http://repub.eur.nl/res/concept/jel-F2/ Recent publications classified by JEL Code F2 en http://repub.eur.nl/static-eur/img/logo.png http://repub.eur.nl http://repub.eur.nl/res/pub/38196/ 2012-10-02T00:00:00Z This paper analytically derives the conditions under which the slope of the tax reaction function is negative in a classical tax competition model. If countries maximize welfare, we show that a negative slope (reflecting strategic substitutability) occurs under relatively mild conditions. Simulations suggest that strategic substitutability occurs under plausible parameter configurations. The strategic tax response is crucial for understanding tax competition games, as well as for assessing the welfare effects of partial tax unions (whereby a subset of countries coordinate their tax rates). Indeed, contrary to earlier findings that have assumed strategic complementarity in tax rates, we show that partial tax unions might reduce welfare under strategic substitutability. Mooij, R.A. de Vrijburg, H. http://repub.eur.nl/res/pub/37284/ 2012-08-01T00:00:00Z We are the first to investigate the cross-section of stock returns in the new emerging equity markets, the so-called frontier emerging markets. Our unique survivorship-bias free data set consists of more than 1,400 stocks over the period 1997 to 2008 and covers 24 of the most liquid frontier emerging markets. The major benefit of using individual stock characteristics is that it allows us to investigate whether return factors that have been documented in developed countries also exist in these markets. We document the presence of economically and statistically significant value and momentum effects, and a local size effect. Our results indicate that the value and momentum effects still exist when incorporating conservative assumptions of transaction costs. Additionally, we show that value, momentum, and local size returns in frontier markets cannot be explained by global risk factors. Groot, W. de Pang, J. Swinkels, L.A.P. http://repub.eur.nl/res/pub/26710/ 2011-10-24T00:00:00Z In this paper we examine two hypotheses concerning emigration. The first hypothesis is that emigration is positively correlated with wage differentials. The second hypothesis concerns a positive correlation between emigration and higher education in the sending country (the so-called brain gain hypothesis). We analyze unique time series data for Suriname for 1972-2009, for which we fit error correction models to disentangle short-run from long-run effects. We document moderate support for the first hypothesis, but we find strong support for the brain drain (and not brain gain) hypothesis. We conclude with implications of our findings for Suriname. Dulam, T. Franses, Ph.H.B.F. http://repub.eur.nl/res/pub/26087/ 2011-08-31T00:00:00Z We decompose capital flows--both debt and equity--into public and private components and study their relationship with productivity growth. This exercise reveals that international capital flows are mainly shaped by government decisions and sovereign to sovereign transactions. Specifically, we show: (i) international capital flows net of government debt are positively correlated with growth and allocated according to the neoclassical predictions; (ii) international capital flows net of official aid flows, which are mostly accounted as debt, are also positively correlated with productivity growth consistent with the predictions of the neoclassical model; (iii) public debt flows are negatively correlated with growth only if government debt is financed by another sovereign and not by private lenders. Our results show that the failure to consider official flows as the main driver of uphill flows and global imbalances is an important shortcoming of the recent literature. Alfaro, L. Kalemli-Ozcan, S. Volosovych, V. http://repub.eur.nl/res/pub/23268/ 2011-05-10T00:00:00Z Despite the importance of trust in economic relations, people often engage in behavior that may violate their interaction partner’s trust. Given that transgressions in economic relations often result in distributive harm for the victim (i.e. loss of economic resources), a common approach in these relations consists of the transgressor providing a financial compensation to the victim: if a customer has complaints about a product, he is reimbursed; when a company is being sued, it often tries to make a financial settlement with the victims. Strangely enough, the high prevalence of financial compensations as a restorative response contrasts sharply with how little is known about their effectiveness. Can financial compensations actually increase trust again and what are the factors that determine their effectiveness? By taking an experimental approach, this dissertation aims to provide some first, much needed empirical answers regarding the effectiveness of financial compensations in restoring trust. In this venture, it was not only studied how aspects of the compensation itself (e.g. size) determine their effectiveness, but also how specific characteristics of the violation, the victim and the transgressor impact victims’ reactions to a compensation. The findings of this dissertation show that even in economic relations, where violations have a clear, quantifiable distributive harm, the process of trust repair is not simply determined by the material, financial value of a compensation. Rather, this dissertation reveals how immaterial aspects such as intent in the violation, whether a compensation was imposed or voluntarily provided or whether or not an apology accompanied the compensation, are all crucial in determining the actual value that victims attach to a financial compensation. Desmet, P.T.M. http://repub.eur.nl/res/pub/22952/ 2011-04-01T00:00:00Z Over the last two decades, management studies on sustainability have grown considerably, including a recent surge of research on climate change. However, environmental problems have not been resolved, and most of the top management journals remain focused on the firm, not the system. This presents both a paradox and an opportunity. The year 2010 was the hottest year on record, making it the warmest decade