Dealing with dualities

This paper introduces the topic of dealing with dualities, which is the theme of this special issue. We first give a short review of the notion of paradox and duality in management research. After this, we discuss the relevance of dualities for the IMP approach of analyzing industrial networks. Then, we briefly introduce the papers of and their relationship with the theme of this special issue. We conclude with some suggestions for future research.     

On the static and dynamic costs of trade restrictions for small developing countries

We analyze the costs of trade restrictions for a small developing economy (LDC). Intermediate goods invented elsewhere are only introduced on the LDC market if it is profitable to do so. The LDC economy evolves to a balanced growth path in which income, welfare, and the share of available goods increase if trade restrictions fall. The adjustment path is asymmetric: an increase in trade restrictions leads to a slow-down of economic growth, while a decrease may lead to a rapid catch-up process. The dynamic costs of trade restrictions are in general substantially larger than the static costs.     

Is there any scope for corporatism in macroeconomic policies?

This paper studies corporatism as the outcome of bargaining between the government and a representative labor union. We show that if negotiations between these two parties only relate to macroeconomic policies and unions are not assumed to be inflation-averse, corporatism can never be beneficial to both parties. As corporatist policies are nevertheless commonly observed in this context, we discuss possible explanations that reconcile the theory with actual observations. The policy implications of these explanations are also discussed.     

Collateral,relationship lending and family firms

Prior research suggested that relationship lending could play a role in solving asymmetric information problems between borrower and lender. Other studies suggest a relationship between family ownership and the shareholder–bondholder agency conflict. The present paper investigates the impact of relationship characteristics, family ownership and their interaction effects upon the use of collateral in SME lending. We examine the determinants of collateral as well as the determinants of the choice between business and personal collateral using decision tree analysis. The results reveal that relationship characteristics have a significant influence, but not always in the direction as expected. Moreover, they do not seem to be the primary determinants in our classification models. The most important determinants in both classification models seem to be the loan amount, total assets and the family versus non-family firm distinction. In addition, we differentiate between line-of-credit and non-line-of-credit loans and find significant differences between these decision trees.     

Do external political pressures affect the Renminbi exchange rate?

This paper investigates whether external political pressure for faster Renminbi appreciation affects both the daily returns and the conditional volatility of the Renminbi central parity rate. We construct several political pressure indicators pertaining to the Renminbi exchange rate, with a special emphasis on the US pressure, to test the hypothesis. After controlling for Chinese macroeconomic surprise news, we find that US and non-US political pressure does not have a significant influence on Renminbi's daily returns. However, evidence suggests that political pressures, and especially those from the US, have statistically significant impacts on the conditional volatility of the Renminbi. Furthermore, we conduct the same exercise on the 12-month Renminbi non-deliverable forward rate. We find that the non-deliverable forward market is highly responsive to macroeconomic surprise news and there is some evidence that Sino-US bilateral meetings affect the conditional volatility of the Renminbi non-deliverable forward rate.     

Corporate Governance, Opaque Bank Activities, and Risk/Return Efficiency: Pre- and Post-Crisis Evidence from Turkey

Does better corporate governance unambiguously improve the risk/return efficiency of banks? Or does either a re-orientation of banks’ revenue mix towards more opaque products, an economic downturn, or tighter supervision create off-setting or reinforcing effects? The authors relate bank efficiency to shortfalls from a stochastic risk/return frontier. They analyze how internal governance mechanisms (CEO duality, board experience, political connections, and education profile) and external governance mechanisms (discipline exerted by shareholders, depositors, or skilled employees) determine efficiency in a sample of Turkish banks. The 2000 financial crisis was a wake-up call for bank efficiency and corporate governance. As a result, better corporate governance mechanisms have been able to improve risk/return efficiency when the economic, regulatory, and supervisory environments are more stable and bank products are more complex.     

On the proportionality of EU spatial ex ante coexistence regulations

The EU is currently struggling to implement coherent coexistence regulations on genetically modified (GM) and non-GM crops in all member states. While it stresses that any approach needs to be “proportionate to the aim of achieving coexistence”, very few studies have actually attempted to assess whether the proposed spatial ex ante coexistence regulations (SEACERs) satisfy this proportionality condition. In this article, we propose a spatial framework based on an existing landscape and introduce the concept of shadow factor as a measure for the opportunity costs induced by SEACERs. Our empirical findings led us to advance the proposition that flexible SEACERs based on pollen barriers are more likely to respect the proportionality condition than rigid SEACERs based on isolation distances. Particularly in early adoption stages, imposing rigid SEACERs may substantially slow down GM crop adoption. Our findings argue for incorporating a certain degree of flexibility into SEACERs by advising pollen barrier agreements between farmers rather than imposing rigid isolation distances on GM farmers. The empirical questions of proportionality and flexibility have been largely ignored in the literature on coexistence and provide timely information for EU policy makers.