path-dependent business system may hinder the ability of the country's institutions to undergo necessary change, which will have important implications for international business literature. Through business system theory, empirical evidence, and a mixed methods approach, we discuss China's business system explaining how the system may impair sustainable growth and the transformation required by a less dependent industrial society. Our research suggests that the Chinese business system is still very arrested due to its recent past, and the Chinese Communist Party has only partial interest in improving some of the most important bases for the development of modern enterprises, even if fostering a somewhat liberal economic approach. Since similar political (authoritarian) and economic (liberal) approaches are found elsewhere, we theorize on what we called an authoriliberal economic approach.     

Diversification and financialization of non-financial corporations: Evidence from China

This paper examines whether and how business diversification affects financialization in non-financial corporations. Using data from the Chinese market, we find that business diversification strategy will significantly increase non-financial corporations' investment in financial assets. Furthermore, exacerbated agency problems, increased investment inefficiency and high operational risk are found to be the consequences of business diversification, which induce companies to hold high-risk financial assets. The impact of business diversification on financial investment is stronger in small-cap firms, SOEs, and firms with weak monitoring mechanisms. Finally, the diversification effect on corporate financialization is more significant where regional economic development and regulatory environment is weak.     

China: Getting beyond the headlines

China's continued economic growth even in these tough times attracts headlines. But China appears to be taking a disturbingly harder line with foreign business. By examining the deep political and social dynamics—China's “Four Basic Questions”—that propel China's rise, we can begin to understand and come to grips with what underlies this apparently new attitude. Surveys by the World Bank and other international organizations show that China's business environment fundamentals might not be as strong as we think. Still, China's economic momentum will continue despite the many problems the country faces. While foreign businesspeople today may express concern over negative trends in the business environment, they should be realistic. Behind the ups and downs of the Chinese scene, the country is struggling to resolve issues left over from history. Clear thinking about these basic issues is needed to survive—and perhaps prosper—in this environment. © 2011 Wiley Periodicals, Inc.     

Changing corporate culture over time in South Korea

Corporate culture change is an interesting topic, not least since cultures are often seen as deeply ingrained and slow moving. Here we look at the example of the large, diversified conglomerates in South Korea – the chaebol. This is partly because of their strong corporate cultures, importance in the country's economic development and growth and growing public and political backlash against what are seen as overly powerful institutions. We find that over the decade from one crisis, the 1997 Asian financial crisis, to the next, the 2008 global financial crisis, there has indeed been change between and within chaebol corporate cultures. However, this is not as straightforward as it seems and the situation in and after 2011 has become even more complex, mainly due to changes in the global environment.     

再看欧债危机后我国外贸企业的应对策略

继美国次贷危机后,09年爆发的欧洲债务危机再一次影响全球。欧债危机不仅令全球经济面临重大下行风险,而且危机的出现也对全球经济的复苏蒙上了阴影。近年来,我国出现的出口下滑,经济增速放缓以及人民币升值等现象也和欧债危机的出现不无联系,我国的外贸企业更是接连面对两次危机压力巨大。危机所带来的影响深入经济发展各个领域,短时期内难以消散,经济发展可能再次触底。面对危机我国应转变政府职能构建经济发展有利环境,转危机为时机加快产业结构优化升级,强化创新提升企业核心竞争力,完善现代企业制度促进国际交流与合作。外贸企业更应该把握其中隐藏的机遇,在对外交流中,不断完善现代企业制度,从而顺利度过危机。     

Using the Capital Assets Pricing Model for risk management—A tool for multinational corporation managers

In this article, using a theoretical model and empirical analysis, we show how multinational corporations (MNCs) can utilize the fundamentals of the Capital Assets Pricing Model (CAPM) to formulate a strategic risk management in a global economy. We show that MNCs with branches all over the world, specifically those that specialize in nontradable goods (e.g., McDonald's), should consider each country's beta as the appropriate measure of the relevant risk attached to the location in the country. Finally, using data from the most recent world economic crisis (the subprime crisis), we show that during a world economic crisis the loss of growth will be significantly higher in countries with higher betas, and lower in those with lower betas. © 2011 Wiley Periodicals, Inc.     

