Legal Environment,Firm-level Corporate Governance and Expropriation of Minority Shareholders in Asia

Claessens et al. (2000, Journal of Financial Economics 58(1–2), 81–112) show that corporate control is substantially enhanced by using pyramid structures and cross-holdings by firms in nine East Asian countries. Claessens et al. (1999, SSRN Working Paper; 2002, Journal of Finance 57(2), 2741–2771) provide empirical evidence regarding expropriation arising from the separation of cash flow from voting rights in Asian firms. Their analysis suggests a high degree of expropriation in Hong Kong, Indonesia, Malaysia, and Thailand. We re-examine the problem of expropriation in Asian firms reported by earlier research. We explore firm-level governance-control structure interactions, and control-legal environment interaction for a set of Asian firms for which we are able to obtain relevant data for all the required variables. The major contribution of this paper is that it jointly examines ownership-control structure, firm-level governance and country-level legal protection available to external suppliers of capital. Using post-crisis data, we find a strong country effect in governance. In general, high control firms in countries with weak legal protection have lower firm-level governance scores in general. On the other hand, high control firms, in countries which have a stronger legal protection environment, signal their intention to not expropriate minority shareholders’ wealth by voluntarily adopting measures to strengthen their discipline and responsibility scores. Contrary to earlier findings, we do not find a relationship between control-ownership wedge and firm value. Furthermore, we do not find any relation between firm-level governance and firm value as measured by Tobin’s Q.     

Do Ukrainian Firms Benefit from FDI?

All countries are eager to attract as much foreign direct investments (FDI) as possible. At the same time FDI may have not only positive, but also negative economic effects for receiving countries. Positive effects are associated with technology transfer, efficient allocation of resources, and training of domestic workers. However, the entry of foreign firms could, e.g., lead to a decrease of labor productivity at domestic firms, which is a negative effect. The main purpose of this paper is to estimate direct and indirect effects of FDI. First, we test for direct influence of foreign direct investments on firms’ performance, where the latter is estimated alternatively as labor productivity and as exports. FDI notably increases both labor productivity and export volumes. Second, we look for spillover or indirect effects. There is statistical evidence that the levels of FDI in certain regional industries are associated with higher performance indicators of firms’ not receiving FDI in those same regional industries.     

长江三角洲地区跨国公司发展态势研究

在经济全球化推动下,当今跨国公司国际直接投资呈现出一些新的重要特点.随着我国改革开放的不断深化,长三角地区跨国公司发展的基本态势表现为:在国际分工从产业间分工向产业内和产品内分工演进的背景下,长三角跨国公司制造业投资具有环节分工的鲜明特征;随着本土企业与跨国公司产业链联系的逐步增强,外资聚集型经济开始形成;跨国公司投资呈现出大型化、系列化、总部化和服务化等发展趋势.这需要我们采取相应的对策,进一步提升长三角利用外资的层次和水平,促进本土企业的成长和经济的快速发展.     

Public–Private Partnerships in International Agricultural Research: An Analysis of Constraints

Public–private partnerships are a potentially important means of conducting pro-poor agricultural research in many developing countries. Yet within the international agricultural research sector, there are few examples of successful collaboration that have contributed to food security, poverty reduction or agricultural development. This study hypothesizes that partnerships between public research agencies and private, multinational firms are constrained by fundamentally different incentive structures; prohibitive costs, both direct and indirect; mutually negative perceptions between the sectors; and high levels of competition and risk associated with valuable assets and resources. Based on a survey of key stakeholders and a review of the literature, findings suggest that the primary impediments to partnership are perceptions, competition and risk, while issues of costs and conflicting incentives are secondary. These findings suggest that investment in innovative organizational mechanisms and supportive public policies could facilitate more, and more successful, public–private partnerships in pro-poor agricultural research.     

