Pro-market Reforms Research Articles

Influence of Institutional and Geographical Factors on the Openness and Dispersion of Knowledge-Sourcing Practices

Organizations do not operate in a vacuum. They are embedded in specific geographic locations and are subject to institutional environments that constrain and shape the way they conduct business in general, and innovation activities in particular. This article summarizes my work about how firms adapt their innovative and knowledge-sourcing activities to factors such as geographic peripherality, government monetary and non-monetary support policies, and ownership changes due to pro-market reforms during privatization processes.

La construcción y articulación de la hegemonía menemista frente al campo empresarial y el establishment􀀃 internacional en los años 90

This article analyzes the construction and articulation of Menemist hegemony in Argentina in the nineties, focusing on the interpellations and discursive strategies of Carlos Menem in the business world and international establishment. Likewise, the Laclau hegemony theory is implemented. In conclusion, Menem realized a dual interpellative strategy: first towards the neoliberal nucleuses in order to convince them to implement and perpetuate the pro-market reforms without ceding the course of action; and second, towards the great nonneoliberal entrepreneurs so that they would transform their established identities and adopt neoliberal ideas. This strategy assumed two historical phases, under a series of not merely linguistic transformations that dialectically legitimized and indirectly demonstrated the interpellative success of the Menemist speech.

Knowledge will set you free

Purpose– The purpose of this paper is to combine notions from the POST Model of Economic Geography and Learning Theory from International Business to study how firms may enhance their responsiveness to institutional processes and changes through different forms of international learning. Focussing on one form of institutional changes, namely pro-market reforms, the paper analyzes how firms may boost the potential benefits from such changes through international strategies that increase their access to knowledge spillovers and absorptive capacity. These strategies include international product diversification, enhancing innovation capabilities, informal institutional exposure, accumulated internationalization knowledge, and overall experiential knowledge.Design/methodology/approach– The hypotheses are tested using generalized least squares models with AR(1) panel-specific autocorrelation and heteroskedasticity correction. Based on the preliminary analyses performed in these studies, the author also executes a Hausman test, Bartlett’s test, and James/Alexander’s test. The results of these analyses indicate that the use of random effects is appropriate; that moderating effects are present; and that multivariate analyses using these moderators are suitable, respectively.Findings– The results indicate that pro-market reforms have a positive and significant effect on the profitability of firms from developing countries. Furthermore, they provide support for the positive moderating effects of international product diversification, innovation capabilities, informal institutional exposure, accumulated internationalization knowledge, and overall experiential knowledge. Together, these findings suggest that through their international strategic decisions, MNEs can enhance their access to knowledge and become more responsive to institutional changes in their home market.Research limitations/implications– This paper contributes to the economic geography literature by linking the POST Model with the classification of types of knowledge from Learning Theory. The paper analyzes how characteristics of place, organization, space, and time play a different role for each of the three basic types of knowledge that is relevant for international firms: institutional, business, and internationalization. Furthermore, the paper contributes to the literature on reforms and firm profitability by delving deeper into the moderating effect of strategic decisions on the relationship between reforms and firm performance. This allows us to have a deeper comprehension of how various sources of international learning may enhance the responsiveness of firms to institutional changes.Originality/value– The paper provides several important contributions to the international strategy literature. First, it contributes to Learning Theory by combining it with the POST Model of Economic Geography to study how each of the three sources of knowledge (and their subcomponents) can be further broken down into factors of place, organization, space, and time. Second, it contributes to the literature of institutional change by studying how knowledge acquired through vastly different means can provide firms with sources of competitive advantage over other local competitors when responding to institutional changes in their home market. Third, it contributes to the literature on reforms and profitability by studying five novel moderators of this relationship.

Multilatinas as sources of new research insights: The learning and escape drivers of international expansion

This study reviews the literature on multilatinas, Latin American multinationals, and provides suggestions for using these firms as a laboratory for extending exiting theories and models of the multinational. Analyses of their behavior tend to discuss their upgrading of capabilities and their patterns of internationalization. An additional opportunity exists to contribute to the literature by analyzing how some of the unique characteristics of Latin American countries affect the internationalization of firms. The review explains how four characteristics of their home countries (political uncertainty, violence, pro-market reforms and reversals, and geographic isolation) can result in the foreign expansion of firms, either because managerial learning of the home country conditions facilitates internationalization (the learning driver), or because the home country conditions induce internationalization to escape those conditions (the escape driver).

