Efficiency and Ownership Structure: The Case of Poland

We examine the effects of foreign entry on productive efficiency during the Polish investment liberalisation. The performance of foreign acquisitions is compared to foreign firms entering the market through greenfield entry, as well as domestic acquisitions of privatised firms, domestic greenfields and remaining state‐owned (non‐privatised) firms during the period 1995–2000. We find that foreign privatised firms have realised larger productivity gains than all types of domestic firms and that this is not due to higher price‐cost margins, which is consistent with the idea that foreign firms bring in firm‐specific knowledge. Foreign greenfields have the highest average labour productivity, while foreign privatisations show the largest productivity increase.     

Are Imports and Exports Cointegrated? An International Comparison

In this paper we use the Johansen and Juselius cointegration technique to examine the long‐run convergence between imports and exports for a number of industrialized countries. The results indicate that there exists a long‐run steady‐state relationship between imports and exports for most countries in the sample. The policy implications of our findings are that the countries are not in violation of their international budget constraints and, more importantly, there is no productivity gap between the domestic economy and the rest of the world, implying a lack of permanent technological shocks to the domestic economy.     

Impact of Economic Development on Commodity and Public Research Policies in Agriculture

A political-economic explanation is provided for the existence of commodity policy and research expenditures in agriculture. Structural economic characteristics such as pre-policy endowment incomes, deadweight costs, and distributional impact of research are found to determine the levels of commodity price subsidies (taxes in developing countries) and underinvestment in research in all countries. Unequal benefits from research generate two types of interaction effects: political interaction effects , whereby commodity policy reduces research-induced inequality, resulting in more research; and economic interaction effects , whereby deadweight costs per unit transfer decline with research. The latter effect generates increased levels of political optimal research investment.     

Environmental policy and the inward investment position of US “dirty” industries

Do high pollution abatement costs have a disadvantageous effect on foreign direct investment in countries with a strict environmental policy? While it would seem to make sense to believe that they do, hard evidence based on trade data is hard to find. The following article tests the hypothesis for the USA and comes to some surprising conclusions.     

Pirates and Samaritans: A decade of measurements on peer production and their implications for net neutrality and copyright

This study traces the evolution of commons-based peer production by a measurement-based analysis of case studies and discusses the impact of peer production on net neutrality and copyright law. The measurements include websites such as suprnova.org, youtube.com, and facebook.com, and the Peer-to-Peer (P2P) systems Kazaa, Bittorrent, and Tribler. The measurements show the two sides of peer production, the pirate side with free availability of Hollywood movies on these P2P systems and the Samaritan side exhibited by the quick joining of 400,000+ people in a community to organize protests against events in Burma. The telecommunications and content industry are disrupted by this way of peer production. As a consequence, revenues of both industries are likely to suffer in the coming years. On the other hand, innovative P2P systems could win the battle on merit over classical distribution technologies. As a result, a continuation is expected of both legal actions against P2P and possible blocking actions of P2P traffic, violating net neutrality. It is argued that this hinders innovation and causes a large discrepancy between legal and user perspectives. A reform of copyright laws is clearly needed, otherwise they will be unenforceable around 2010.     

Institutional Investors,Political Connections,and the Incidence of Regulatory Enforcement Against Corporate Fraud

We investigate two under-explored factors in mitigating the risk of corporate fraud and regulatory enforcement against fraud, namely institutional investors and political connections. The role of institutional investors in the effective monitoring of a firm’s management is well established in the literature. We further observe that firms that have a large proportion of their shares held by institutional investors have a lower incidence of enforcement actions against corporate fraud. The importance of political connections for enterprises, whether in a developed market such as the United States or an emerging market such as China, has been established by previous studies. However, we find evidence of another positive effect of political connections: they may reduce the incidence of enforcement action against corporate fraud. We also find that political connections play a more significant role in reducing regulatory enforcement incidents against non-state-owned enterprises and firms in weaker legal environments, whereas institutional ownership plays a more important role in reducing regulatory enforcement incidents against state-owned enterprises.     

The age-effect of financial indicators as buffers against the liability of newness

This paper builds on the liabilities of newness literature to suggest that accounting information is important for new firms. Using a sample of over 30,000 companies followed during their first 7 years of existence, we find evidence that financial indicators mitigate the liability of newness and that this buffering effect is stronger the younger the organization. These results represent three primary contributions to the literature. First, our conceptualization of accounting measures as indicators of external (creditworthiness enhancing legitimacy) as well as internal (targets for management) buffers to the liabilities of newness provides a novel way of viewing these constructs and explains why they are important to new firms despite their uncertainty and opacity. Second, we theoretically justify and empirically validate that these constructs are more important the younger the new firm is, which runs counter to the common wisdom of these constructs in the entrepreneurship literature. Third, we identify buffers against failure for new firms that are generalizable across industries.     

A strategic development management orientation for local authorities 1

One of the direct consequences of political transformation in South Africa is an increasing emphasis on development. An important element of this is the often‐expressed wish that local authorities become more development orientated. For the purposes of this article, being ‘developed’ is defined as having the capacity and power to resist threats from the dynamic environment and to utilise its opportunities in a responsible and sustainable manner. Development is not a condition that can be bestowed on people by a local authority or any other development agent. But a local authority is part of the multidimensional environment, and a development‐orientated local authority contributes to the process of development by purposefully eliminating threats from this environment and providing access to opportunities in matters it is mandated to deal with. A development‐orientated local authority should therefore have a strategic (or mission‐driven) development management approach. This article proposes an arrangement to incorporate such an approach into the organisational structure.     

A comment on Bradburd: “Privatisation of natural monopolies”

In a recent issue of this journal, Ralph Bradburd (1995) argues that the efficiency gains of privatising a natural monopoly are likely to outweigh any loss of allocative efficiency. However, a trade-off based on a definition of the total surplus which includes profits but not internal rents is flawed. Correcting the analysis shows that even stronger conditions have to be met before privatising a natural monopoly is beneficial. The same is true if demand schedules are iso-elastic rather than linear. Recent evidence on demand elasticity and efficiency differences suggests that privatisation would be likely to reduce welfare even according to Bradburd's approach.