Never mind the quality feel the width: University–industry links and government financial support for innovation in small high-technology businesses in the UK and the USA

In this paper we use a size and industry matched sample of over 1,900 UK and US businesses for the period 2004–05 in the manufacturing and business services sectors to analyse the relative “strength” of the university–industry ecosystems in which these firms operate in the two economies. Our analysis shows that in both countries universities per se play a quantitatively smaller role as a source of knowledge for business innovation than either the business sector itself or a variety of organisations intermediating between the university and business sectors. Our analysis reveals a much more diffuse university–industry ecosystem in the UK in which a higher proportion of businesses claim links external to themselves in their pursuit of knowledge for innovation and a higher proportion report directly connecting with universities. US firms are more likely to access knowledge through a combination of business and intermediary sources and are less likely to have established formal collaborative or partnership agreements in the 3 years prior to the survey. We also find, however, that a higher proportion of US firms place a very high value on the connections they have with universities and are much more likely to commit resources to support such innovation related university interactions. A similar pattern of diffuse but weaker links characterise the supply of public sector financial assistance for innovation in our sample firms. UK firms are more likely to be in receipt of assistance, but receive far less per firm in absolute terms and relative to their R&D expenditures. It appears that the UK university–industry ecosystem is characterised by a greater width than quality of interaction.     

Tripartite decomposition of labor productivity growth,FDI and human development: evidence from transition economies

This study investigates the relative contribution of technological change, technological catch-up and capital deepening as drivers of labor productivity growth in 14 transition economies during the period 2000–2012. In addition, the study extends the usual decomposition of labor productivity growth by encompassing the impact of foreign direct investment (FDI) on labor productivity growth in transition economies. To illustrate the relative contribution of FDI as a driver of labor productivity growth, we present a simple theoretical model that augments Kohli [Labour productivity vs. total factor productivity. IFC Bulletin 20 (April), Irving Fisher Committee on Central Bank Statistics, International Statistical Institute, 2005] and Grosskopf et al. (Aggregation, efficiency, and measurement, Springer, New York, pp 97–116, 2007) decomposition of the labor productivity. The insights derived in this model provide an underpinning to the empirical analysis in this study. Using Blundell–Bond dynamic panel General Method of Moments estimators, the main finding of dynamic panel data regressions shows that technological catch-up, technological change, and human development level, trade and demographic of population ageing are the main factors that affect labor productivity growth in transition countries. Furthermore, the findings of dynamic panel data regressions show insignificant positive impact of FDI on productivity growth in transition economies. One explanation is that the 14 transition economies that are included in this study do not reach a minimum human development threshold level.     

Between demand and supply: Bribery in international trade

The use of kickbacks and illicit payments to win foreign sales is eroding fair trade and undermining good governance around the world. While often seen as discrete acts by unscrupulous businesses, bribery in international trade is better seen as driven by push and pull forces larger than individual firms. Two hypotheses on the dynamics of transnational bribery are formulated and tested in this study. The demand-pull hypothesis views multinational corporations as victims of corruption in host countries and predicts a positive relationship between corruption in host countries and bribery by guest businesses. The supply-push hypothesis treats multinationals as proactive parties and proposes a positive relationship between pro-bribery conditions in exporting countries and the inclination of their multinationals to foreign bribery. Analysis of cross-national data yielded no support for the demand-pull hypothesis, but strong backing for the supply-push hypothesis. This finding validates the potential of effective bribery reduction through supply-side controls. Direct all correspondence to Hung-EnSung, The National Centeron Addiction and Sub-stance Abuseat Columbia University, 633 Third Avenue, 19th Floor, NewYork, NY 10017, USA.     

US patents abroad: Does gravity matter?

The aim of this paper is to explore the factors that influence the flow of US patents to 27 OECD countries using a gravity model for the period 1995–2005. The dependent variable is the number of patents from the US to the destination country. Our findings support the hypothesis that the mass of patenting activity in the US and the destination country are significant factors in explaining the behavior of the US patenting activity abroad. A narrow technological gap between the source and the destination country indicates a high absorptive capacity of the destination country for the knowledge created in the source country and thus, the imitation risk increases providing an incentive to register the patent in the destination country. The effect of the physical distance is statistically ambiguous, possibly due to the spread of internet use. Finally, the business cycle in the destination country is not statistically significant.     

