A study of production decisions under extreme uncertainty in the wood products industry

Management under uncertainty has posed economists with the most important conceptual challenge to their basic models of profit maximization. This paper investigates firms' behavior under conditions of extreme uncertainty in the wood products industry of British Columbia. The investigation compares the predictive powers of models developed on the basis of empirical research of how firms decide “in fact” (behavioral models) and models derived from the assumption that firms behave “as if” they maximize profits. The paper lends support to the claim that firms are adaptive organisms and tend to behave as if they maximize profits.     

Underpricing and Market Power in Uniform Price Auctions

In uniform auctions, buyers choose demand schedules as strategiesand pay the same "market clearing" price for units awarded.Despite the widespread use of these auctions, the extant theoryshows that they are susceptible to arbitrarily large underpricing.We make a realistic modification to the theory by letting prices,quantities, and bids be discrete. We show that underpricingcan be made arbitrarily small by choosing a sufficiently smallprice tick size and a sufficiently large quantity multiple.We also show how one might improve revenues by modifying theallocation rule. A trivial change in the design can have a dramaticimpact on prices. Our conclusions are robust to bidders beingcapacity constrained. Finally, we examine supply uncertaintyrobust equilibria.     

The introduction and use of microcomputers by professionals in an industrial corporation

The introduction of computer technology to many activities of society in recent years is due to a large extent to the microcomputer (MC). On the one hand, the low cost of MCs and the fact that they entail a significant degree of independence from management information systems departments would predict their rapid spread in business organizations. On the other hand, such a diffusion may be delayed because of people's resistance to the use of a new technology, especially if they do not feel comfortable with it. The current study examines the adoption of MCs in a large high-technology corporation. The response of the organization to the microcomputer innovation was described by determining in a “diffusion” function to fit the data on the purchasing of MCs. A two-stage was conducted to sample the users' attitudes toward the MCs and its impact on their their job and their effectiveness. The results indicate that there was no significant effect on users' jobs or on the allocation of their time to different activities. Yet the overall response to the MC was very positive. This positive attitude was directly related to users' perceptions of changes in decision-making processes and in the power structure of their units due to the introduction of the MCs. The implications of these findings to the process of adopting MCs are discussed.     

Growth and survival: The moderating effects of local agglomeration and local market structure

One of the central explanations of the high failure rates of de novo entrants is the liability of smallness. As a corollary, most prior literature has suggested that firms should experience survival benefits from growth. In this paper, we argue that survival benefits need to be balanced against the potential cost of rapid growth, and they are contingent upon the structure of the environment. We predict a curvilinear relationship between an entrant's growth rate and failure, and argue that the relationship is contingent upon the local agglomeration of economic activity and the local structure of competition. We test and find support for our predictions using firm‐level longitudinal data of all de novo entrants into the Canadian manufacturing sector between 1984 and 1998. Copyright © 2014 John Wiley & Sons, Ltd     

Business Cultural Intelligence Quotient: A Five‐Country Study

Cultural intelligence (CI) has often been linked to performance at the individual, team, and firm levels as a key factor in international business success. Using a new measure of CI, the business cultural intelligence quotient (BCIQ), our study provides empirical evidence on several key antecedents of CI using data on business professionals across five diverse countries (Austria, Colombia, Greece, Spain, and the United States). The findings suggest that the most important factors leading to cultural intelligence, in order of importance, are the number of countries that business practitioners have lived in for more than six months, their level of education, and the number of languages spoken. We find that cultural intelligence varies across countries, suggesting that some countries have a higher propensity for cross‐cultural business interactions. By teasing out the common antecedents of BCIQ among professionals, our findings may help with screening and training professionals for international assignments. Future research may examine the environmental (country‐specific) factors associated with a higher propensity for cultural intelligence (such as immigration, cultural diversity, languages spoken, and international trade) to explain the effect of country of origin on cultural intelligence in the professional community. © 2016 Wiley Periodicals, Inc.     

Sectoral analysis of foreign direct investment and growth in the developed countries

Empirical studies on foreign direct investment (FDI) and growth in developed countries have yielded conflicting results using cross-country regressions. We use sectoral data for a group of six country members of the OECD. Our paper is the first to identify the sector-specific impact of FDI on growth in the developed countries. Our results show that FDI has positive, or no statistically discernible, effect on economic growth directly and through its interaction with labor. Moreover, we find the effects seem to be very different across countries and economic sectors.     

Dynamic Embeddedness in Chinese Firm Internationalization

This article presents a multilevel framework to analyze the motivations and location choices of Chinese OFDIs. We contribute to theory‐integration on Chinese OFDI flows and patterns by suggesting a framework that combines country‐, industry‐ and firm‐level analyses and by reflecting aspects from the resource‐based view (firm‐specific advantages), institutional‐based view (push/pull home‐ and host‐­country factors), and network‐based view (network relations). We also explicitly incorporate “time” as a variable into our framework by introducing and explaining the concept of dynamic embeddedness as an interaction dimension to reflect the inherent dynamics on all levels and actors. © 2017 Wiley Periodicals, Inc.     

Fire‐sale FDI? The Impact of Financial Crises on Foreign Direct Investment

We analyze the evolution of foreign direct investment (FDI) inflows to developing and emerging countries around financial crises. We empirically examine the Fire‐Sale FDI hypothesis and describe the pattern of FDI inflows surrounding financial crises. We also add a more granular detail about the types of financial crises and their potentially differential effects on FDI. We distinguish between mergers and acquisitions (M&A) and greenfield investment, as well as between horizontal (tariff jumping) and vertical (integrating production stages) FDI. We find that financial crises have a strong negative effect on inward FDI in our sample. Crises are also shown to reduce the value of horizontal and vertical FDI. We do not find empirical evidence of fire‐sale FDI; on the contrary, financial crises are shown to affect FDI flows and M&A activity negatively.     

Foreign Aid in the Aftermath of Large Natural Disasters

This paper examines Official Development Assistance (ODA) in the aftermath of large natural disasters between 1970 and 2008. Using an event‐study approach, the paper finds that while the median increase in ODA is 18% compared with pre‐disaster flows, the typical surge is small in relation to the size of the affected economies. Moreover, aid surges typically cover only 3% of the total estimated economic damages caused by the disasters. The main determinants of post‐disaster aid surges are found to be the intensity of the event itself and the recipient country's characteristics such as the level of development, country size and the stock of foreign reserves. The paper does not find evidence that political considerations or strategic behavior on the part of donors determine the size of post‐disaster aid surges.     

Sudden stops and the Mexican wave: Currency crises,capital flow reversals and output loss in emerging markets

Sudden stops are the simultaneous occurrence of a currency/balance of payments crisis with a reversal in capital flows. We investigate whether sudden-stop crises are a unique phenomenon and whether they entail an especially large and abrupt pattern of output collapse (a “Mexican wave”). Using a panel data set over 1975–1997 and covering 24 emerging-market economies, we distinguish between the output effects of currency crises, capital inflow reversals, and sudden-stop crises. Sudden-stop crises have a large negative, but short-lived, impact on output growth over and above that found with currency crises. A currency crisis typically reduces output by about 2–3%, while a sudden stop reduces output by an additional 6–8% in the year of the crisis. The cumulative output loss of a sudden stop is even larger, around 13–15% over a 3-year period. Our model estimates correspond closely to the output dynamics of the ‘Mexican wave’ (such as seen in Mexico in 1995, Turkey in 1994 and elsewhere), and out-of-sample predictions of the model explain well the sudden (and seemingly unexpected) collapse in output associated with the 1997–1998 Asian Crisis.