BEHAVIOURAL COMPLEXITY

Abstract The paper compares and contrasts complexity economics and neoclassical economics. It proposes a framework for modelling complex systems and, accordingly, utilizes agent‐based simulation to examine consumption behaviour in a complex model and in a neoclassical model. Results suggest that complex behaviour leads to higher accumulation of wealth, better efficiency and greater stability. These results are consistent with the nature of complex systems whereby ‘the whole is greater than the sum’, and where unexpected system properties emerge from simple local interactions.     

Innovation and internationalization as growth strategies: The role of technological capabilities and appropriability

Firms grow either by launching new products (innovation) or by attracting new customers (internationalization) or by using a mixed strategy. An interesting question is whether innovation and internationalization activities are complementary or substitutive. The paper discusses the connections between technological capabilities, their appropriability, innovation activities, and internationalization, and derives hypotheses from the knowledge-based view of the firm. The hypotheses are empirically analyzed using survey data from 300 Finnish firms clustered as follows: (i) domestic replicators, (ii) domestic innovators, (iii) international replicators, and (iv) international innovators. The performance of the clusters is empirically analyzed, the success criteria being actual growth rate and profitability. We conclude that a profitable firm needs to have unused technological capabilities in order to exploit economies of scope through innovation. A strong appropriability regime strengthens growth. Internationalization and innovation combined is the most advisable option when domestic markets are limited.     

Corporate governance and operating performance of Chinese listed firms

In this paper, we investigate the impact of corporate governance on firm performance and valuation in China. Our study introduces a composite measure of corporate governance to measure the association between corporate governance and Chinese firms’ performance and valuation. Because agency theory suggests that companies with better corporate governance standards perform better, we propose that better governed Chinese firms would have greater performance and higher valuation. We find that our composite measure of corporate governance is positively and significantly associated with firm performance and valuation. These findings have implications for policy makers, researchers, managers, and investors in general and those in emerging markets in particular.     

Highly skilled globetrotters: mapping the international migration of human capital

In the final years of the twentieth century, brain drain, skills shortages and lack of career opportunities have become issues of major concern for policy-makers concerned with R&D in government, academia, and industry. Labour mobility across political borders, especially among highly skilled labour, provides a solution for the aforementioned concerns to some actors, but engenders problems to others. Drawing on various empirical investigations and on previous studies, this paper attempts to provide a mapping of the various types of human resources mobility across national borders. It argues that various groups of highly skilled persons are driven by different push and pull factors. In addition to immigration legislation, other factors, such as taxation, studying abroad, quality of work, openness in communication, business expansion overseas, labour market supply and demand signals, etc. play important role in the choice of highly skilled migrants to relocate overseas.     

International Growth Orientation of Knowledge-Intensive SMES

As a response to the increasing interest in the internationalisation of knowledge-intensive firms, a measure for analysing their international growth orientation was developed. This measure was applied in empirical setting of Finnish information and communication technology companies. The development of the measure as well as the empirical findings are described in detail, and the validity and the reliability of the measure was secured in various ways. The measure seems both viable and valid, and also the findings appear to be logical, and they give a good basis for further research on the topic.     

Whose policy uncertainty affects trade flows between Japan and the U.S.?

Previous studies mostly assumed that the effects of policy uncertainty on trade flows are symmetric. In this article, we add to this literature by arguing and demonstrating that the effects could be asymmetric. Since asymmetry analysis requires using non-linear models, such models yield a more significant outcome than linear models. We show this by considering the trade flows of 66 two-digit U.S. exporting industries to Japan and 59 two-digit Japanese exporting industries to the United States. While both the linear and non-linear models predicted short-run effects of the U.S. and Japanese policy uncertainty on exports of most industries, the long-run effects were significantly different. In the long run, while the linear model predicted no significant effects of either uncertainty measure, the non-linear model 12 (14) U.S. exporting industries that were affected by changes in the Japanese (the U.S.) policy uncertainty measure and six (10) Japanese exporting industries that were affected by changes in the Japanese (the U.S.) policy uncertainty measure. Several large industries were among the affected industries.     

Trading concentration and industry-specific information: an analysis of auto complaints

Review of Quantitative Finance and Accounting - We investigate whether sophisticated investors’ trading concentration in the auto industry is associated with their use of auto complaint data....     

An Extension of the Trade Restrictiveness Index to Large Economies*

The Trade Restrictiveness Index (TRI) introduced by Anderson and Neary (1994 ) provided the first theoretically satisfying measure of a country’s tariff structure by overcoming the problem of ad hoc specification of indexing weights and the related index number problem. We observe, however, that the TRI may not exist or may not be unique when countries are large. As a remedy, we propose a simple extension.