Does interdependency affect firm and industry profitability? an empirical test

Strategy researchers have argued that heterogeneity in firms' practices and profitability within and across industries may derive from industry‐level differences in the extent of interdependencies among firms' activities. Theoretical models have clarified how and why differences in the extent of the interdependencies faced by firms across industries may affect the distributions of firm profits, but the specific predictions from these models have not been empirically tested. In this paper, we present what we believe is the first large scale empirical analysis linking differences in the extent of interdependencies across industries to differences in the distribution of firm profits within and across those industries. We use survey data to measure interdependencies systematically across a wide number of industries, thus addressing the primary obstacle to incorporating interdependencies in larger scale empirical work, and find evidence consistent with the theoretical predictions: average profitability is highest in industries with moderate levels of interdependency; the dispersion of profits among firms is higher in industries with more extensive interdependencies; and industries with more extensive interdependencies have a more positively skewed performance distribution. We find that the effect of interdependencies on average industry profitability is similar in scale to the effect of patent protection and industry growth rates, placing interdependency squarely among the strategy field's central concepts. Copyright © 2009 John Wiley & Sons, Ltd.     

New Insights on US Aggregate and State Level Trade with the China Region

Aggregate trade data with breakdown into related and non‐related party components show that US multinational enterprises use different trading strategies in the China region relative to other countries. US trade with the China region in 2002–2007 is characterized by arm's‐length transactions. State‐level trade data show great variability in state engagement with the region through trade: exports to the region range from 1 to 28 percent of state exports. In addition, compared to exports to other countries, exports to the region are highly concentrated. At the extreme, for some states, 96–98 percent of exports to the region are computer and electronic products. Finally, gravity regressions show that state exports to Hong Kong are positively associated with the relative size of the Hong Kong‐born population in the states. There is no evidence that stricter labor regimes lead to lower state exports.     

China's foreign trade marketing strategy: Problems and prospects 1

It has been seven years since the open door policy was officially instituted by the People's Republic of China. During this time, changes have taken place within Chinese society and China's dealings with the rest of the world. In this paper, the authors evaluate the problems and prospects for China's foreign trade marketing strategy. They make recommendations in five policy areas: (1) export promotion; (2) the mix of exports; (3) a systems approach to trade; (4) joint ventures stressing value‐added labour and (5) the role of assembly technology. Each strategy is identified and discussed in terms of its future prospects in the development of China's trade.     

Ethical Evaluations of Business Activities and Personal Religiousness

The study examines the relationship betweenmoral judgments of a business situation with ethicalcontent and personal religiousness. The findingssuggest that ethical interest and behaviour arerelated to religiousness. However, only the ethicalphilosophy of contractualism was found to be relatedto religiousness, while moral equity and relativismwere not.     

An Empirical Analysis of the Bias and Rationality of Profit Forecasts Published in New Issue Prospectuses

Our study sets out to assess the accuracy of profit forecasts made by IPOs in Hong Kong. We use a variety of measures and tests to examine the accuracy, bias, rationality, and superiority of earnings estimates. The results show that forecast accuracy compares favourably with the findings from the developed economies of Australia, Britain, Canada, and New Zealand. Forecasts are shown to be superior to the predictions from time series models. IPOs tend to underforecast in the sense that actual profits exceed the forecasts. The rationality tests show mixed results. Cross-sectional analyses of forecast accuracy have poor explanatory power although the Big Six reporting accountants are associated with smaller forecast errors.     

Volatility behavior of exchange rate future contracts

The increasing globalization of economies and the concurrent increase in the risk of currency exposure has stimulated the development of new instruments to allow both investors and traders to hedge their currency risk. The expansion of these derivatives, however, has raised some concerns. This paper studies the determinants of the dynamics of exchange rate future contracts as a means to identify the sources of such concerns. By using a mean-exponential generalized autoregressive conditional heteroskedasticity (M-EGARCH) model for five different future contract lengths and six developed economies, it is found that an M-EGARCH(1,1) effectively describes the exchange rate futures' daily dynamic. Sign, size, and persistence effects on the volatility of future contracts are all significant, thus providing important information to both policy makers and market participants.     

EARNINGS MOBILITY: AN INTERNATIONAL COMPARISON OF ITALY AND FRANCE

In this study we consider two panels of wage-earners, from 1974 to 1988, for Italy and France respectively. The international perspective and the availability of micro-data are particularly interesting for they allow us to address individual characteristics as well as national specificities. In the empirical analysis a partitioning of the earnings distribution by deciles is used and the overall hierarchical mobility of individuals is investigated. Transition matrices are computed in order to compare wage formation and mobility processes across countries, in the period under investigation. A rich battery of mobility indices is presented and the relations between them are studied.
The paper addresses several different issues and compares the results across countries. First, the evolution of earnings and the relative wage profiles are compared across countries. Second, the heterogeneity issue is addressed and some structural characteristics of the sample are studied, namely: cohort and gender differences in earnings.     

BEEF PRODUCTION FUNCTIONS FROM SAMPLE FARMS IN NOVA SCOTIA*

The beef production function of different enterprises has been estimated for the sample farms in Nova Scotia. The returns to scale and marginal productivity of resources are derived from the production functions. It indicates decreasing returns to scale and the low marginal productivities of grain, labor, and variable costs for all enterprises. Grain and hay are the most important feeds for beef production. Many beef farms in the province produce more roughage than grain. The marginal rate of substitution of hay for grain is diminishing. Beef farmers can produce equal amounts of product with different combinations of the two feeds. The results provide the possibility of finding the least-cost combination of inputs. This study has specified the optimum input levels under different prices of inputs. It will help beef farmers to allocate their resources properly in order to maximize profits. Les fonctions de production de boeuf de différentes entreprises ont été eslimées à partir de fermes selectionées en Nouvelle-Ecosse. Les économies ?échelle et la productivté marginale des ressources sont dérivées des fonctions de production. On retrouve dans toutes les entreprises des économies ?échelle décroissantes et une faille productivity marginale du grain, du travail et des couts variables. Le grain el le foin constituent la plus importanle source ?alimentation dans la production de boeuf. Plusieurs fermes ?élevage de boef produisent plus de fourrage que de grain. Le laux marginal de substitution du foin pour le grain va en diminuant. Les éleveurs de boeuf peuvent produire des quantités egales par des combinaisons différentes de ces deux aliments. Les résultats ptrmettent de déterminer la combinaison la moins coûteuse pour la consommation des aliments, Cette étude a détérmine les niveaux optime de consommation selon les différents prix des aliments. Elle aidera les producteurs de boeuf à distribuer adéquatement les aliments afin de maximiser les profits.