On export performance and export elasticities: A macroeconomic approach

Summary In many studies far-reaching conclusions with regard to competitiveness are based upon an export price elasticity that results from only estimating an equation for the volume of exports. The aim of this article is to show with the aid of a macroeconomic model that the influence of competitiveness is overestimated in this way. This conclusion cannot be based on the necessity to introduce the export structure alongside world trade as a regressor in the export equation. The overestimation is a result offeedback mechanisms, greatly resulting from an endogenous exchange rate, which largely neutralize the initial export price effect. Financial support from the Netherlands organisation for the advancement of pure research (ZWO), no. 46–65, is gratefully acknowledged. The authors thank Prof. S.K. Kuipers for helpful comments and Martin O. Nijkamp and Vincent C.A. Polanen Petel for computational assistance.     

Exploring Exploration Orientation and its Determinants: Some Empirical Evidence*

abstract Adopting an information‐process perspective, this article conceptualizes exploration orientation in terms of scope of information acquisition. In line with this conceptualization, a multidimensional operational measure of exploration orientation is developed and its internal consistency established. The measure appears to have nomological validity in that it behaves as predicted with measures of variables hypothesized to be related to exploration orientation. Consistent with the emerging co‐evolution framework, environmental pressures as well as managerial intentions are found to influence an organization's exploration behaviour. Specifically, empirical results indicate that more environmental dynamism, a stronger organization mission, a prospector orientation and larger slack resources are associated with a greater exploration orientation. Implications, shortcomings and future research directions are discussed.     

Dividends and share repurchases in the European Union

We examine cash dividends and share repurchases from 1989 to 2005 in the 15 nations that were members of the European Union before May 2004. As in the United States, the fraction of European firms paying dividends declines, while total real dividends paid increase and share repurchases surge. We also show that financial reporting frequency is associated with higher payout, and that privatized companies account for almost one-quarter of total cash dividends and share repurchases. Our regression analyses indicate that increasing fractions of retained earnings to equity do not increase the likelihood of cash payouts, whereas company age does.     

Noise trading and the price formation process

This study proposes the dispersion in daily net initiated order flow across brokers as a proxy for the level of noise trading in a stock, and applies this proxy to test some basic implications of market microstructure theory. We use data from the Australian Stock Exchange, a computerized limit order market where price, quantity, and broker identity for each incoming order are shown on broker screens. We find daily movements in our noise measure are positively associated with trading volume and market depth, and negatively related to the bid-ask spread. We find monthly movements in our noise measure are negatively associated with the probability of informed trading, and positively correlated with the arrival rate of uninformed traders. We also find the sensitivity of stock prices to net initiated order flow decreases in the level of noise trading. In addition we find that, after controlling for noise trading, the sensitivity of stock prices to net initiated order flow is significantly greater on Mondays. These empirical results consistently support the implications of various models of market microstructure, suggesting that our proxy provides useful information as a daily measure of noise trading.     

Senior Team Attributes and Organizational Ambidexterity: The Moderating Role of Transformational Leadership

abstract    Organizations capable of pursuing exploration and exploitation simultaneously have been suggested to obtain superior performance. Combining both types of activities and achieving organizational ambidexterity, however, leads to the presence of multiple and often conflicting goals, and poses considerable challenges to senior teams in ambidextrous organizations. This study explores the role of senior team attributes and leadership behaviour in reconciling conflicting interests among senior team members and achieving organizational ambidexterity. Findings indicate that a senior team shared vision and contingency rewards are associated with a firm's ability to combine high levels of exploratory and exploitative innovations. In addition, our study shows that an executive director's transformational leadership increases the effectiveness of senior team attributes in ambidextrous organizations and moderates the effectiveness of senior team social integration and contingency rewards. Hence, our study clarifies how senior executives reconcile conflicting demands and facilitate the balancing of seemingly contradictory forces in ambidextrous organizations. Implications for literatures on senior team attributes, transformational leadership and organizational ambidexterity are discussed.     

Exploring necessary conditions in HRM research: Fundamental issues and methodological implications

Although the notion that HRM activities are necessary conditions for achieving certain outcomes is widespread in HRM research, most empirical studies follow an additive sufficiency logic. That is, they analyse whether HRM activities increase an outcome, assuming that they can compensate for one another. However, this does not correspond to the idea of necessity where single HRM activities are required for an outcome to occur and cannot be compensated when absent. We discuss the differences between sufficiency and necessity logics in terms of theory, methodology, and practical relevance. Also, we suggest using a new approach and analysis technique in HRM research: necessary condition analysis. We illustrate the application of the method by analysing data on the relationship between ability‐, motivation‐, and opportunity‐enhancing HRM practices (i.e., high‐performance work practices) and employee performance. This illustrative example highlights that necessary conditions require particular theoretical attention and suitable empirical methods. The paper concludes by showing the value of studying necessary conditions, because such analyses allow straightforward recommendations to be given of high relevance for HRM practice, which differ from and add to recommendations based on additive sufficiency logic and analyses.     

Definition-consistent measurement of exchange market pressure

Currencies can be under severe pressure, but in a managed exchange rate regime that is not fully visible via the change in the exchange rate. The literature has proposed a way to measure such exchange market pressure (EMP) indirectly, by adding interest rate changes and forex interventions to the exchange rate change. We demonstrate that this measure is not consistent with the definition of EMP and develop a new measure that is consistent. This is first derived within the commonly used monetary exchange rate model. Then we generalize the analysis by avoiding the use of an exchange rate model. We find that the interest rate should not be taken in the first-difference form used so far, but rather in level form and relative to the interest rate chosen if the country had no exchange rate objective. Applications on the European Monetary System and East Asian crises confirm that this improvement is highly relevant in practice.     

How trade and investment agreements affect bilateral foreign direct investment: Results from a structural gravity model

We employ a structural gravity approach to analyse the impact of preferential trade agreements (PTAs), bilateral investment treaties (BITs) and other policies on bilateral foreign direct investment (FDI). We use the UNCTAD global database on bilateral FDI stocks and flows. To control for the heterogeneous nature of PTAs, we employ two different indicators of PTA depth. We find that on average signing a PTA increases bilateral FDI stocks by around 30%. Nevertheless, we also find that ‘deeper’ or comprehensive PTAs (e.g., including provisions on investment, public procurement and intellectual property rights provisions) do not have a significantly different impact than signing regular PTAs. Belonging to the EU single market, on the other hand, has a strong impact and increases bilateral FDI by around 135%, and signing a BIT has an effect that is comparable to signing a PTA.     

RECENT AND FUTURE MANAGEMENT CHANGES IN LOCAL GOVERNMENT: CONTINUING FOCUS ON RATIONALITY AND EFFICIENCY?

Dutch municipalities and provinces have recently introduced many changes relating to management control. This paper explores the role of economic and social rationality in the introduction of reforms, and the nature of possible future reforms. Based on interviews with politicians and professional managers and on documents, the paper examines experiences with recent management changes. In addition, it discusses ‘change initiating factors’. Budget cuts and trends seem to be such change initiating factors. However, particularly more demanding citizens, increases in voters' volatility and politicians' uncertainty seemed to initiate changes. The paper speculates that in the near future, too, it could be a rational survival strategy for politicians and managers to focus on initiatives that are intended to enhance performance and efficiency.