since 1880. In certain places (like Australia and the Arctic), the impacts of climate change are already apparent. In the future, as CO2 continues to rise, we can expect more extreme events like floods, droughts, fires, and melting ice caps. This has profound implications for the way we manage and organize our societies. Before we can manage something, we have to make sense of the situation. In a complex environment, people need to pay attention to subtle cues, overcome barriers, and collectively develop ‘sensemaking’ across organizations. If people do not pay sufficient attention, they will encounter a ‘predictable surprise’ – a crisis situation that could be avoided but isn’t because of existing social and economic structures. This lecture considers how to make better sense of climate change. Professor Whiteman argues that it essential for managers and academics to take a more systemic approach and collaborate with the natural sciences and local people. She ends with management lessons for the 21st Century. Whiteman, G.M. http://repub.eur.nl/res/pub/22643/ 2011-03-10T00:00:00Z The past two decades have witnessed an exponential growth of research on corporate governance around the world and on the role of the ownership concentration more specifically. In line with a longer tradition of ownership studies in U.S. context, most corporate governance researchers have commonly taken a classical agency theoretical view of ownership concentration. The research presented in this dissertation show that classical view of ownership seems overly crude. I provide a more fine-grained understanding about the role of ownership in different contexts; one that takes into account the subtly different formal and informal institutional that can be found around the world on the one hand, and that distinguish between the identity of concentrated owners on the other. I show, first, that a crucial factor with respect to the ownership concentration – firm strategy and performance relationships involve owner identity: i.e. who owns a firm matters significantly for that firm’s objectives, strategies, and performance. Second, I contribute to emerging institution-based view of corporate governance by expanding its empirical domain and testing empirically the interaction between formal and informal institutions. Essen, M. van http://repub.eur.nl/res/pub/21405/ 2010-11-18T00:00:00Z The port of Rotterdam is the largest seaport in Europe and a huge industrial complex. This seaport has been the focal point of several studies that merely view the port as a transport node. This neglects the fact that it is also a collection of thousands of related businesses that together form the Rotterdam seaport cluster. This PhD thesis deals with the companies in the Rotterdam seaport cluster and their value for the competitiveness of the port. Companies active in many sectors, such as stevedoring, transport, logistics, off-shore and shipbuilding. The competitiveness of the port of Rotterdam is dependent on the behavior of the firms located in the port cluster. Some firms create substantially more positive effects than others and are called ‘leader firms’. The Characteristics and the behavior of these leader firms are analyzed in this study. The Rotterdam port cluster is defined and the business structure is researched to select the leader firms. Nine forms of leader firm behavior are identified in the fields of innovation, internationalization and cluster governance. With the use of a qualitative comparative analysis it is researched which firm characteristics foster leader firm behavior. Conclusions are drawn about the role of leader firms in clusters and the stimulus and obstacles for leader firm behavior. Recommendations are formulated for the business community, government and the leader firms. Nijdam, M. http://repub.eur.nl/res/pub/20785/ 2010-09-28T00:00:00Z This paper examines the impact of the three main channels of international trade on domestic innovation, namely outward direct investment, inward direct investment (IDI) and exports. The number of Triadic patents serves as a proxy for innovation. The data set contains 37 countries that are considered to be highly competitive in the world market, covering the period 1994 to 2005. The empirical results show that increased exports and outward direct investment are able to stimulate an increase in patent output. In contrast, IDI exhibits a negative relationship with domestic patents. The paper shows that the impact of IDI on domestic innovation is characterized by two forces, and the positive effect of cross-border mergers and acquisitions by foreigners is less than the negative effect of the remaining IDI. Chang, C.L. Chen, S-P. McAleer, M.J. http://repub.eur.nl/res/pub/19882/ 2010-06-30T00:00:00Z Organizational studies emphasizing the role of attention in organizational behavior depart from the idea that organizations, like individuals, have limited capacity to attend to environmental stimuli. The bounded capacity of the organizations to respond to stimuli is conditioned by the limited cognitions of individuals and by the limited capability of organizations to distribute, coordinate and integrate those cognitions. The cross-level nature of organizational attention, its dual character as both a process and an output, means that theories of attention afford interesting insights to explain organizational behavior. This dissertation presents one conceptual and two empirical studies about organizational attention. In the conceptual study entitled “Attention span: expanding the attention-based view to team, organizational and social movements levels”, it is argued that attentional processes have functional equivalence at the team, organizational and social movements level. The study entitled “When a thousand words are (not) enough: an empirical study of the relationship between firm performance and attention to shareholders”, tests the power of the attention-based view combined with resource dependence theory to explain the relationship between financial performance and attention to shareholders. Finally, the study “Sense and sensibility: testing the effects of