Risk abatement as a strategy for R&D investments in family firms

The behavioral agency model suggests family firms invest less in R&D than nonfamily firms to protect their socioemotional wealth. Studies support this contention but do not explain how family firms make R&D investments. We hypothesize that when performance exceeds aspirations, family firms manage socioemotional and economic objectives by making exploitative R&D investments that lead to more reliable and less risky sales levels. However, performance below aspirations leads to exploratory R&D investments that result in potentially higher but less reliable sales levels. Using a risk abatement model, our analyses of 847 firms over 10 years supports our hypotheses. Copyright © 2013 John Wiley & Sons, Ltd.     

Beating competitors to international markets: The value of geographically balanced networks for innovation

Being able to launch new products internationally is critical for technology‐based ventures to recoup the high costs of R&D and to exploit their innovations fully. Despite the widely recognized importance of networks within the innovation development process, there appear to be contrasting viewpoints as to whether local or foreign network partners contribute more in the race to internationalize. Drawing on the theoretical underpinnings of comparative advantage, we propose and empirically confirm that ventures pursuing a balance of local and foreign network connections for the development of an innovation are able to bring the product more rapidly into the international marketplace. Furthermore, both innovation complexity and industry clockspeed heighten the importance of geographic network balance to the speed of product internationalization. Copyright © 2013 John Wiley & Sons, Ltd.     

To Your Health: Health Insurance,Self‐Employment Exit,and Older Entrepreneurs

Drawing on a sample of 5,238 individuals in the Health and Retirement Study, we examined the relationship between having one's own health insurance and exit from self‐employment to employment. Our results indicate that individuals who have health insurance are less likely to exit self‐employment. When self‐employed individuals have their own health insurance, males, relative to females, are more likely to exit self‐employment. Additionally, when self‐employed individuals have their own health insurance, those who do not have health problems that limit work are more likely to exit. We discuss the implications that these findings have on the literature and policymakers.     

Credit unions during the crisis: did they provide liquidity?

We use the consumer finance monthly national survey to demonstrate that credit unions (CUs) in the United States did little to help consumers obtain a home equity line of credit (HELOC) during the recent financial crisis. Our results hold after including a two-stage regression structure using the availability of CUs as the identifying instrument, as well as employing a Heckman correction procedure to adjust for sample selection bias. We find that during the financial crisis, CUs were no more likely than other depositary institutions to extend HELOCs either in areas experiencing housing price declines or to lower income households. Our results provide an empirical counterpoint to those who have lauded CUs for providing liquidity during times of crisis or for serving consumers who would otherwise be challenged to obtain funds.     

How do young firms manage product portfolio complexity? The role of absorptive capacity and ambidexterity

Building a complex portfolio of products can be beneficial for young firms due to increased sales growth and competitiveness. Yet, the benefits from product portfolio complexity (PPC) are often outweighed by rising costs, leading to an inverted U‐shaped relationship between PPC and performance. Recent research has called for an increased understanding of how firms are able to better manage higher levels of PPC. We suggest that absorptive capacity and ambidexterity are vital to enhancing the benefits and mitigating the costs of increasing PPC. Using a sample of 215 young high technology firms, we find support for positive moderating effects of absorptive capacity and ambidexterity on the inverted U‐shaped relationship between PPC and firm performance. Copyright © 2012 John Wiley & Sons, Ltd.     

Nationalism,socialism and planning: Influential ideas in the South

The paper discusses the origin of three influential ideas in the South, the reasons why they are found persuasive by Southern elites, and finally whether they are helpful in promoting modernization. It argues that all three ideas are Janus-faced, combining the ‘modern’ aspects of the rationalist Enlightenment with the partly ‘pre-modern’ rural nostalgia of the Romantic movement. But the ideas are dysfunctional in terms of the desired aims of ‘nation-building’ and attaining material progress. Nationalism, far from being an adhesive can become a disintegrative force in pluralistic societies. Planning becomes a means of suppressing the agents of the economic modernization that is desired. The waving of the Enlightenment and socialist banner of equality in suppressing the merchant, financier and entrepreneur is a smokescreen. The suppression reflects more atavistic impulses, which amount to a denial of the irreducible uncertainty that unavoidably attends commercialization, monetization and industrialization.     

International Evidence on Institutional Trading Behavior and Price Impact

This study characterizes institutional trading in international stocks from 37 countries during 1997 to 1998 and 2001. We find that the underlying market condition is a major determinant of the price impact and, more importantly, of the asymmetry between price impacts of institutional buy and sell orders. In bullish markets, institutional purchases have a bigger price impact than sells; however, in the bearish markets, sells have a higher price impact. This differs from previous findings on price impact asymmetry. Our study further suggests that price impact varies depending on order characteristics, firm‐specific factors, and cross‐country differences.     

Managing differences: the central challenge of global strategy

The main goal of any international strategy should be to manage the large differences that arise at the borders of markets. Yet executives often fail to exploit market and production discrepancies, focusing instead on the tensions between standardization and localization. In this article, Pankaj Ghemawat presents a new framework that encompasses all three effective responses to the challenges of globalization. He calls it the AAA Triangle. The A's stand for the three distinct types of international strategy. Through adaptation, companies seek to boost revenues and market share by maximizing their local relevance. Through aggregation, they attempt to deliver economies of scale by creating regional, or sometimes global, operations. And through arbitrage, they exploit disparities between national or regional markets, often by locating different parts of the supply chain in different places--for instance, call centers in India, factories in China, and retail shops in Western Europe. Ghemawat draws on several examples that illustrate how organizations use and balance these strategies and describes the trade-offs they make as they do so. Because most enterprises should draw from all three A's to some extent, the framework can be used to develop a summary scorecard indicating how well the company is globalizing. However, given the tensions among the strategies, it's not enough simply to tick off the corresponding boxes. Strategic choice requires some degree of prioritization--and the framework can help with that as well. While it is possible to make progress on all three strategies, companies usually must focus on one or two when trying to build competitive advantage.     

Free Trade and Laissez Faire: Has the Wheel Come Full Circle?

This paper notes that there is a need to get to a fourth stage in the evolution of the relationship of free trade to laissez faire going beyond the three stages identified in Max Cordon's magisterial book Trade Policy and Economic Welfare. In the first stage free trade was a special case of the argument for laissez faire. In the second stage many arguments for protection arose with various qualifications to the case of free trade and laissez faire. In the third stage the link between free trade and laissez faire was broken and in the theory of domestic distortions it was noted that all arguments for protection except in the case of monopoly power in trade were second best arguments. Moreover, it was possible to devise measures such as taxes and subsidies that reduced the distortion through government intervention. But noting that government intervention itself carries with it problems of rent seeking and directly unproductive activities as well as the taking into the proper role of Government, laissez faire seems the best policy. Hence the need for a fourth stage in the evolution of free trade and laissez faire to link them together again.