Regionalization in East Asia

Institutional regionalization has come very late to East Asia compared with Europe, but its pace has dramatically increased since the mid-1990s. Many agreements, including bilateral ones such as those signed between Japan and Singapore, or pluri-lateral ones such as those between ASEAN countries, cover an ever increasing number of countries of the East Asian region, including Japan, India, and China. We first analyze Asian integration as a de facto, spontaneous, development of trade. Trade specialization in Asia has often been described as guided by the different levels of development of the countries participating in the regional integration. It constitutes a vertical division of labor between poor countries exporting natural resources and/or labor-intensive products to developed countries exporting machinery, sophisticated parts and components, and high-tech products. This trade structure is radically different from the European horizontal division of labor (exchange of different varieties of similar goods). Then we look at the micro-economic level how Japanese firms tend to integrate Asia into their international network, with Japanese partners being used as relays for Japanese export of semi-manufactured products. Last we present a simulation with the MIRAGE model of a scenario of general regionalization in which all the regions of the world develop preferential treatment for neighboring countries. These agreements are limited to industrial products with particular attention to the automotive sector. The main results are that Asia is the main winner in such a scenario, and within Asia it is Japan and Korea that will be the main winners. In fact, because developing Asia is one of the most protected regions of the world, the impact of liberalization is also the highest. Second, Japan and Korea are best placed to profit from these regional agreements, because other developed countries are excluded from the market of developing Asia. They also have superiority in manufacturing goods whereas countries like China might have problems upscaling their industrial production. Nevertheless our model did not take into account the voluntary pace of development chosen by China and that she will use her powerful state system to avoid being locked into low-tech, low-value-added products.

The limits to internationalization of scientific research collaboration

This study analyses international research collaboration for eight science-based technologies in the Netherlands for the period 1988–2004. It is found that the share of international research collaborations in research collaboration is high, but not rising during the period investigated. This result suggests that the process of internationalization has reached an end. It is also found that collaboration between academic and non-academic organizations is less likely to take place at the international level than collaboration between academic organizations. This suggests that collaborating within national research systems helps academia, firms and governmental organizations to overcome differences in norms, values and incentives. Nonetheless, international collaboration between academic and non-academic organizations is also frequently occurring. Some consider these collaborations as undesirable, insofar academic research funded domestically is ‘leaking’ to foreign firms in such research collaborations. Such unwanted knowledge spillovers has lead some to plea for a ‘technology-nationalism’ in science policy instead of a ‘techno-globalization’. An analysis of the ‘balance of trade’ in international collaborations between Dutch academia and foreign firms and between Dutch firms and foreign academia shows that fears for unwanted knowledge spillovers are unfounded.

An Econometric Analysis of the Role of Knowledge in Economic Performance

We conduct a regression analysis of the effects of knowledge on aggregate economic performance using data from the United Nations Development Program (UNDP) and the World Bank for four groups of countries during 1995–2001. Our results indicate that knowledge is a key driver of economic growth for each group of countries. More importantly, we find that variation in economic performance among these groups may be related to the timing of investment in education, R&D, and information technology, as well as economic policies that affect trade and foreign direct investment.     

Implications of Indeterminacy: Naturalism in Epistemology and the Philosophy of Law II

In a circulated but heretofore unpublished 2001 paper, I argued that Leiter’s analogy to Quine’s “naturalization of epistemology” does not do the philosophical work Leiter suggests. I revisit the issues in this new essay. I first show that Leiter’s replies to my arguments fail. Most significantly, if – contrary to the genuinely naturalistic reading of Quine that I advanced – Quine is understood as claiming that we have no vantage point from which to address whether belief in scientific theories is ever justified, it would not help Leiter’s parallel. Given Leiter’s way of drawing the parallel, the analogous position in the legal case would be not the Legal Realists’ indeterminacy thesis, but the very different position that we have no vantage point from which to address whether legal decisions can ever be justified. I then go on to address the more important question of whether the indeterminacy thesis, if true, would support any replacement of important legal philosophical questions with empirical ones. Although Ronald Dworkin has argued against the indeterminacy thesis, if he were wrong on this issue, it would not in any way suggest that the questions with which Dworkin is centrally concerned cannot fruitfully be addressed. The indeterminacy thesis is a bone of contention in an ordinary philosophical debate between its proponents and Dworkin. Of course, if the determinacy thesis were true, no one should try to show that it is false, but this triviality lends no support to the kind of replacement proposal that Leiter proposes. I conclude with some general reflections on naturalism and philosophical methodology.     