attention structures and organizational attention on financial performance” tests the process model of situated attention by examining the effects of attention structures and the allocation of attention on organizational social responses and performance/ Together, these studies deepen and expand attentional perspectives on organizational behavior. Moreover, they renew scholars’ interest in organizational attention, indicating some of the strengths and limitations of theories of attention and also revealing a prolific research stream. Carvalho de Mesquita Ferreira, L. http://repub.eur.nl/res/pub/22098/ 2010-04-08T00:00:00Z This article describes a case study on the Machiguenga, a remote Indigenous tribe affected by the Camisea Gas Project in the Peru. We introduce the anthropological concept of ‘glocalization’ and integrate this with organizational knowledge of ‘identity work’. Our findings demonstrate that identity work is a multi-faceted and boundary spanning process that significantly affects stakeholder relations and contributes to conflict between local communities and oil and gas companies. Indigenous identity can be both threatened and strengthened in response to natural gas development and is related to how individuals, communities and the Machiguenga (as a collective) engage in identity work. We also discuss broader implications for management ethics, including a discussion of how Indigenous self-identify processes create a challenge for stakeholder theory. Bruijn, E. Whiteman, G.M. http://repub.eur.nl/res/pub/17833/ 2010-02-19T00:00:00Z Philanthropic organizations have recently started to focus on how to invest their resources in a way that will really make a difference to society. Strategic philanthropy is the new concept for voluntary action for the public good to create a valuable sustainable impact! This inaugural address presents the future research agenda of the Erasmus Centre for Strategic Philanthropy and focuses on three (strategic) challenges faced by philanthropic organizations: 1) sustaining philanthropic commitment, 2) selecting and executing programmes, and 3) examining the role of management and boards. These are the linking pin between the first two challenges. Governance, accountability and organizational effectiveness are essential for management and boards of individual organizations and for the philanthropic sector as a whole. In the first strategic challenge, philanthropic commitment is seen as a natural resource and Ostrom’s (1990) eight design principles for managing ‘common pool resources’ are applied to philanthropic commitment. The second strategic challenge focuses on the results chain for programme management while the role of management and boards is analyzed from the perspective of ‘resource exchange partnerships’ in the third challenge. Cooperation, especially with the business world, is presented as essential for creating sustainable impact in society. Meijs, L.C.P.M. http://repub.eur.nl/res/pub/18228/ 2010-02-05T00:00:00Z Social dilemmas, or situations in which individual and collective interests collide, elicit strong emotions. But are these emotions socially functional in that they help establish cooperation? Generally, they are, as four empirical chapters showed. In dyadic relations, refusal to return a favour is best reciprocated while expressing disappointment instead of anger or no emotion. This does not even lead to a negative impression. When not recipients but observers can reciprocate cooperative acts, non-cooperation out of anger or disappointment is perceived by observers as a just action to retaliate against defectors and is therefore met cooperatively. In situations where group members have to coordinate their contributions to obtain a public good, anger signals bleaker prospects than guilt does, especially when communicated by an influential fellow group member. This makes that group members are more likely to exit the group or install a democratic leader. Guilt actually promotes successful coordination by signalling that both the person that experiences guilt and the person towards guilt is experienced will contribute, which encourages people to cooperate even when coordination is difficult. Thus, emotions are indispensable, socially informative cues that typically help to establish cooperation, facilitate coordination and implement structural solutions in social dilemmas. Wubben, M.J.J. http://repub.eur.nl/res/pub/17667/ 2010-01-04T00:00:00Z European economic integration is commonly believed to be incomplete, and that further reforms are needed. In this context, the union of U.S. states is considered the benchmark of complete economic integration and is often the basis for comparison regarding the extent of E.U economic integration. Yet, with low trade barriers and with productive factors at least notionally mobile across E.U. countries, is the belief that U.S. states are more integrated than E.U. member states correct? To address this question, this paper first develops three theoretical predictions about the distribution of output and factors that would arise among members of a fully integrated economic area in which goods, capital and labor are freely mobile and policies are harmonized. These theoretical predictions are then empirically tested using data on the output and factor stocks of 14 E.U. member states and the 51 U.S. states (includes District of Columbia) for the period 1965 to 2000. The empirical results convincingly support each theoretical prediction. Hence, contrary to popular belief, the extent of E.U. economic integration is not statistically different from that among U.S. states. Bowen, H.P. Munandar, M.I.S.H. Viaene, J.M.A. http://repub.eur.nl/res/pub/17829/ 2009-12-31T00:00:00Z This paper analyzes enhanced cooperation agreements in corporate taxation in a three country tax competition model where countries differ in size. We characterize equilibrium tax rates and the optimal tax responses due to the formation of an enhanced cooperation agreement. Conditions for strategic complementarity or strategic substitutability of tax rates are crucial for the welfare effects of enhanced