Financial Markets and the Political Center of Gravity

Academics across multiple disciplines and policymakers in multiple institutions have in recent decades searched for the economic, political, and institutional foundations for financial market strength. Promising theories and empirics have developed, including ma-jor explanations from differences in nations’ political economy.A common view is that, because many pro-market corporate reforms occurred during the 1990s in Europe, when social democratic parties governed and financial markets deepened, basic left-right explanations do not work and more complex political explana-tions are needed, presenting an unexpected paradox, in some political scientists’ view. This finding might be interpreted to indicate that left-right orientation is unimportant in affecting financial development and that either nonpolitical institutional issues or different political considerations are more central.We show here, first, that conceptually it’s not relative local placement of the govern-ing coalition on the nation’s left-right spectrum that counts, but whether the polity as a whole — i.e., its political center of gravity or its dominant governing coalition — is left or right on economic issues. If interests and opinion shift in a nation such that its political center of gravity is no longer statist and anti-market, then even locally left parties could and would implement pro-market reforms. (And conversely, in an earlier era when inter-ests and opinions were statist and anti-market, one should not expect to see even locally right parties pushing pro-market financial reforms forward.)Second, we bring forward data showing substantial movement over recent decades of political parties and governing coalitions; these shifts must be accounted for in assessing the impact of left-right divisions on financial and securities markets. In large measure, these political shifts correlate with financial markets shifts. Left-right matters not only in the fixed-in-time cross-section, but also the left-right economic shifts over time make an empirical difference. The results thereby further buttress the importance of a nation’s basic left-right political orientation in explaining financial market outcomes.

Marketized state ownership and foreign expansion of emerging market multinationals: Leveraging institutional competitive advantages

The emergence of marketized shareholders through corporate ownership reform and their impact on the foreign entry of emerging market firms is a critical but understudied issue. Our study investigates the effect of marketized state ownership on emerging market firms’ propensity to engage in foreign direct investment. We argue that firms with marketized state ownership may derive institutional competitive advantages from their dual responsiveness to shifting global market conditions and home government expectations which has a positive impact on their foreign investment decisions. However, such advantages are likely to vary in magnitude for firms with marketized state ownership at central and local levels of government due to different patterns of corporate restructuring. We predict that such ownership effects are contingent on firms’ affiliation to meso-level institutional structures such as state business groups which reallocate resources among members. Using a longitudinal sample of 973 Chinese publicly listed firms, we find empirical support for our arguments. Our research offers new insights on how emerging market multinationals may derive institutional advantages from pro-market reforms for overseas expansion.

Feminism's Two Legacies: A Tale of Ambivalence

This essay explores the possibility for twenty-first-century feminism to retrieve the insurrectionary spirit of women's liberation. It begins by charting the shift from a feminist imaginary focused on egalitarian redistribution to a feminist imaginary founded on recognition of cultural difference. I attribute this shift to the inherent ambivalence of feminism, its ability to articulate as easily with liberal individualism as with solidary egalitarianism. I argue that this ambivalence accounts for a subterranean electoral affinity that has enabled the recuperation of feminist ideas as a source of energy and legitimation for the deregulatory, promarket reforms of neoliberal capitalism, with its valorization of market mechanisms (such as wage labor and micro-credit) that have harnessed the dream of women's emancipation to the engine of capitalist accumulation. I conclude by asking how twenty-first-century feminism might revive the political-economic concerns of its most radical period, together with its insights into the dynamics of recognition, to join forces with and radicalize the analyses of critics of neoliberalism who tend—despite the rich history of feminist critique—to overlook the centrality of women's labor in neoliberal productivity.

Multilatinas as Sources of New Research Insights: The Learning and Escape Drivers of International Expansion

This study reviews the literature on Multilatinas, Latin American multinationals, and provide suggestions for using these firms as a laboratory for extending existing theories and models of the multinational. Analyses of their behavior tend to discuss their upgrading of capabilities and their patterns of internationalization. An additional opportunity exists to contribute to the literature by analyzing how some of the unique characteristics of Latin American countries affect the internationalization of firms. The review explains how four characteristics of the home countries (political uncertainty, violence, pro-market reforms and reversals, and geographic isolation) can result in the foreign expansion of firms, either because managerial learning of the home country conditions facilitates internationalization (the learning driver), or because the home country conditions induce internationalization to escape those conditions (the escape driver).

Globalization, International Organizations, and Telecommunications

Since the 1990s over 158 countries established pro-market reforms in telecommunications—a fast pace for such a drastic change. For example, Sweden and Botswana, two nations vastly different across multiple dimensions, both liberalized their telecom sectors. Why did so many countries adopt liberal reforms in such a short period of time? Conventional wisdom highlights the role of global markets and technology, powerful states, global diffusion, and domestic politics. I argue that contrary to these claims, diffusion through key international organizations is the critical and overlooked factor in explaining rapid global convergence of pro-market telecom reforms. Using an original dataset for 189 countries between 1970 and 2003 and event history analysis, I demonstrate that membership in key liberal trading organizations, especially the WTO and the OECD, increases the likelihood that countries will adopt liberal pro-market reforms in telecommunications. These results speak directly to current public policy debates about the reregulation of global markets and bridges the literatures of policy diffusion, institutional design, and regulatory regimes.