Introduction: the icarus paradox in Korean business and management

Some writers argue that modern history reveals that countries pass through ‘cycles’ in economic leadership. The ‘forerunners’ of industrialization used inventions and innovations as the major sources of their growth. On the other hand, newly industrializing countries, labelled ‘latecomers’ vis-à-vis the first groups, relied more on imitating, borrowing, or learning advanced technological and organizational capabilities to achieve national industrialization and eventually to gain national competitiveness. For some time, many have viewed such economies, especially the ‘Asian Tigers’, as a major force that will lead future world economic growth. However, such expectations have diminished with the recent financial crisis and contagion in Asia. The subject matter covered here includes the sources of economic growth and industrialization, the ‘catch-up’ strategies of firms, and foreign investment. The causes of the recent financial crisis, and future possibilities for the Korean model of business and management, are also analysed.     

Hong Kong's Hotel industry—the post-hand-over blues

Hong Kong's tourism industry collapsed around July 1997, shortly after the hand over to Chinese rule. When the Asian financial crisis hit, Hong Kong's investments in neighboring countries suffered. Thereafter the Heng Seng Index dropped 55 percent. Throughout the last quarter of 1997 Hong Kong's economic inhibitors—unemployment, business failures, and negative GDP—all pointed to a recession. Among Hong Kong's hotels, more than 1,750 jobs were lost from December 1997 to March 1998, and average room rates dropped below 1991 levels. Hong Kong's tourism crisis can be traced to: an imbalance between room supply and demand (caused by the inflated demand for office space), unfair hotel pricing to take advantage of Japanese tourists, ineffective national promotional campaigns, airline woes, and food-borne illnesses that scared away visitors. Economic recovery is likely to take several years, and is dependent on the recovery of the rest of the region's countries. In June 1998 Hong Kong produced an economic-stimulus package to stem the tide of decreasing land values and stimulate the money supply. Hoteliers can help by working together to ensure pricing stability. Coordination is also needed between the Hong Kong Tourist Association and the rest of the industry to set goals and objectives. Hospitality education and training need to focus on the current needs of the industry and on how to compete in the new market.     

Foreign Direct Investment Policy–Friendly Business Environment in R&D Sectors: Baltic States versus Visegrad Countries

This article examines the impact of foreign direct investment (FDI) policy on inward FDI in the Visegrad and Baltic countries. The analysis of business environment highlights that the countries in both regions attempt to create a friendly business environment by means of similar methods. However, the countries in both regions focus on fiscal incentives such as taxes, which do not play a major role in attracting inward FDI in R&D. The results of attracting FDI are better in the Visegrad countries, which implement financial incentives toward inward FDI along with fiscal incentives. According to empirical analysis, it is noticed that a higher intervention level and a higher support level guarantee the volume of inward FDI. The country's introduced FDI policy enables it to orient industry and to implement economic strategic targets. FDI policy does have an impact on promoting the development of the entire country.     

Extending the investment development path model to include the human environment factor

This article aims to address Dunning's call to include the “human environment” (HE) as a new trend and trajectory for research in international business (IB). Dunning argues that the most important driver for economic advancement is knowledge, which arises from the HE. We extend Dunning's IB theory of the five stages of a country's investment development path (IDP) to include the HE factor. Further, we use China as an example in which to examine the role of human resource management (HRM). We identify and analyze an important link between foreign direct investment, multinational enterprises, and both domestic and global HRM. © 2011 Wiley Periodicals, Inc.     

