Does Entry Size Matter? The Impact of the Life Cycle and Technology on Firm Survival

A wave of empirical studies has recently emerged showing that smaller-scale entry is confronted with a lower likelihood of survival than their larger counterparts. The purpose of this paper is to examine whether the relationship between size of a firm when entering an industry and the likelihood of survival holds under different technological conditions and across the different stages of the industry life cycle. The empirical evidence suggests that the relationship between firm size and the likelihood of survival is shaped by technology and the stage of the industry life cycle. While the likelihood of survival confronting small entrants is generally less than that confronting their larger counterparts, the relationship does not hold for mature stages of the product life cycle, or in technologically intensive products. In mature industries that are still technologically intensive, entry may be less about radical innovation and possibly more about filling strategic niches, thus negating the impact of entry size on the likelihood of survival.     

KALDORIAN DEMAND FUNCTIONS AND THE RETURN TO CAPITAL: AN ANALYSIS IN A TRADE THEORETIC FRAMEWORK

Abstract.  This paper shows that under certain plausible conditions capital accumulation raises the return to capital. A three good trade theoretic model with Kaldorian demand functions is used to establish this result. This proposition is also independent of the assumption of diminishing return to capital a key feature of endogenous growth theory. Our result sheds light on the high rates of investment and growth that many East Asian economies have achieved.     

Political risk and the internationalization of firms: An empirical study of Canadian‐based export and FDI firms

Political risk analysis primarily receives attention for foreign direct investment (FDI) but only rarely for exporting. We examine how exporters and foreign direct investors evaluate the relative importance of political risk factors. We provide a rationale for exporters to evaluate political risk factors for FDI and for foreign direct investors to evaluate political risk factors for exporting. Survey data were collected from Canadian exporters and foreign direct investors and capture the distinctive nature of salient factors for exporting and FDI. We offer unique insights on the evolutionary character of political risk that are of practical value for both exporting and FDI. Copyright © 2007 ASAC. Published by John Wiley & Sons, Ltd.     

Broadband adoption,jobs and wages in the US telecommunications industry

This article evaluates the impact of broadband adoption on wage and employment levels among the local exchange companies in the US telecommunications industry for the period between 1988 and 2001. Broadband is a general purpose technology and its adoption and diffusion is expected positively to impact wages because of the need for higher level skill in its deployment and usage, but can also lead to less human capital usage because of a scale effect. Using the extent of fiber adoption among the local exchange firms as a measure of broadband deployment, it was found that broadband diffusion within and between the firms over time has had a positive and significant impact on wage levels but its impact on employment has been negative. As broadband diffusion increases, with substantial scope available to do so given the low levels of deployment both among the local exchange firms studied and within the United States as a whole, the impact of such diffusion on enhancing wage levels in the sector can be profound.     

The role of export-driven entrepreneurship in economic development: A comparison of software exports from India, China, and Taiwan

In the puzzle of economic development, there is moderate agreement around one issue: that entrepreneurial, export-led development is likely to produce higher economic growth rates than inward-looking development. This paper begins by taking an overall look at the size and competitiveness of the economies of India, China, and Taiwan, with particular reference to the software and the information technology (IT) sectors. It then focuses on the role of software export entrepreneurship in India and Taiwan as exemplars for other sectors and for formulation of government policy. In Taiwan, successful exporters constitute a model deemed worthy for other companies to emulate. In India, whether the booming software sector will prove to be a sufficient exemplar and catalyst for change throughout the economy and government remains an open question. The paper concludes by taking a look at another related export sector—IT-enabled service exports. Throughout the various sections of the paper, government policy implications remain an important backdrop.     

The evolution of Indian accounting standards: Its history and current status with regard to International Financial Reporting Standards

This paper addresses the adoption and applicability of International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB) to India. Specifically, the paper highlights some major areas where the country lacked harmonization with IAS in 1993 and the rapid congruence with IAS in the decade that followed. The attempt to achieve congruence with IAS appears to be more a by-product of the country's rapid economic growth rather than its catalyst. However, continued growth and the attraction of foreign capital to domestic ventures will depend on the transparency of the financial dealings. The Institute of the Chartered Accountants of India, (ICAI), India's standard setting body, is increasingly attempting to provide this transparency by revisions and additions to accounting standards, and by Exposure Drafts which aim to bring India more in line with International Financial Reporting Standards.     

The implied Sharpe ratio

In an incomplete market, including liquidly traded European options in an investment portfolio could potentially improve the expected terminal utility for a risk-averse investor. However, unlike the Sharpe ratio, which provides a concise measure of the relative investment attractiveness of different underlying risky assets, there is no such measure available to help investors choose among the different European options. We introduce a new concept—the implied Sharpe ratio—which allows investors to make such a comparison in an incomplete financial market. Specifically, when comparing various European options, it is the option with the highest implied Sharpe ratio that, if included in an investor's portfolio, will improve his expected utility the most. Through the method of Taylor series expansion of the state-dependent coefficients in a nonlinear partial differential equation, we also establish the behaviour of the implied Sharpe ratio with respect to an investor's risk-aversion parameter. In a series of numerical studies, we compare the investment attractiveness of different European options by studying their implied Sharpe ratio.