Knowledge seeking in going abroad

Based on knowledge theories, this study examines the impact of client‐following and market‐seeking entry strategies on foreign market entry by firms. The article also explores the subsequent development of knowledge in firms. Using data from 116 firms, we test three hypotheses using logistic regression. Our hypotheses are supported in the data. Our analysis shows that significant differences exist between client‐following firms and market‐seeking firms. Client followers are both supported and trapped by their international network, whereas market seekers, though not supported, are much freer to pursue higher‐order learning. Due to differences in their network ties, these two types of firms learn at different speeds and learn different things. We also found that firms with proactive knowledge‐seeking strategies learn more. Thus, learning strategies have consequences for exploration and exploitation of international markets, what is learned and how much is learned, and proactive internationalization strategies for firms. © 2009 Wiley Periodicals, Inc.     

Getting Shut Out of the International Capital Markets: It Doesn't Take Much*

We use a simple model of international lending to show that an emerging market borrower who might default can be shut out of international capital markets without warning. A modest haircut on obligations, for example, can shut down lending.     

The future of bioregional planning in the Southern Appalachian Man and the Biosphere region

This paper assesses the current status and future prospects for bioregional planning in the Southern Appalachian Man and the Biosphere (SAMAB) region in the United States. The SAMAB region is one of the most biodiverse temperate regions in the world. The region's environment is threatened by development, air and water pollution, and invasive species. Numerous institutions in the region have some responsibility for protecting the region's environment, including the National Park Service, the US Forest Service, the US Environmental Protection Agency, the US Fish and Wildlife Service, several states, hundreds of municipalities, and numerous active non-profit organizations. Twenty-seven people associated with bioregional planning were interviewed to gauge their opinions on the state of bioregional planning in the SAMAB region. Overall, the respondents do not believe that the totality of all those efforts comprises bioregional planning because the efforts are limited in scale and scope and somewhat uncoordinated. With respect to the future of the region, the respondents found it difficult to imagine the state of the region 50 and especially 200 years into the future. Additionally, almost all of their definitions of bioregional planning included a spatial dimension but none included a time dimension. Thus, one of our conclusions is that the future of bioregional planning in the region will be hampered by difficulties people responsible for environmental protection have in dealing with ‘the future’. Much effort needs to be expended to inculcate people in the region with the desire to anticipate problems long before they occur. Reactive responses, which characterize the majority of current efforts, are likely to be ‘too little, too late’.     

Promise and peril in implementing pay‐for‐performance

Why would managers abandon pay‐for‐performance plans they initiated with great hopes? Why would employees celebrate this decision? This article explores why managers made their decisions in 12 of 13 pay‐for‐performance “experiments” at Hewlett‐Packard in the mid‐1990s. We find that managers thought the costs of these programs to be higher than the benefits. Alternative managerial practices such as effective leadership, clear objectives, coaching, or training were thought a better investment. Despite the undisputed instrumentality of pay‐for‐performance to motivate, little attention has been given to whether the benefits outweigh the costs or the “fit” of these programs with high‐commitment cultures like Hewlett‐Packard was at the time. © 2004 Wiley Periodicals, Inc.     

EXCHANGE RATE FUNDAMENTALS,FORECASTING, AND SPECULATION: BAYESIAN MODELS IN BLACK MARKETS

Although speculative activity is central to black markets for currency, the out‐of‐sample performance of structural models in those settings is unknown. We substantially update the literature on empirical determinants of black market rates and evaluate the out‐of‐sample performance of linear models and non‐parametric Bayesian treed Gaussian process (BTGP) models against the random walk benchmark. Fundamentals‐based models outperform the benchmark in out‐of‐sample prediction accuracy and trading rule profitability measures given future values of fundamentals. In simulated real‐time trading exercises, however, the BTGP achieves superior realized profitability, accuracy and market timing, while linear models do no better than a random walk. Copyright © 2013 John Wiley & Sons, Ltd.     

Testing hypotheses of ghetto morphology

Socioeconomic urban policy has generally treated the American black ghetto as a single community or neighborhood. A study of recent literature suggests that the socioeconomic structure of ghetto space may be developing a spatially systematic heterogeneity. The literature has suggested several hypotheses concerning the socioeconomic morphology of ghetto space, but heretofore these hypotheses have not been tested in any rigorous fashion. This is the objective of this study. The results of these tests suggest that the ghetto is indeed developing as a socioeconomically heterogeneous subsystem spatially parallel to the overall urban system. This implies that a multiplicity of communities or neighborhoods are developing over time. In order to be effective, the processes of urban planning and policy development must address this evolving pattern.     

Minimum variance cross hedging under mean‐reverting spreads,stochastic convenience yields,and jumps: Application to the airline industry

Exchange traded futures contracts often are not written on the specific asset that is a source of risk to a firm. The firm may attempt to manage this risk using futures contracts written on a related asset. This cross hedge exposes the firm to a new risk, the spread between the asset underlying the futures contract and the asset that the firm wants to hedge. Using the specific case of the airline industry as motivation, we derive the minimum variance cross hedge assuming a two‐factor diffusion model for the underlying asset and a stochastic, mean‐reverting spread. The result is a time‐varying hedge ratio that can be applied to any hedging horizon. We also consider the effect of jumps in the underlying asset. We use simulations and empirical tests of crude oil, jet fuel cross hedges to demonstrate the hedging effectiveness of the model. © 2009 Wiley Periodicals, Inc. Jrl Fut Mark 29:736–756, 2009     

Can the Timing of Negotiations Impact the Consequences of Mergers?

This paper uses a theoretical model to examine whether variation in the timing of negotiations between buyers and sellers can alter the effects of mergers between sellers. The model shows that mergers between horizontally overlapping firms lead to price increases regardless of how negotiations take place. In contrast, mergers between firms in different markets can only lead to higher compensation for the combined firm when negotiations occur sequentially. However, any price effects from out‐of‐market mergers stem from a mechanical redistribution of existing market power and not from a loss in competition. Published 2014. This article is a U.S. Government work and is in the public domain in the USA.     

Does Weak Governance Cause Weak Stock Returns? An Examination of Firm Operating Performance and Investors' Expectations

We investigate Gompers, Ishii, and Metrick's (2003) finding that firms with weak shareholder rights exhibit significant stock market underperformance. If the relation between poor governance and poor returns is causal, we expect that the market is negatively surprised by the poor operating performance of weak governance firms. We find that firms with weak shareholder rights exhibit significant operating underperformance. However, analysts' forecast errors and earnings announcement returns show no evidence that this underperformance surprises the market. Our results are robust to controls for takeover activity. Overall, our results do not support the hypothesis that weak governance causes poor stock returns.     

To integrate with a high- or low-wage country: That is the question

This paper considers the question of whether a country with the intermediate capital–labor ratio is better off forming a free trade area with the higher or lower wage country. Typical analyses of gains from trade ignore the effects of free trade on factor prices. When Europe forms a free trade area with a high-wage economy, the equalized wage rises and rent declines, while the price of the importable declines. Workers unambiguously benefit, but integration has an ambiguous effect on capitalists. However, consumers as a whole benefit from the integration and workers can more than offset the losses of the capitalists. On the other hand, Europe's integration with a low-wage economy raises rent but lowers the wage and the price of the labor-intensive good. Accordingly, capitalists unambiguously benefit, but integration has an ambiguous effect on workers. Again, welfare of all consumers rises and the capitalists can more than offset the losses of workers.