The introduction of Australian digital television: Politics, policy and power

This article discusses the introduction of digital television to Australia, and the competing interests, and conflicts of power, surrounding this. It seeks to explain the primary outcomes of the digital settlement in terms of these interests and these processes of power. It points out how this settlement was very much at odds with the pro-market, deregulatory and competition-oriented reform advanced by the Howard government (and prior to it, the Hawke and Keating governments) in other industry sectors. The digital settlement introduced in 2001 entirely determined what Australians watched on their television screens for the first decade of the 21st century. This article seeks to unpack the processes that led to this outcome.本文讨论了澳大利亚数字电视的引进以及围绕它的利益博弈和权力斗争。作者力图从利益或权力的角度理解数字电视引进的主要结果。作者指出，数字电视的引进与霍华德政府（以及之前的霍克和基廷政府）推行的市场化、解除管制、竞争导向的改革大相径庭。2001年引进的数字电视整个决定了21世纪头十年澳大利亚人在电视屏幕上看些什么。本文意在揭示通向这一结果的过程。

A Comment on the Extension of the OLI Framework to Emerging Economies

Does Dunning’s Ownership–Location–Internalization (OLI) framework explain the internationalization of business groups in emerging economies? I argue that business groups do not have traditional ‘firm specific advantages’ (FSAs) that the OLI framework talks about, but their ownership advantages derive from the home country locational advantages. However, as pro-market reforms get implemented in emerging economies, these FSAs of business groups will increasingly provide less marginal benefits. Under such conditions, business groups will develop a new range of FSAs, which are independent of their locational advantages. I extend the debate as to whether the internationalization of business groups is unique enough to require new theories.

Business Group Affiliation and Corporate Expansion during Pro-Market Reforms

This study examines how emerging economy firms pursue growth in the domestic market during pro-market reforms. Grounding on the literature on institutional voids and business groups, we propose tha...

The rise of capitalism and the roots of anti-American terrorism

This contribution examines the role of capitalism in anti-American terrorism. It uses two theoretical frameworks, both of which contrast the pacifying effects of higher levels of capitalist development with the potentially destabilizing effects of a transition towards capitalism, but differ with respect to their definition of capitalism, capitalism’s interaction with anti-American terrorism, and its empirical operationalization. Using panel data for 149 countries between 1970 and 2007 and providing further system-level time-series evidence, this contribution finds no support for hypotheses derived from the classical capitalist peace literature. There is no evidence that anti-American terrorism increases with external economic liberalization or that it decreases with higher levels of economic openness. By contrast, hypotheses derived from economic norms theory find empirical support. Conceptualizing capitalism as social market-capitalism, this article finds that higher levels of market-capitalism are associated with less anti-American terrorism, while the process of marketization fuels it. Consistent with expectations from economic norms theory, the destabilizing effects of the marketization process may stem from the violent opposition of antimarket interest groups that have benefited from the pre-market order to the economic-cultural change initiated by a transition towards a market economy. These interest groups deliberately target the USA as the main proponent of market-capitalism, globalization, and modernity, where anti-American terrorism serves the purpose of consolidating their societal position, rolling back pro-market reforms and limiting the perceived Americanization of their communities. This contribution’s findings suggest that the USA may ultimately become a less likely target of transnational terrorism through the establishment of market economies, but should not disregard the disruptive economic-cultural effects of the marketization process in non-market economies.

When do family firms have an advantage in transitioning economies? Toward a dynamic institution-based view

We advance a dynamic institution-based view of the firm that extends the theory's current focus on scope of pro-market reforms (degree of market liberalization in a given year) to consider how speed of reforms (rate of market liberalization achieved over time) affects the performance of firms from transitioning economies. Utilizing a sample of public firms from Chinese provinces with varying reform speeds, we find that while scope of reforms positively impacts firm performance, speed of reforms detracts from firm performance. We further find that while family firms have an advantage in gradually reforming provinces, non-family firms have an advantage in rapidly reforming provinces. Thus, we extend the institution-based view across time (speed of reforms) and firms (family vs. non-family firms). Copyright © 2014 John Wiley & Sons, Ltd.

How do pro-market reforms impact firm profitability? The case of India under reform

A number of developing countries have enacted pro-market reforms to transform their economies from socialist to market economies. These reforms bring sweeping changes in the economic and competitive landscapes of these countries, with significant consequences for firm performance. We integrate Douglass North's theory of institutional change with gains from governing the economy through market forces relative to government control to theorize a U-shaped relationship between pro-market reforms and firm profitability. We also theorize that the U-shaped relationship will be shallower for foreign firms and top business group firms relative to independent firms. We test and find support for the theorized relationships in a large sample of 122,534 observations taken across 18,591 firms in India, as it has implemented pro-market reforms.

