Unearthing the Integral Determinants of Foreign Ownership Prevalence of Companies in Africa: Role of Country-level Governance

ABSTRACT

This study seeks to deepen our understanding on how country-level governance structures influence prevalence of foreign ownership of firms in Africa. This study reinforces the new institutional economics perspective by empirically highlighting that governance structures influence the prevalence of foreign ownership of companies in an economy. Using archival data from 39 African economies, we found that there is a significant positive association between regulatory quality and foreign ownership prevalence. Also, foreign ownership is prevalent in African countries that are politically stable and embrace rule of law. However, we found that countries with high voice and accountability structures are associated with low foreign ownership prevalence.     

Moving toward stakeholder-based HRM: a perspective of Italian HR managers

HR practices that look beyond focusing mainly on shareholders' interests to include a wider group of stakeholders are likely to result in a more effective HR system. This work examines Italian HR managers' perspectives of stakeholders and their perceived salience, based on data collected from 30 HR managers from the highest capitalization companies in the Milan Stock Exchange. The Mitchell, Agle and Wood model of stakeholder salience is applied to classify the stakeholders of the HR system into four clusters: definitive, dependent, discretionary and non-stakeholders. The results are discussed with reference to the body of knowledge on strategic HRM, putting forward specific managerial implications and proposing avenues for further research.     

The Influence of CEOs' Visionary Innovation Leadership on the Performance of High‐Technology Ventures: The Mediating Roles of Connectivity and Knowledge Integration

Senior leaders play an essential role in facilitating knowledge creation processes and driving firms' innovation performance. However, little is known about the underlying relational mechanisms by which CEOs help build knowledge integration capability and drive firm innovation. We developed and tested a conceptual model about the ways in which CEOs shape a context conducive for knowledge creation processes and drive multiple innovation performance. A field, survey‐based, study among small‐ to medium‐sized technological ventures (SMVs) showed that CEO visionary innovation leadership (manifested by both vision for innovation and enactment of the vision through specific leadership behaviors) was positively related to a context of connectivity. Connectivity was related to firm knowledge integration capacity, which in turn resulted in enhanced firm innovation (new product quality, development speed, and product innovation). The findings also indicate direct links between CEO visionary innovation leadership and knowledge integration, and between connectivity and product innovation. Implications for theory and practice are discussed.     

Input Hedging,Output Hedging,and Market Power

We argue that commodity input hedging is different from commodity output hedging. Output hedging can be detrimental to “sector play.” Furthermore, firms with market power that hedge outputs have incentives to over‐produce and distort market prices. In rational markets, such hedging will be expensive and we expect to see a negative relationship between hedging and market power in “output industries” but not in “input industries.” We test these predictions on a sample of S&P500 firms from 2001 to 2005. Our results support both hypotheses. Placebo tests show that the same empirical regularities do not apply to currency hedging. Finally, our empirical framework, which differentiates between hedging inputs and hedging outputs, can also help in reconciling conflicting results in prior studies.     

On the socially optimal size of a life-saving facility

The paper examines the simultaneous problem of finding an optimal size of an intensive care unit and an optimal amount of social investment in preventive medicine. The “demand” for ICU services is assumed stochastic. The approach used is to minimize social costs involved in operating the facility and social loss stemming from deaths of untreated patients.

After deriving the optimality conditions the results are applied to recent British data     

Foreign dependence of individual stock prices: The role of aggregate product market developments

In this paper, we analyze the role of aggregate variables in the transmission from international stock price developments to individual domestic stock prices in a small open stock market. In particular, a theoretical and econometric model is used to determine whether international aggregate product market developments explain observed differences in foreign dependence among individual Belgian stocks. The results suggest that, except for the stocks of some internationally oriented companies, expected international production is not the most important explanatory variable and that an estimation model of aggregate fundamentals explains only part of individual stock price adjustments.     

Staying Home or Moving Away? Restructuring Efforts within Multinational Enterprises

This paper analyses the impact of geographic dispersion on employment changes within multinationals. Building on earlier work of Landier et al. (2009, Review of Financial Studies 22, 3: 1119), we investigate whether corporate decision‐making within a multinational is affected by the distance between an affiliate and its headquarter. Our findings suggest a detrimental impact of distance on employees, by either an increased likelihood of observing a downsizing event, or by witnessing a larger decrease in the number of employees at distant locations during downsizing events. In addition, our results seem to relate the higher likelihood of observing a downsizing event to the role of social factors on decision making. The more visible a manager is in his community, the less likely he is to downsize proximate divisions.     

Justice Failure: Efficiency and Equality in Business Ethics

This paper offers the concept of “justice failure,” as a counterpart to the familiar idea of market failure, in order to better understand managers’ ethical obligations. This paper takes the “market failures approach” (MFA) to business ethics as its point of departure. The success of the MFA, I argue, lies in its close proximity with economic theory, particularly in the idea that, within a larger scheme of social cooperation, markets ought to pursue efficiency and leave the pursuit of equality to the welfare state. As a result, the core ethical responsibility of business actors is to avoid profiting off of market failure. After reviewing this approach I challenge its emphasis on efficiency. I argue that just as we note the suboptimal efficiency of actual markets (market failure), we should also take seriously the suboptimal equality of actual welfare states (what I call “justice failure”). Taking this idea seriously results in a whole other set of ethical responsibilities for businesses to take into account; in addition to market imperfections and regulatory lacunae, managers should also avoid profiting from, and exacerbating, structural inequalities and injustices. I offer an outline of the kinds of injustices and inequalities that would have bearing on business ethics, and the kinds of ethical responsibilities that this approach suggests that business actors should take into account.