COMPARISONS OF PURCHASING POWER, REAL OUTPUT AND LABOUR PRODUCTIVITY IN MANUFACTURING IN JAPAN, SOUTH KOREA AND THE U.S.A., 1975–85

This study presents binary comparisons of real output and labour productivity in manufacturing in Japan, South Korea and the U.S.A. in 1975, made according to an "industry of origin approach." The 1975 benchmark comparisons have been updated to 1985. Value added per hour worked in Japanese manufacturing increased from 54 percent of the U.S. level in 1975 to 76 percent in 1985. In certain important branches such as electrical machinery, metal products and machinery and transport equipment, productivity leadership shifted to Japan. In South Korea, labour productivity in manufacturing increased rapidly from 1975 to 1985, both in absolute terms and relative to the U.S.A. Nevertheless, in 1985 value added per hour worked was only 14 percent of the U.S. level.     

Technological change and input-output analysis: An appraisal

There is an extensive literature on technological change (TC) pertaining to input-output (I-O) analysis, that offers the potential to significantly extend the range of applications of this valuable tool. This paper classifies and analyzes the major types of TC. It summarizes some established methods for estimating TC, expands on methods not well developed, and shows how some methods not typically identified with I-O are useful. In addition, the methods are critically evaluated and their appropriateness to various subcategories of TC assessed.Two major conclusions are drawn. First, that input-output does not deserve much of the criticism it receives for being a rigid tool of analysis, insensitive to price changes, policy regulations and innovation. Second, given the availability of numerous approaches to incorporating TC into I-O models, researchers no longer have a legitimate excuse for assuming away TC or using crude modification methods.     

Does the market discipline banks? New evidence from regulatory capital mix

While bank capital requirements permit a bank to freely substitute between equity and subordinated debt, lenders and investors view debt and equity as imperfect substitutes. It follows that, after controlling for the level of regulatory capital, the mix of debt in capital isolates the role that the market plays in disciplining banks. I document that the mix of debt in capital affects bank behavior, but only when investors can impose real constraints. In particular, the mix of debt reduces the probability of failure and future distress for BHC-affiliated institutions (where the investor has control rights through an equity position) and for stand-alone banks before the Basel Accord (when debt issues included restrictive covenants). However, substituting equity for subordinated debt at the bank holding company level or in stand-alone banks since the Basel Accord (where the investor has few protections) only increases the probability of distress and failure.     

Heavy lies the crown? How job anxiety affects top executive decision making in gain and loss contexts

Research summary: Despite abundant anecdotal evidence that many top executives experience anxiety in their jobs, the upper echelons literature has remained largely silent on the organizational implications of executive job anxiety. In this study, we theorize that job anxiety will cause executives to (1) create a social buffer against threats by surrounding themselves with supportive decision‐making teams, and (2) pursue lower‐risk firm strategies. We further argue that these effects will vary depending upon whether strategic decisions occur in gain versus loss contexts. We test our ideas using a novel multisource, multimethod approach that includes data from 84 top executives of large organizations, their decision‐making teams, their friends and families, and archival sources. Results from an analysis of 154 major strategic decisions provide general support for our theory. Managerial summary: Although many top executives experience anxiety in their jobs, some struggle more with anxiety than others. Our paper is the first to focus on how job anxiety affects executives' decisions. We analyze 154 major strategic decisions made by 84 top executives of large organizations in a range of industries, collecting data from personal interviews with executives and surveys of their decision‐making teams, spouses, and friends. We find that anxious executives take fewer strategic risks, especially when things are going well. We further argue that anxious executives focus more on “buffering” themselves from threats, and find that they surround themselves with close supporters when times are tough. Our results demonstrate a pattern through which anxiety causes top executives to focus more heavily on avoiding potential threats. Copyright © 2015 John Wiley & Sons, Ltd.     

Where are the big bills? Escaping the endogenizer’s dilemma

The continual expansion of rational choice theory to a greater range of social phenomena—from markets to politics and institutions—is a testament to its success. Each further application, however, simultaneously forecloses a potential source of inefficiency in economic systems. Abdicating efficiency considerations impairs economics’ explanatory power as much as its normative relevance. In this paper I explore the interconnected roles of subjectivism and knowledge problems in accounting for inefficiency. I conclude that the knowledge-generating properties of institutions allow for efficiency comparisons, but only in the embrace of a thoroughgoing subjectivism.     

Economic growth under political accountability

We examine the impact of political and criminal accountability on economic growth. Governments seek to maximize their own consumption by extracting rents that are costly to growth. When citizens are able to depose politicians through elections, governments are tightly controlled. The rents politicians are able to extract increase in the length of their term. The effect of the threshold of criminal responsibility on the ability of voters to control politicians is non-monotonic. When tenure in power does not depend on economic performance, rent extraction is limited only by the effectiveness of oversight mechanisms but does not depend on time horizons of the rulers. Accumulation constraint binds only rulers who are neither politically nor criminally accountable.     

The impact of the institution of patent protection and enforcement on entry mode strategy: A panel data investigation of U.S. firms

The Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement has engendered a harmonisation of patent laws across countries but the extent of enforcement of these laws continues to vary. This study investigates the degree to which de jure book law protection of patents and de facto enforcement of these laws influences the propensity of firms to exploit their patented technology in foreign markets with company-owned operations or unrelated concerns using licensing agreements. Analyzing data on royalty and fee receipts of U.S. parent companies from affiliates and non-affiliated parties abroad from 1998 to 2007, and using separate measures for de jure and de facto patent protection and enforcement, we find that strengthening de jure protection induces greater affiliate licensing while strengthening de facto enforcement induces non-affiliate licensing. We conclude by observing that greater account should be taken of de facto enforcement measures when investigating the role of institutions on the international activities of firms.