Asset specificity and behavioral uncertainty as moderators of the sales growth — Employment growth relationship in emerging ventures

Sales growth and employment growth are the two most widely used growth indicators for new ventures; yet, sales growth and employment growth are not interchangeable measures of new venture growth. Rather, they are related, but somewhat independent constructs that respond differently to a variety of criteria. Most of the literature treats this as a methodological technicality. However, sales growth with or without accompanying employment growth has very different implications for managers and policy makers. A better understanding of what drives these different growth metrics has the potential to lead to better decision making. To improve that understanding we apply transaction cost economics reasoning to predict when sales growth will be or will not be accompanied by employment growth. Our results indicate that our predictions are borne out consistently in resource-constrained contexts but not in resource-munificent contexts.     

Agglomeration, Relative Wage Costs and Foreign Direct Investment—Evidence from Swedish MNCs 1974–1998

This paper examines the relationship between agglomeration economies and relative wage costs in influencing location of multinational corporations. An inflow of firms to certain regions and industries is likely to increase demand for labor. If mobility of labor is low increased costs can be expected to deter additional inflows of firms, albeit agglomeration economies may compensate for higher wages. Despite its important policy implications this relationship has to our knowledge not been exposed to empirical testing. The empirical analysis finds that foreign direct investment has become increasingly sensitive to differences in wage cost across industrialized countries, but also that agglomeration economies related to knowledge externalities positively influences higher costs. The relative strength of these two forces impacts the spatial distribution of production.

Trade policy in majoritarian systems: the case of the U.S.

Abstract We provide a theory of trade policy determination that incorporates the protectionist bias inherent in majoritarian systems, suggested by Grossman and Helpman (2005) . The prediction that emerges is that in majoritarian systems, the majority party favours industries located disproportionately in majority districts. We test this prediction using U.S. data on tariffs, Congressional campaign contributions, and industry location in districts represented by the majority party over the period 1989–97. We find evidence of a significant majority bias in trade policy: the benefit to being represented by the majority party appears at least as large in magnitude as the benefit to lobbying.     

NEW PUBLIC MANAGEMENT: The effects of contractualism and devolution on political control

This article analyzes effects and implications of New Public Management (NPM) when implemented in the civil service systems in New Zealand and Norway, focusing especially on the effects of devolution and contractualism on political control. Using a transformative perspective, we interpret these effects as a result of a melding of environmental factors, polity features and national historical-institutional constraints. Norway scores low on both environmental and internal factors enhancing administrative reform, furthering a soft version of NPM and small changes in political control. In contrast a combination of external pressure, weak countervailing cultural forces and ‘elective dictatorship’ in New Zealand produces a radical version of NPM, resulting in a weakening of central political control.     

Trade Liberalization and the Degree of Competition in International Duopoly

This paper analyzes how a reduction in trade costs influences the possibility for firms to engage in international cartels, and hence how trade liberalization affects the degree of competition. We consider a particular intra‐industry trade model amended to allow for firms producing differentiated products. Our main finding is that trade liberalization may have an anti‐competitive effect. We find that there is no unique relation between a reduction in trade costs and the degree of competition. When products are differentiated, a lowering of trade costs is pro‐competitive if trade costs are initially high, but anti‐competitive if trade costs initially are low. Hence, trade policy is not necessarily a substitute for competition policy.     

Social Behaviour in Work Absence*

By making use of a large‐scale randomized experiment, we test whether social behaviour is important for work absence due to illness. The individuals treated in the experiment were exposed to less monitoring of their eligibility to collect sickness insurance benefits, which sharply increased their non‐monitored work absence. This exogenous variation is exploited in two complementary analyses. In both analyses, we find significant social‐behaviour effects. Using detailed data, we conclude that the social‐behaviour effects most likely stem from fairness concerns.     

Five charges against the precautionary principle

We defend the precautionary principle against five common charges, namely that it is ill-defined, absolutist, and a value judgement, increases risk-taking, and marginalizes science. We argue, first, that the precautionary principle is, in principle, no more vague or ill-defined than other decision principles and like them it can be made precise through elaboration and practice. Second, the precautionary principle need not be absolutist in the way that has been claimed. A way to avoid this is through combining the precautionary principle with a specification of the degree of scientific evidence required to trigger precaution, and/or with some version of the de minimis rule. Third, the precautionary principle does not lead to increased risk-taking, unless the framing is too narrow, and then the same problem applies to other decision rules as well. Fourth, the precautionary principle is indeed value-based, but only to the same extent as other decision rules. Fifth and last, the precautionary principle is not unscientific other than in the weak sense of not being exclusively based on science. In that sense all decision rules are unscientific.     

Finite sample accuracy and choice of sampling frequency in integrated volatility estimation

We consider the properties of three estimation methods for integrated volatility, i.e. realized volatility, Fourier, and wavelet estimation, when a typical sample of high-frequency data is observed. We employ several different generating mechanisms for the instantaneous volatility process, e.g. Ornstein–Uhlenbeck, long memory, and jump processes. The possibility of market microstructure contamination is also entertained using models with bid-ask bounce and price discreteness, in which case alternative estimators with theoretical justification under market microstructure noise are also examined. The estimation methods are compared in a simulation study which reveals a general robustness towards persistence or jumps in the latent stochastic volatility process. However, bid-ask bounce effects render realized volatility and especially the wavelet estimator less useful in practice, whereas the Fourier method remains useful and is superior to the other two estimators in that case. More strikingly, even compared to bias correction methods for microstructure noise, the Fourier method is superior with respect to RMSE while having only slightly higher bias. A brief empirical illustration with high-frequency GE data is also included.     

Entrepreneurial response to interstate regulatory competition: evidence from a behavioral discrete choice experiment

Journal of Regulatory Economics - Despite a developing literature exploring the relationship between regulation, taxation and business startups, few studies have utilized artefactual experimental...