Economic Development and Marketing Strategies: a Comparative Lens

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 We analyze two core models of economic development in emerging markets: socialism (i.e., the “visible hand” of the state in directing the country’s socio-economic life) and capitalism (i.e., the “invisible hand” of the markets implemented through pro-market reforms). We further distinguish between two types of socialist economic development: Soviet Communism (as experienced in the pre-1990s Central and Eastern European transition economies) and Fabian Socialism (as experiencedin pre-1991 India). We then suggest that companies can adapt to the evolution from socialism to capitalism in their countries through the implementation of more sophisticated marketing strategies that can ensure a sustainable competitive advantage. Thus, we study the marketing strategies of companies from emerging markets operating under both models of economic development. We analyze the opportunities and challenges that emerging market companies face under each model of economic development in terms of deploying various marketing strategies, and provide useful venues for future research.
 

Entre los «cuentos chinos» y la realidad : (el surgimiento de China : un dilema central de la política exterior argentina)

Argentina is isolated from the world and its international reputation has declined. In international trade, despite the favorable international circumstances, we have not diversified export pattern and have consequently lost important markets. In terms of foreign direct investment, recurrent instability and discretion in the application of the rules of the game reduced investments. In contrast, the pro-market reforms introduced by China, along with a high investment rate, generated a tremendous economic progress over the past decades. The rise of China on the world stage is beneficial to our country if we understand it and use it in our favor. But keep in mind that the Argentinean and Chinese economy, in the commercial field, are less complementary to what has been discussed in various fields in recent years. Unfortunately, China imports few of the products with higher added value that we export, since the highest concentration of our exports to China is raw materials. Argentina must implement an effective strategy to engage with China in the future and seize the opportunities that are presented.

What Constitutes Poverty in Myanmar? The Social Work Appraisal

This paper briefly describes the general poverty situation in Myanmar, factors that partly constitute poverty in Myanmar, and social work and poverty in Myanmar. Myanmar with a population of over 60 million and at 676,578 km2 (Burma) is the largest country of mainland Southeast Asian Region, and second largest overall in size after Indonesia. It is a country that is rich in natural resources including precious stones, oil, and natural gas, however, Myanmar is still one of the poorest countries and majority of its citizens are still living in poverty and do not enjoy the benefit of their rich natural resources even under the newly introduced political reforms. There are differences in urban and rural poverty. The urban people have more money than the rural people but rural people on subsistence agriculture have more food but no hard cash. It is argued in this paper that poverty in Myanmar is mainly caused by the mismanagement of resources and inefficiency of governance, corruption and dishonesty in resource allocations, insecurities of social and economic conditions to the people. The 2008 Myanmar Constitution describes the protection and rights of the citizens for property ownership, education and health. The newly adopted pro-market reforms have led to cases of land seizures from farmers for mining and industrial development, decline in wages in real terms for factory workers with resultant social problems in many areas in the country. The challenge for the future leaders and policy makers is whether it is the constitution that needs to be changed or improved or improve the enforcement of the current one to improve the poverty situation for the people of Myanmar.

Growth and Crisis in India’s Political Economy from 1991 to 2013

Since the pro-market reforms were launched, the Indian economy has grown from 4.7% in the 1990 to 9% in 2011 before slowing down dramatically to nearly half of that rate in recent years. From launching of reforms until 2011, it did manifest some vivid and impressive signs of India moving towards high growth and increase in living conditions of its population. The purpose of this article is to access the likely effects of reform measures on the society, because the mainstream approach suggests that the reforms can be expected to increase economic growth and incomes. However, this study finds that the mainstream economists ignore the role of domestic aggregate demand and inequality. India’s growth was led by the services sector, which included real estates, IT, telecommunications and banking, and contributed nearly 50% to the GDP in 2012. Manufacturing, which experienced remarkable growth and transformation in the East Asian economies, had rather grown much slower. The agriculture sector, which still employs nearly two-third of India’s workforce, remains stagnant. The study suggests that education and health have been neglected in India and this will compromise productivity and growth.

Upmarket and Downmarket OFDI in Response to Reforms

We analyze the impact of the level of pro-market reforms on outward FDI. Pro-market reforms are the transformation of institutional frameworks and regulations required for markets to function properly. Building on the institution-based view, we propose that higher levels of reforms in the home country induce domestic firms to improve their competitiveness to international levels, enabling them to invest abroad and become multinationals. Moreover, we argue that the level of reforms in the home country influences the destination of their investment, with higher levels of reforms enabling firms to become more internationally sophisticated competitors and invest upmarket in more advanced countries than their home country. We test these arguments on a sample of 45,291 bilateral OFDI flows covering most of the globe from 1995-2010.