Preference Erosion and Multilateral Trade Liberalization

Because of concern that tariff reductions in Organisation forEconomic Co-operation and Development (OECD) countries willtranslate into worsening export performance for the least developedcountries, the erosion of trade preferences may become a stumblingblock for multilateral trade liberalization. An econometricanalysis of actual preference use shows that preferences areunderused because of administrative burdens—estimatedto be equivalent to an average of 4 percent of the value ofgoods traded. To quantify the maximum scope for preference erosion,the compliance cost estimates are used in a model-based assessmentof the impact of full elimination of OECD tariffs. Taking intoaccount administrative costs eliminates erosion costs in theaggregate and greatly reduces the losses for countries mostaffected by preference erosion.     

Import prices,income, and inequality

We compare three theoretical explanations for the positive empirical relationship between importer income per capita and traded goods prices. A first explanation is that consumers with higher incomes demand higher quality goods with higher prices. A second explanation is that wealthier people exhibit an increased willingness to pay for necessary goods as more goods enter the consumption set in a hierarchic demand system, and can thus be charged higher markups. A third explanation is that consumers with higher incomes are more finicky regarding their preferred variety in an ideal variety framework and can thus be charged higher markups. We discriminate between these three theories by focusing on the effect of income inequality on trade prices. Based on a large dataset with bilateral HS6 level data on 1260 final goods categories from more than 100 countries between 2000 and 2004, we find a highly significant negative effect of income inequality on unit values. This contradicts both the demand for quality and finickyness theories, while providing support for the increased willingness to pay theory linked to hierarchic demand. These findings on income inequality do not falsify the quality expansion model and the ideal variety model per se. However, the results do argue for place of importance of hierarchic demand.     

Inherited agglomeration effects in hedge fund spawns

This paper studies inherited agglomeration effects, which we define as human capital that managers acquire while working in an industry hub that may be transferred to a spinoff. We test for inherited agglomeration effects in the hedge fund industry and find that hedge fund managers who previously worked in New York and London outperform their peers by about one percent per year. The results are driven by managers who worked in investment management positions previously, and are at least as large as traditional agglomeration effects that arise from being located in an industry hub contemporaneously. The evidence suggests that inherited agglomeration effects are an important, but as yet overlooked, factor influencing the performance of new firms. Copyright © 2013 John Wiley & Sons, Ltd.     

Stopping the Exploitation of Workers: An Analysis of the Effective Application of Consumer or Socio-Political Pressure

Commodity chain analysis (Bair and Ramsay, 2003 Multinational Companies and Global Human Resource Strategies) is used to explore where economic pressure (from consumers) or socio-political pressure (from governments and NGOs) can be applied to reduce worker exploitation. Six paths are illustrated with examples of successful and unsuccessful application of pressure. Three conclusions are reached :Economic pressure on companies and brand owners is more likely to lead to improved workplace conditions than socio-political pressure; Brand owners are more likely to implement improved workplace conditions than retailers; and Retailers who are under extreme consumer price pressure will resist improving workplace conditions. Dr. Gina L.S. Pines received her Ph.D. in Business, Organization and Policy Studies from The City University of New York, Bernard Baruch College of Business. She has held faculty positions at John Jay College of Criminal Justice (CUNY), Rensselaer at Hartford, Fairfield University and Central Connecticut State University. Presently, she is a Visiting Associate Professor of Business Strategy and Policy at the University of Hartford. Prior to her university work, Dr. Pines developed public–private partnerships for The New York City Partnership (a Rockefeller foundation) and The New York City Public Schools. While at the New York City Partnership Dr. Pines developed, applied for and was granted by the New York State Senate, $1.4 million for start up programs and research in business–education partnerships for 10 consecutive years. Dr. Pines has delivered numerous white papers to the New York State Senate. She has presented at academic conferences, most recently in London on human rights violations and corporate social responsibility. Her research has examined CEO career paths and firm strategic choice, strategy formulation, implementation, and evaluation and the exploitation of women and children in lesser developed nations. Presently, she is developing a model specifying the linkages among “guilt triggers” corporate social responsibility and the exploitation of women and children in lesser developed nations. David Meyer is a Professor of Management and Organization at Central Connecticut State University and a Research Fellow at the Fraser Center, Wayne State University. His Ph.D. is in Organizational Behavior and Industrial Relations from the University of Michigan. His research concerns workplace justice, implementing strategy, and problem solving in organizations. He has published in the British Journal of Industrial Relations, Industrial and Labor Relations Review, Industrial Relations, and others.     

The Cost of Rich (and Poor) Country Protection to Developing Countries

This study confirms that substantial barriers to market accesswill remain in both rich and poor countries following full implementationof the Uruguay Round agreement. The analysis finds that approximately40% of the costs of these barriers to developing countries arisefrom barriers to market access in industrial countries and 60%from barriers in developing countries themselves. The resultssuggest that there would be large gains to almost all regionsfrom a round of negotiations that increased market access inthe North and South. In Africa, the potential static gains frommultilateral reform appear to exceed those from preferentialliberalisation, without the well-known disadvantages of a preferentialapproach.     

Household inequality, social welfare, and trade

Working with Sen social welfare functions (meaning explicit separability between mean income and income dispersion), we develop a generalized dual approach to tracking household inequality aspects of social welfare in general equilibrium. We highlight how household equity can be examined analytically alongside production efficiency in duality-based models, using our dual framework to explore potential trade-offs between efficiency and equity effects of trade policy. Our results complement the set of standard inequality results in trade theory focused on functional rather than household inequality. We also find that the relative distributional impact of tariffs on welfare is conditional on the initial level of inequality.     

Accounting for the Benefits of Social Security and the Role of Business: Four Ideal Types and Their Different Heuristics

Germany is considered to be a pioneer of social security systems; nonetheless, globalization and demographic changes have put enormous pressure on them. A solution is not yet in sight as the debate on the future of the German social security systems still lacks consensus. We argue that ideas matter and that the debate can benefit from a deeper reflection on the concept of social security. This objective is pursued along two lines. First, we take a historical perspective and reconstruct the development of Germany’s social security systems. Second, we scrutinize from a theoretical perspective how social security is conceptualized in public and theoretical debates. Behind the various positions, we identify four basic ideal types. We then analyze how these ideal types account for the benefits of social security systems and what role they assign to corporations in providing social security. While two ultimately reinforce potential conflicts between different groups in society, the other two ideal types reveal possible benefits for all. The last ideal type actually conceptualizes social security systems as insurance that fosters risky but overall productive investments in human and other forms of capital. Therefore, it can be shown that social security systems are not necessarily threatened by globalization and that incentives exist for corporations to invest in the provision of social security.     

Asian management research needs more self-confidence

The challenges faced by Asian businesses merit scholarly investigation, both to help local business and to enrich the global scholarly discourse. Such research should be able to make major contributions, for instance by explaining context-specific variables and effects, and by drawing on traditional Asian thought in developing new theories. Yet, recent work, in part due to a lack of self-confidence to analyze the implications of indigenous contexts, seems to have made little progress on this agenda. I first discuss how Asian management research could potentially contribute to global management knowledge. On this basis, I outline institutional constraints that may suppress indigenous and innovative research and thus inhibit the potential impact of local work. I conclude that Asian scholars ought to be more careful in applying theories developed in other contexts, and they can be more self-confident in exploring locally relevant research issues, and in developing theories that explain Asian phenomena.