GW-CIBER Funded Projects: 2010-2011
African Diaspora Marketplace Longitudinal Study
PI: Liesl Riddle, Associate Professor, Department of International Business, GWSB
Most research on diaspora investment is based on singular case studies and cross-sectional surveys. What is lacking is a multi-method, empirical examination of the diaspora investment process through time so that diaspora investors’ investigation, business launch, and early start-up experiences can be better understood. The proposed three-year longitudinal study of the participants in the African Diaspora Marketplace will illuminate the unique challenges and opportunities faced by diaspora entrepreneurs in the early phases of their business development. The study will consist of quantitative tracking surveys as well as qualitative in-depth case studies of a subsample of participants. It will explore if and the degree to which investor motivations (pecuniary and non-pecuniary) change as the investor becomes more involved in business activity in the country of origin. It will investigate whether and to what extent investor perceptions of business environment obstacles change as the investor gains greater hands-on experience in the country-of-origin economy. It also will examine how investors utilize their social networks to gain access to the financial, human, and social capital needed to launch their investments.
Syndicated Lending to Emerging Markets: Foreign Banks and Local Subsidiaries
PI: Hein Bogaard, Assistant Professor, Department of International Business
Banks from advanced economies finance a substantial amount of investment in emerging markets, both in the form of “direct” cross-border lending and “indirectly” through subsidiaries in host countries. In this research project, we ask how country and borrower characteristics affect the choice between direct and indirect lending by studying the market for syndicated loans. We distinguish between institutional and economic factors affecting this choice. We also investigate how financial crises in the home country of the lenders or in the host country where the borrower is located affect the choice between direct and indirect lending. Our research has implications for the availability of finance for investment and growth in emerging markets and provides insight in the transmission of financial crises between countries.
Financial Deregulation and Private Sector Borrowing
PI: Senay Agca, Associate Professor, Department of Finance, GWSB
This project will examine the impact of financial deregulation policies on the costs of corporate borrowing by utilizing international panel data on corporate loan issuances. If financial deregulation policies reach their aim, corporations should be able to borrow more and at better terms. The results of this project will provide a better understanding on whether these policies achieve their objective in improving the funding resources for corporations by increasing its availability or by reducing its cost.
Surviving the Global Financial Crisis: Firm Ownership, Organization and Establishment Performance
PI: Maggie Chen, Assistant Professor, Department of Economics, CCAS
This project examines the differential response of establishments during the global financial crisis. Using a new dataset that reports activities of over 12 million establishments around the world, the project investigates the role of firm ownership and organization in determining establishment performance during the crisis. The existing literature has so far shown an ambiguous relationship between foreign investment and economic growth at both the macro and the micro levels. The project disentangles the ambiguity by exploring three potential channels through which firm ownership and organization can affect establishment performance: (i) production linkage, (ii) financial linkage, and (iii) firm network. Preliminary evidence suggests that establishments with different ownership and organization structures exhibited sharply different responses. Multinational owned establishments performed, on average, better than their local counterparts, but the role of multinational owners hip can vary significantly with production and financial linkages and the size of firm organization network.
The Political Economy of Oil in Japan, France, and the United States
PI: Llewelyn Hughes, Assistant Professor, Department of Political Science, CCAS
The project examines variation in government intervention in the international oil market by major oil-importing states. Policies designed to enhance national control over the petroleum supply chain were restructured the 1980s in the three countries examined in the study, giving the state a less significant role in shaping trade in crude oil and petroleum products. This process was reversed in some countries, but not others, under conditions of high prices in the 2000s. I argue these changes reflect the interests of two sets of political actors: governmental actors (bureaucratic and political) with responsibility for oil policy, and firms engaged in the oil sector. Further, these actors focus on political, organizational and commercial goals, rather than national security, when crafting oil policies. Changes in oil policies over time reflected the effect of shifts in oil prices on the policy preferences of state actors and firms as they pursue their political, organizational and commercial goals.
Commitment of Multinational Corporations to Global Initiatives: The Role of Domestic Labor Institutions
PI: Srividya Jandhyala, Assistant Professor, Department of International Business, GWSB
This project will address the question: When do Multinational Corporations (MNCs) join global initiatives? Global initiatives are voluntary programs that guide and constrain the activities of firms, rather than governments, by specifying standards that sometimes exceed government regulations. Existing literature examining the MNCs choice to join a particular initiative and the timing of that decision is limited to the firm’s social characteristics, generally in case studies or small samples. Unlike prior research, this project proposes an empirical examination of a large sample of MNCs focusing on the institutional element; specifically the strength of the labor laws and regulations in a firm’s home country and other countries that it has operations in. The PI will examine a firm’s membership in the UN Global Compact, the world’s largest sustainability initiative that stipulates compliance with human rights and labor policies in order to understand the interaction between domestic laws and global initiatives.
Two Hundred Years of Financial Integration: Growth, Crises, and Financial Contagion
PI: Graciela Kaminsky, Professor, Department of Economics, CCAS
The last three decades have been witness to a dramatic process of globalization. This process of integration was warmly welcomed around the world since it was believed that financial integration allows capital to travel to its most attractive destination. But the boom in international capital flows of the 1990s ended with currency crises around the world. Again in the mid-2000s, international capital flows sharply increased, with the United States and Great Britain becoming the most important beneficiaries of this surge. This boom also ended with a collapse and worldwide crisis beginning in 2007 and we are now in the midst of a sovereign crisis in Europe. What went wrong? What should policy makers do? This project constructs a new database on international capital flows since the beginning of the 19th century to compare the boom-bust cycles during the heydays of financial integration before 1931 and the crises that followed them with those of the last three decades to understand the differences between crises that start in the financial centers (such as crises of 1929 and 2007) and those that start in the periphery (such as the Baring crisis of 1890 and Mexico crisis of 1994) as well as to assess the various channels of financial contagion and the policies should be implemented to reduce the spillovers of the crises.
Innovation and the Organization of R&D Activities in the Multinational Firm
PI: Anu Phene, Associate Professor, Department of International Business, GWSB
Research on multinational firm (MNC) innovation has examined the global dispersion of the firm’s R&D network. However an area that has been largely overlooked in this research is how MNCs organize their global R&D networks and the consequent implications for firm innovation. Teece (1996) posits that firm organization is an important determinant of innovation and the links between firm structure and innovation process are poorly understood. We propose that in order to understand multinational firm innovation, it is critical to look beyond the existing emphasis of international dispersion of activity and evaluate how global R&D networks are organized. As the resource based view suggests it is not merely the possession of resources but the organization and management of these resources that determine firm capability and therefore competitive advantage. Our research question in this study is, “How does the organization of the MNCs global R&D network influence its innovation?”. We evaluate the organization of the MNCs global R&D network by examining a) the national factors that determine configuration of the network and b) organizational factors that influence co-ordination within the network. We suggest that while configuration of the R&D network is important, effective co-ordination moderates the relationship between configuration and innovation, often compensating for the effects of a less optimal structure or strengthening the effects of an appropriate configuration.