Exchange rates and foreign direct investment: theoretical models and empirical evidence*

Over the past decades, growth in foreign direct investment (FDI) has stimulated significant attempts at developing theories that explain this trend. One line of this research explores the relationship between exchange rates and FDI. There is no consensus about the nature of this relationship in either the theoretical or empirical work. In this article, we critically appraise this body of work, and find the theoretical studies to be making ground in exploring the complexities of FDI, but the empirical evidence to be constrained by data problems.     

Strategic sourcing: from periphery to the core

As globalization changes the basis of competition, sourcing is moving from the periphery of corporate functions to the core. Always important in terms of costs, sourcing is becoming a strategic opportunity. But few companies are ready for this shift. Outsourcing has grown so sophisticated that even critical functions like engineering, R&D, manufacturing, and marketing can-and often should-be moved outside. And that, in turn, is changing the way companies think about their organizations, their value chains, and their competitive positions. Already, a handful of vanguard companies are transforming what used to be purely internal corporate functions into entirely new industries. Companies like UPS, Solectron, and Hewitt have created new business models by concentrating scale and skill within a single function. As these and other function-based companies grow, so does the potential value of outsourcing to all companies. Migrating from a vertically integrated company to a specialized provider of a single function is not a winning strategy for everyone. But all companies need to rigorously reassess each of their functions as possible outsourcing candidates. Presented in this article is a simple three-step process to identify which functions your company needs to own and protect, which can be best performed by what kinds of partners, and which could be turned into new business opportunities. The result of such an analysis will be a comprehensive capabilities-sourcing strategy. As a detailed examination of 7-Eleven's experience shows, the success of the strategy often hinges on the creativity with which partnerships are organized and managed. But only by first taking a broad, strategic view of capabilities sourcing can your company gain the greatest benefit from all of its sourcing choices.     

Lessons from Lowell, Massachusetts (1821–62): The Shifting Sands of Managerial Beneficence

Far more than a mechanism to voyeuristically delve into the past to satisfy trivial interests, management history can be used to provide insight into contemporary practices and guide us away from repeating past mistakes. Using historiography, this paper offers a glimpse into the nature of the employer–employee relationship, comparing events from the earliest days of industrialization to the present. Set in the historical site of Lowell, Massachusetts, the birthplace of the American Industrial Revolution, this research addresses the progression of events that seem to predictably occur when well-meaning entrepreneurial enterprises face environmental turbulence and subsequently alter their labor philosophy from paternalism to social Darwinism. In the early 1800s, Lowell's textile mills represented a progressive environment. A close-knit, planned community was created which allowed the women opertives to grow socially and intellectually. However, economic downturns resulted in cycles of wage-cutting and cost-saving efforts. Eventually, the women were replaced with immigrants who were willing to tolerate substandard working conditions. By the 1860s, the owners had completely abandoned their concept that corporations should have souls. In history, market forces are continually in flux and often so is management's perception about whether the worker is a valuable asset or an easily discarded econom ic liability. Reactions to this unpredictability are addressed.     

The Cyclical Behavior of Net Exports: Temporary and Persistent Movements

This paper explores the empirical relationship of net exports, domestic output, and foreign output. It presents evidence supporting a consumption-smoothing motive for trade in goods. Classical models of the international macroeconomy typically allow for trade in claims on both home and foreign output. This paper lends empirical support to this setup by showing that highly transitory shocks to output cause net exports from the country experiencing the shock to rise. Persistent shocks have opposite effects—a result consistent with the role persistent shocks play in signaling future investment opportunities.     

THE EFFECTS OF FLEXIBLE EXCHANGE RATES ON AUSTRALIAN WOOL PRICES*

The implication of price stabilisation under a volatile exchange rate is an increasingly volatile price denominated in a foreign currency. Time series analysis is used to model the relationship between exports, prices and AWC stocks. This model is used to assess the distribution of the impact of exchange rate shocks on prices denominated in local and foreign currencies. It is found that the AWC has significantly reduced the impact of exchange rate shocks on domestic prices.     

Organizational environment and business strategy: Parallel versus conflicting influences on human resource strategy in the pharmaceutical industry

While much attention in recent years has been focused on the issue of human resource strategy, little research has been conducted on the degree to which the various forces helping to shape human resource strategy exert parallel or conflicting influences. In this article, business environment and strategy influences on corporate human resource strategies in the pharmaceutical industry are examined. In particular, data derived from corporate annual reports are used to generate a grounded theory of where, when, and why environmental influences on human resource strategy may be more or less consistent with business strategy influences across a number of human resource strategy dimensions.     

Some applications for Basil's independence theorem in testing econometric models

Basu's Independence Theorem is used to show how tests of compound econometric hypotheses, involving two or more naturally ordered hypotheses, may be based upon mutually independent test statistics.     

The effects of industry growth and strategic breadth on new venture performance and strategy content

A sample of 123 independent new ventures was classified into four industry growthlstrategic breadth categories. High growth industry environments were found to provide a favorable environment for new ventures to achieve sales growth; however, the highest sales growth rates were exhibited by new ventures pursuing broad breadth strategies in high growth industries. One-way ANOVA and contrast tests were also used to identify whether specific strategic variables varied across the four industry growth/strategic breadth combinations. New ventures in high growth industries chose to enter on a larger, more aggressive scale and placed more emphasis on new product development than those entering low growth industries. Broad breadth strategy ventures had higher levels of advertising and promotion expenses and placed greater emphasis on the dominance of marketing expertise in their top management team, developing new channels of distribution, and on brand name recognition. Ventures pursuing focus strategies emphasized specialty products and were less cost conscious.     

New technology introduction in a marginal coffee area of Colombia

Income stagnation in the downward cycle of primary product prices is a problem for small farmers in developing countries. The recent abrupt price decline in coffee poses a large adjustment problem in marginal production areas. One method of farm income stabilization for marginal export crop production areas is diversification into food crops with improved technology. The potential for a cushioning of this farm income decline via the introduction of improved food crop technology was examined. A substantial moderating effect was obtained even without uprooting the improved coffee technology. Moreover, an analysis of the constraints to the earlier introduction of the Caturra coffee variety helped identify some of the components of farmer decision making relevant to adoption of new technology.