East Meets West in Anti-Money Laundering and Anti-Terrorist Finance: Policy Dialogue and Differentiation on Security, the Timber Trade and ‘Alternative’ Banking

This paper compares and contrasts South East Asian and European Union countries’ perceptions of the priorities for anti money laundering (AML) and anti terrorist finance (ATF) in relation to three industries: security goods and services; the timber trade; and ‘informal’ value transfer and banking services. It might be expected that all countries would equally support each of these aspects of AML/ATF policies, without differentiating between the industries generating the proceeds. As this paper will show, however, historical experiences, contemporary political relations and patterns of trade shape countries’ approaches, resulting in distinctive enthusiasms and reservations. In a nutshell, the EU points most strongly to products and services originating in Asia as posing AML/CTF risks, and locates primary responsibility for monitoring and control as falling within Asia - a projection of risk and responsibility that is reciprocated by Asian countries. Asian countries perceive a need for tighter control of dangerous products exported by the west, for example, small arms and light weapons, and of related money laundering circuits. Asian and European policy makers increasingly articulate concerns over illegal logging and related laundering, however European importers and their governments see responsibilities for this as falling primarily within Asia. Finally, the EU (like the US) perceives high levels of laundering risk in ‘informal’ value transfer/banking services, in which Asian-run businesses have a global competitive advantage. For the future, as the international balance of trade shifts, and as Asia increases its influence in international fora including those concerned with AML/CTF, so the region’s policy preferences may be expected to carry more weight.

The Determinants of Trade Credit in Transition Countries

The paper investigates the determinants of trade credit in transition countries. Traditional theories of trade credit extension suggest that both financial and commercial motives may induce non-financial companies to assume a role of financial intermediation. Furthermore, specific conditions of financing for companies in transition countries may reserve to trade credit an important role in financial structure. We test the determinants of accounts receivable and accounts payable on a sample of about 9300 companies from nine Central and Eastern European Countries. Results suggest that both financial and commercial motives explain the credit behaviour of firms. However, we do not find generalised patterns in the use of trade credit among all transition countries.     

What the design of an R&;D tax incentive tells about its effectiveness: a simulation of R&;D tax incentives in the European Union

Most industrialized countries apply special tax incentives to boost the R&D expenditures of firms. This study considers the design of such R&D tax incentives as applied in the European Union and simulates its effect on the post-tax R&D expenditures of firms in different industries and different profit/loss-situations by means of the simulation model European Tax Analyzer. Any restrictions and progressive tax incentives are explicitly taken into account. Our results indicate that for designing and measuring public support to R&D it is often not sufficient to focus only on tax rate effects of R&D tax incentives and the design of a tax incentive must be in accordance with the framing tax system in order to be effective. As soon as there are any limitations in place, our results suggest a considerably lower impact of R&D tax incentives on the post-tax R&D expenditures than the commonly used B-Index by the OECD. The results clearly illustrate the beneficial impact of immediate cash refunds for unused tax incentives.     

Occupational structures across 25 EU countries: the importance of industry structure and technology in old and new EU countries

This article analyzes the occupational structure of 25 European Union countries during the period 2000–2004. Shift-share analyses are used to decompose cross-country differences in occupational structure into within sector and between sectors effects. The static analysis for 2004 shows that the new member countries employ a lower share of skilled workers because their industry structure is biased towards less skill-intensive industries and because they use fewer skills within industries. The differences in the shares of (high-skilled) non-production workers are dominated by the between (industrial) effect. In contrast, the dynamic analysis of 2000–2004 showed that changes in the share of high-skilled non-production workers are mostly driven by within sector changes, which are probably related to skill-biased technological change. Similar trends in the countries’ within effects support the catch-up of the new member countries’ skills demand, while the structural developments that could equalize the industry mix of the new and old member countries are related to increased domestic demand and will probably take time.

