Expectations,network effects and timing of technology adoption: some empirical evidence from a sample of SMEs in Italy

We provide evidence on the influence of expectations and network effects on the timing of technological adoption. By considering a sample of SMEs operating in Italy, we focus on the determinants of their decision to adopt Fast Ethernet, a communication standard for Local Area Networks (LANs). We find that both expectations and network effects significantly affect the timing of adoption. In particular, price expectations generally tend to delay adoption and (indirect) network effects in the form of backward compatibility as well as informational spillovers tend to foster adoption. Firm size also matters.

Entry,trade costs,and international business cycles

Are firm entry and fixed exporting costs relevant for understanding the international transmission of business cycles? We revisit this question using a model that includes entry, selection to exporting activity, physical capital accumulation and endogenous labor supply. We determine that once the stochastic process for exogenous productivity is calibrated to consider the endogenous dynamics in TFP created by the number of firms and the time series volatility of entry is calibrated to the data, our model yields minimal departures from the Backus et al. (1992) benchmark. The richer model shares all of the successes of the previous model in terms of the volatilities of aggregate quantities, as well as its failures, in terms of replicating patterns of international co-movement and the volatility of international relative prices.     

Entrepreneurial rents and the theory of the firm

The creation of entrepreneurial rents occurs under conditions of uncertainty. Yet current theories of rent appropriation such as transactions cost theories of the firm focus their efforts primarily on how quasi-rents – rents that have already been created – are appropriated by parties to that exchange. Entrepreneurs face a dual challenge, that of creating entrepreneurial rents and appropriating some of these rents. Moreover, this challenge usually exists at a time when the entrepreneurial rents that might be created are not known or anticipatable. Indeed, entrepreneurs not only concern themselves with ensuring that they are able to appropriate at least some of the rents that might be eventually created but in fact they may not create any rents or potentially lose value. Understanding the dual nature of the rent creation and the rent appropriation problem has a variety of implications for the study of entrepreneurial organizations and generally for theory of the firm discussions.     

Service quality control mechanisms in franchise networks

This paper reports the study of some factors that influence the control intensity exerted by franchisors on the service quality provided by the franchised units of their networks and what interdependencies exist between the different mechanisms that can be used to monitor service quality. On the one hand, three control mechanisms of conformance quality are considered, namely audits, mystery shoppers, and mandatory purchase of inputs and products. On the other hand, polls are used to monitor perceived quality by customers. There are two main findings. First, control intensity is greater in those industries in which customers tend to be non-repetitive. Second, four complementary relationships are found between control mechanisms: between audits and mystery shoppers, between audits and polls, between mandatory purchase of inputs or products and mystery shoppers, and between mandatory purchase of inputs or products and polls.     

Making Location Decision Based on Regional Industrial Capabilities: A Case of a Distributor

This article presents a structured process to make facility location decisions based on regional industrial capabilities. It presents a framework for collecting business intelligence on major cities of the region of interest. In the next step, the collected business intelligence is incorporated into a quantitative decision analysis model for facility location. While the proposed framework is generic and builds on the existing international business and supply chain management literature, the article mainly focuses on the facility location problem of a distribution firm that is not well represented in the literature. Two cases—one each for new and established distributors who are trying to sell to the Mexican market—are presented in the article.     

Export transitions

This paper uses a broad multi-country dataset to describe the main stylized facts about export performance in the last four decades. First, transition probability matrices are computed to look at changes in the position of countries at the world distribution of the export to GDP ratio. It finds that transitions toward high export ratios have been mainly experienced by Asian countries, but also that some reformers, like Mexico and Chile, have been able to improve their position relative to other studied economies. African countries mainly sunk to the bottom part of the world distribution, although they constitute only half of the economies with relatively bad export performance. In the consideration of the structural factors that may play an important role for long-run transitions, the results suggest that more open economies and those with better institutions are more likely to move to high export ratios in the long-run. Second, the within-country experiences are analyzed for identifying episodes of export transitions. Using an event study methodology, a very weak association is found between export transitions and investment rate. In contrast, the results suggest that transitions are potentially driven by improvements in financial development. Finally, favorable terms of trade, increments in productivity, and reductions in exchange rate distortions are not found to be a catalyst for export transitions.     

The Innovation Process and the Development of a Sustainability Strategy

ABSTRACT

This article analyzes what influences a firm's choice of strategy—why some firms stick to defensive strategies while others rely on offensive ones. With this in mind a survey was conducted on mineral sector companies associated with the Brazilian Mining Institute. The results show that the majority of companies use an offensive strategy and that some companies use more than one strategy at the same time. That is, they possess a corporate strategy and a sustainability strategy.     

The Internationalization of Spanish- and Portuguese-Speaking Banks

This article investigates which variables affect the location choice of banks from Spanish- and Portuguese-speaking countries in their process of internationalization. The article compares the differences in these variables for public and private banks. The sample consists of 141 banks operating in 58 countries. Results show that internationalization is undertaken by the largest banks, which preferably choose countries with similar language, close to the home country, and with the most opportunity for growth. Additionally, the effects of certain explanatory variables on the probability of expanding to a given country are different for public and private banks.     

Income Distribution and Monopoly: Price and Quantity Patterns with Intra‐ and Inter‐class Income Dispersion

We analyze the direction of the co‐movements of price and output in a monopolistic market when an expansive shock occurs. Price and quantity patterns are shown to depend on the consumers' income distribution. In particular, a low degree of income dispersion is associated with price and quantity reacting in opposite directions to demand shocks.     

An asset-pricing view of external adjustment

Recent literature has argued that conventional measures of external sustainability - the trade balance and current account - are misleading because they omit capital gains on net foreign asset positions. We adjust the definition of the current account to include the capital gains and discuss how this may affect our thinking about external adjustment and sustainability. We do so in the context of a two-country macro-finance model of Pavlova and Rigobon (2008a) that allows exploration of the interconnections between equilibrium portfolios and external accounts' dynamics. We calibrate the model and find that it generates several testable implications, some of which have already been validated empirically. First, we establish dynamic properties of the capital-gains adjusted current account and show that they are fundamentally different from those of the conventional current account. Second, we find that capital gains have a stabilizing effect on the trade balance and the current account. Finally, we demonstrate that in response to a shock, the conventional and the capital-gains adjusted current accounts may move in opposite directions.