cooperation. Simulations show that enhanced cooperation is unlikely to be feasible for small countries. When enhanced cooperation is feasible, it may hamper global harmonization. Only when countries are of similar size is global harmonization a feasible outcome. Vrijburg, H. Mooij, R.A. de http://repub.eur.nl/res/pub/17016/ 2009-10-19T00:00:00Z In this empirical paper we assess how labour market transitions and out- and repeat migration of immigrants are interrelated. We estimate a multi-state multiple spell competing risks model with four states: employed, unemployed receiving benefits, out-of-the-labour market (no benefits) and abroad. We discuss one-step ahead transitions from all four states and the transition probability, including all intermediate transitions, from employment. Based on the estimated parameters we simulate the labour-migration dynamics for a synthetic cohort to derive relevant economic indicators, e.g. the probability of experiencing an unemployment spell. For the analysis we use data on recent labour immigrants to The Netherlands, which implies that all migrants are (self)-employed at the time of arrival. We find that many migrants leave the country after a period of no-income. Employment characteristics and the country of origin play an important role in explaining the dynamics. The microsimulations of synthetic cohorts reveal that many migrants experience unemployment spells, but ten years after arrival only a few are unemployed. They also indicate that the Credit Crunch will not only increase the unemployment among migrants but also departure from the country. An increase in the number of migrants from the EU accession countries will lead to more dynamics. We do not expect that the recent simplification of the entry of high income migrants will have a lasting effect, as many of those migrants leave fast. Bijwaard, G.E. http://repub.eur.nl/res/pub/19978/ 2009-10-01T00:00:00Z This paper explores how pension reforms in countries with PAYG schemes affect countries with funded systems. We use a two-country two-period overlapping-generations model, where the countries only differ in their pension systems. We distinguish between the case where a reform potentially leads to a Pareto improvement in the PAYG country, and where this is impossible. In the latter case, the funded country shares both in the costs and the benefits of the reform. However, if a Pareto-improving pension reform is feasible in the PAYG country, a Pareto improvement in the funded country is not guaranteed. Adema, Y. Meijdam, L. Verbon, H.A.A. http://repub.eur.nl/res/pub/21916/ 2009-09-01T00:00:00Z In this paper the relationship between a country’s prevalence of new ventures and its rate of economic growth is investigated, while taking into account new ventures’ export orientation. It is generally acknowledged that new venture creation as well as export activity may both be important strategies for achieving national economic growth. However, to our knowledge no attempt has been made to investigate empirically the role of export-driven new ventures in economic growth. We focus on the national level and use data for a sample of 34 countries over the period 2002–2008. Our results suggest that, on top of a positive relation between entrepreneurial activity in general and subsequent macroeconomic growth, there is an additional positive effect of export-oriented early-stage entrepreneurship in higher-income countries. However, there is no such additional effect in lower-income countries. Hessels, S.J.A. Stel, A.J. van http://repub.eur.nl/res/pub/16600/ 2009-08-19T00:00:00Z Putting measures in place to prevent wrongdoing in organizations is important, but detecting and correcting wrongdoing is just as vital. Employees who observe wrongdoing should therefore be encouraged to respond in a manner that supports corrective action. This paper examines the influence of the ethical culture of organizations on employee responses to observed wrongdoing. The findings show that, contrary to transparency and congruency of management, many other dimensions of ethical culture were negatively related to inaction and external whistleblowing and positively related to direct interven-tion, reporting to management and calling an ethics hotline. The model used for ethical culture explained 27.5% of intended responses by employees. Kaptein, S.P. http://repub.eur.nl/res/pub/16098/ 2009-06-16T00:00:00Z The primary objective of financial statements is to provide capital market participants with information that enables them to make informed decisions. They also serve to alleviate the so-called ‘agency problem’ – through true and fair disclosures, financial statements contribute to keeping the interest of outsiders (shareholders) aligned with those of the insiders (executives). Material errors, however, will render these financial statements unreliable and can cause great uncertainties to investors and other stakeholders. Subsequent correction of these errors – restatements – often leads to the following question: Can management still be trusted? And subsequently: Where were the gatekeepers? The avalanche of accounting scandals a few years ago, coupled with the current global credit crises, reiterate that our knowledge of corporate governance failures needs continuous upgrading. This dissertation contributes to understanding why the watchdogs did not bark, and also dissects how common human biases affect the mechanisms of corporate monitoring roles, in particular during restatement crises. Three connected studies were conducted. A first qualitative study develops a model for gauging restatement severity and provides insight into the forces blurring the 20/20 vision on restatement situations. A second quantitative study is the first study to comprehensively elicit analysts’ perceptions of CEO pressures and behaviours during restatements. A third study corroborates our findings through in-depth interviews with analysts. Combined the studies show that bounded awareness and common human biases heavily influence functioning of executives and gatekeepers in safeguarding corporate reputation during restatements. Gertsen, H.F.M.