Transferring technology across borders: institutional effects in Chinese context

Effective technology transfer across borders is very complex and difficult. There are so many factors that affect the effectiveness of technology transfer across borders, and the host country’s institutional profile is a critical factor. The country institutional profile reflects the institutional environment in that country and is defined as the set of all relevant institutions that have been established over time, that operate in that country, and that are transmitted into organizations through individuals (Kostova 1997, 1999; Kostova and Roth 2002) [Country institutional profiles: Concept and measurement. Academy of Management Best Paper Proceedings, pp. 180–189; Transnational transfer of strategic organizational practices: A contextual perspective. Academy of Management Review, 24(2), 308–324; Adoption of an organizational practice by subsidiaries of multinational corporations: Institutional and relational effects. Academy of Management Journal, 45(1), 213–233.]. There have been some studies about the relationship between institutional profile and technology transfer, but there are few studies with a Chinese context. Technology transfer plays an important role in developing countries and has been as one of vital strategies to build an innovative nation in China. Therefore, it is urgent to focus on the relationship between China’s institutional profile and technology transfer. The results of structural equation modeling, the subject of this paper, were based on an empirical study of 167 foreign ventures sampled in China, but they did not fully confirm what the institutional theory emphasized about the effectiveness of technology transfer. The normative dimension of the country institutional profile was shown to have a significantly positive effect on the effectiveness of technology transferring across borders, but contrary to expectations, the regulatory dimension of the country institutional profile was shown to have a significantly negative effect on the effectiveness of technology transfer, while the cognitive dimension has no significant effect on it. The concluding section of the paper discusses some practical implications and potential future study directions.      

Industry Self-regulation Under Government Intervention

Industry actors (organizations, associations) can influence the way in which firms comply with regulations. This study examines how this influence process is affected by government intervention. Using official, anonymized data from the entire industry of financial intermediation in the Netherlands (N = 8655 firms), we examine how firms’ affiliations with industry actors relate to (1) voluntary actions aligned with improving regulatory compliance (e.g., requesting audits, attending workshops), and (2) law violations. Industry actors are distinguished between trade associations and the industry’s self-regulatory organization (SRO), which is subject to more government intervention. The analysis employs Poisson regressions to explain count variables, and bootstrapping to assess indirect associations. A series of robustness tests focus on relevant sub-samples, employ exact matching to address possible self-selection, and incorporate lagged dependent variables. The association between affiliations with industry actors and law violations is negative and significant. This association is more indirect for trade associations than for the SRO (i.e., it is more strongly mediated by the voluntary actions firms take and which help to improve compliance). These findings go in line with the theory that government intervention makes industry-self regulation more mandated and less voluntary. Under less government intervention, industry actors may promote more voluntary efforts to comply.     

The effect of competitive and non-competitive R&;D collaboration on firm innovation

A firm can improve its innovation either by its internal research and development (R&D) efforts or by forming external collaborative R&D alliances. While previous studies on R&D collaboration and knowledge diffusion mainly focus on various external sources of R&D collaboration, little effort has been made to investigate the joint impact of competitive and non-competitive R&D collaborations on firm innovation simultaneously. By examining the data of 165 Taiwanese firms in the information and communication technology industry, we find that: (1) non-competitive R&D collaborations with universities have a positive direct impact on firm’s innovation performance; and (2) both non-competitive and competitive R&D collaborations have a positively moderating effect on the relationship between a firm’s internal R&D efforts and firm innovation and the positive moderating effect is higher for non-competitive R&D collaborations than that of competitive R&D collaborations. These findings suggest that R&D collaborations, either non-competitive or competitive, exhibit the nature of a win–win situation. We also derive implications for firms’ selection of R&D alliance partners and government policies.     

WTO体系内制定投资规则的努力——历史、现状与展望

时至今日 ,WTO及其前身GATT已经走过了半个多世纪的历程。这期间 ,目睹了世界经济情势的巨大变迁。与GATT这个专事贸易的协调性的国际机构比较。WTO是堪称综合性国际经济组织。它不但拓展了传统贸易的概念 ,把服务贸易放到了重要的位置 ,而且将其触角伸延至知识产权和外国直接投资领域 ,甚至还在继续强化它的争端解决机制。从近年的实践来看 ,WTO一直在尝试扩张其规范领域。虽然不断地遭到这样或那样的挫折 ,它的进取势头依然强劲。历史的经验和现实的需要都在昭示 ,WTO有必要也有能力主持谈判和制定一项综合性的投资规则 ,实现新的突破。我们希望它在完成这项神圣使命的过程中 ,最大程度地尊重包括中国在内的广大发展中国家的意志 ,以避免重蹈OECD之覆辙