Should Variable Cost Aid to Attract Foreign Direct Investment be Banned? A European Perspective

The purpose of this paper is to analyze the European Commission’s approach to state aid to attract foreign direct investment (FDI) in a competition policy framework. The Commission considers variable cost aid (VCA) to be more distortive than start-up or fixed cost aid (FCA). This paper addresses that issue and checks whether allowing FCA while banning VCA is an optimal strategy for a supranational Competition Authority maximizing welfare. The model shows that a domestic government maximizing welfare always prefers VCA to FCA if both the incumbent and the entrant are foreign firms and if granting VCA does not cause the incumbent firm to exit the market. The model shows that banning VCA may lead to sub-optimal equilibria where welfare is not maximized.     

Making Sense of the Third Way

Books reviewed in this article:
Anthony Giddens, The Third Way
Tony Blair and Gerhard Schroeder, The Way Forward for Europe's Social Democrats – A Proposal     

Reconceptualizing the spillover effects of foreign direct investment: A process-dependent approach

Theory suggests that FDI spillovers are a function of the level of foreign presence. We extend this view by developing and testing the premise that variations in spillover effects are the result of differences in the process of foreign entry. Drawing from the concept of time compression diseconomies, we develop the constructs of pace and irregularity of foreign entry, and demonstrate that they negatively moderate the relationship between the level of foreign presence and the productivity of host-country firms. We also explain how and why the moderating role of the process of foreign entry is influenced by the intensity of R&D and technical knowledge in domestic industries. We find evidence that firms operating in low-tech sectors are better able to absorb fast foreign entry.     

From Greenwashing to Machinewashing: A Model and Future Directions Derived from Reasoning by Analogy

Journal of Business Ethics - This article proposes a conceptual mapping to outline salient properties and relations that allow for a knowledge transfer from the well-established greenwashing...     

Handelsrestriktionen gegen Russland belasten sektoral und regional unterschiedlich stark

Wirtschaftsdienst - Die militärische Eskalation in der Ukraine sowie die aufgrund der Sanktionen einsetzenden Bremseffekte für die Kapital- und Handelsströme werden die deutsche...     

Strategizing corporate social responsibility: evidence from an Italian medium-sized, family-owned company

Corporate social responsibility (CSR) is becoming a mainstream issue as both researchers and managers are realizing its importance, but knowledge gaps persist. In particular, the processes underlying the adoption of responsible managerial practices and the effects associated with them are still at the centre of intense debate. Not surprisingly, managers expect formalized procedures that might influence corporate managerial processes and especially corporate strategies. Given the growing emphasis on the integration of CSR into corporate strategy, the purpose of this qualitative study is to explore the antecedents of this process and the dynamics underlying it. We focus on a medium-sized, family-owned Italian company, SABAF SpA. We find that: the beliefs and value systems of entrepreneurs play a fundamental role in shaping a sustainable corporate strategy; the importance of the relationship between social performance and financial performance depends to some extent on the kind of competitive strategy that a company has selected; and people need to be aware of it – that is, CSR strategies must be explicit and codified into specific managerial procedures.