Transformation of China's sovereign wealth fund since the 2008‐2009 global crisis

China Investment Corporation (CIC) transformed its initial investment strategy of focusing mainly on the US financial sector during 2007‐2008 into a new strategy of diversified investments across geography and sectors since 2009. Massive financial losses and domestic political backlash during the global financial crisis of 2008 gave impetus to CIC's rethinking of strategy. In the midst of the crisis, CIC engineered a capacity‐building and reorganization exercise to reposition itself for a new strategy that has since allowed for more diversification of investments. A more receptive global investment climate for sovereign wealth funds has also aided CIC's efforts to present itself as a responsible global investor and facilitated its investments. Postcrisis, CIC's new strategy of diversification is characterized by continued investments in the financial sector, but with new investments increasingly directed to real sectors of energy, natural resources, and real estate in both developed and emerging economies. Notwithstanding a global recovery that is fraught with uncertainties, CIC's judicious timing in making diversified investments, and its attention to reducing risks and enhancing returns, have been rewarded by an impressive turnaround in performance since 2009. Going forward, the success and sustainability of the new strategy will be contingent on how well CIC can navigate domestic bureaucratic rivalry and the shifting climate of the international investment environment in the medium to long term. Ultimately, CIC's shareholder, the government of the People's Republic of China (PRC), holds the key to its future direction and goals. © 2012 Wiley Periodicals, Inc.     

我国宏观经济形势及流通业发展环境分析

2008年下半年以来,为应对金融危机,我国采取了一系列经济刺激计划并取得明显成效,我国经济不断企稳回升.其中,投资成为经济增长最主要的拉动力量,而消费则是最稳定的一支力量.如果不发生特别大的变化,2010年我国经济增长总体态势和动力格局将好于2009年,有望保持平稳较快增长格局,有利于流通领域的发展和回升,为流通业迎来更好的发展机会.考虑到宏观政策影响因素的复杂性,2010年我国宏观政策存在许多两难的选择,宏观政策回旋余地不大,政策取向短期内不会有重大调整,将继续保持积极的财政政策和适度宽松的货币政策,当然也要进行一些适度的调整,如逐步调整刺激经济的总量、结构和力度.在这样的宏观形势下,流通企业必须密切关注全球金融危机的变化与世界主要经济体的走势;关注外需及对外环境的变化;关注微调和局部政策调整对流通业的影响;关注居民收入和社会保障体系的进展;关注消费政策取向的变化;关注消费者价格指数(CPI)趋势和动向的发展变化.要充分发挥销售终端对整个产业结构调整的促进和导向作用;充分发挥品牌的展示作用,推动品牌创新,特别是要为国内品牌提供更多展示和实现的机会,进一步提升和谋求金融模式创新;采用新的营销手段和信息技术,促进流通业发展.     

The Great Recession of 2008: Impact on the Bangladeshi economy and international business implications

This article examines the current global financial crisis (GFC) and its impact on Bangladesh's economy and discusses international business implications for the country within an institution‐based analytical framework. The article finds that the macroeconomy of Bangladesh has shown remarkable resilience in the face of this massive global crisis, and the impact has been minimal and limited to a moderate slowdown of the economy The country thus could be poised for taking advantage of international business opportunities as the global economy begins to recover. Further, JPMorgan's Frontier Five and Goldman Sachs's Next Eleven classification of Bangladesh indicates enormous potential for growth and development. The article suggests that the Bangladeshi diaspora could serve as a connecting hub so that “brain gain” could be achieved through labor migration and remittances. Strategic alliances among home and foreign firms are also important to the future capacity building of the country. However, strategic management in the form of further institutional, structural, and policy reforms are critical in enabling the country to develop an international‐business‐friendly environment conducive to taking advantage of evolving global opportunities and realizing its full potential. © 2011 Wiley Periodicals, Inc.     

E-commerce entrepreneurship as a national priority: the case of Thailand

Thailand has been one of the most successful developing countries. This progress came to a sudden halt in 1997 when the Asian financial crisis hit this country. Thailand responded by creating a favourable environment for business incubation as a high priority at the national government level. The purpose of this paper is to provide an overview of the steps taken by the Thai government to encourage e-commerce entrepreneurship as a key component of its successful reaction to the economic crisis of 1997 and e-service as a source for its future national competitiveness.