Funded Projects

GW-CIBER sponsored research takes the form of published articles and books, working papers, research seminars, conference presentations, and the organization of academic workshops on topics related to GW-CIBER’s research streams.

GW-CIBER Projects Funded Through Our Annual Request-for-Proposals Competition

Global and National Data Mapping Project

PI: Susan Aaronson, Research Professor, IIEP/ESIA

Brief Description:

This project will map the governance of data for a diverse sample of 57 countries. The PIs will examine data governance by type of data (e.g., public, personal, proprietary), domestic and international strategies, and application (e.g., for AI or the internet of things.) In so doing, the PIs will provide new information about institutional development – understanding data governance norms and strategies, governance gaps, governance coherence, linkages to international law, and good governance principles.

Can Information Shift Preferences Towards Trade Policy? Evidence from Randomized Survey Experiments

PI: Maggie X. Chen, Professor, Department of Economics, CCAS

Brief Description:

The rising anti-globalization sentiments in developed countries have largely been attributed to continued declines in manufacturing employment and increases in income inequality. Economic research has long hypothesized that as globalization produces winners and losers, winners are expected to become supporters of globalization while losers express opposition. However, this theoretical prediction is contradicted by the observations that the current anti-globalization sentiment is in fact shared across income, skill, and political spectrums and that the underlying economic conditions blamed for the current backlash have been present for the past decades. A potential alternative explanation for the recent discernible increase in calls for protectionism is the public’s rising exposure to information fueled by negative narratives of globalization. In this project, the PIs investigate the role of evidence-based information in shaping individuals' views towards globalization and their preferences for economic policies and the potential mechanisms, including prior belief, loss aversion, and economic grievances, through which the influence is exerted. Understanding how information might shape individuals' attitudes and policy preferences is critical in an era of information explosion, as research on trade policy decisions has typically assumed a full information environment, without regard to possible biases in the information set that individuals are exposed to. This research will help understand how exposure to different narratives of globalization explains the evolution of public sentiments that is otherwise difficult to reconcile with conventional economics hypotheses.

Arresting the Opposition: Labor Unions & Free Trade in Developing Countries

PI: Adam Dean, Assistant Professor, Department of Political Science, CCAS

Brief Description:

At the turn of the twenty-first century, why did country after country in the developing world open their economies to the global market? This paper places labor unions and government repression at the heart of the debate over trade liberalization in developing countries. It argues that the move towards free trade involved a top-down democratization process that empowered export-oriented businesses but silenced the demands of protectionist labor unions. In contrast, bottom-up democratization led by labor unions led to a continuation of trade protection. This paper supports these arguments with a multi-method approach that combines qualitative case studies of Argentina, Bolivia, and India with quantitative analysis of data from 126 developing countries from 1985 to 2010. In general, the empirical evidence suggests that the move towards free trade in developing countries was resisted by labor unions, and only proceeded in democratic countries to the extent that such opposition was repressed.

Financial Fragility: Africa 1970-2019

PI: Graciela Kaminsky, Professor, Department of Economics, CCAS

Brief Description:

In the aftermath of the 2007-2008 US Subprime Crisis, monetary policy in the financial centers became highly expansionary, leading to a global increase in liquidity. In this environment, public and private debt around the world surged suggesting the possibility of a new financial and debt crisis. One major concern is the debt sustainability of Sub-Saharan African Countries, especially now during the global pandemic. But what is the extent of financial fragility in Africa? Most of the data on debt as published by the IMF is for the most recent years. With only a few data points it is hard to assess the sustainability of the debt. A longer sample including various boom-bust cycles in capital flows as well as a long series of crises is needed.  The goal of this project is to assess the financial vulnerability in all Sub-Saharan African Countries starting in 1970. The project involves the creation of a novel database on debt and financial crises spanning 50 years, allowing the PI to estimate waves of debt and see how they ended.

U.S. Firms and Geopolitical Risk: Who’s Exposed and How Do They Respond

PI: Alexander Kirss, PhD Student, Department of Political Science, CCAS

Brief Description:

What strategies do international businesses adopt to try and mitigate geopolitical risk, particularly when it comes to large scale shocks like interstate wars? Existing empirical research on business reactions and responses to geopolitical shocks is often narrowly confined to specific industries or timeframes. It is hard to piece together a larger picture of the range of business responses and strategies from this scattered empirical record. This project therefore aims to develop a new database that systematically records these responses by gathering qualitative and quantitative data through both original archival research and cataloging of existing data repositories.

Terrorists, Taxes, or Trafficking: Anti-Corruption Framing and Public Support for Corporate Transparency Laws

PI: Elizabeth Meehan, PhD Student, Department of Political Science, CCAS

Brief Description:

Increasing global corruption has led international organizations to pressure countries to adopt corporate transparency (CT) laws to minimize illicit financial flows, as well as to reduce corporate losses to fraud and bribery. But many countries have not adopted these laws, with some scholars pointing to a lack of grassroots support for transparency and anti-corruption measures as a major factor. Existing scholarship is also mixed about whether transparency increases public trust in government. Under what conditions does public support for CT laws increase, and how does it affect public trust in government and business? Through survey experiments fielded in the United States and Australia, the PI tests whether respondents have greater support for transparency when they believe their country’s competitiveness or safety (ingroup) is threatened relative to another country (outgroup). Anti-corruption frames that activate ingroup sentiments increase public support for CT laws and in government and business compared to those that activate outgroup sentiments. Furthermore, the PI tests two new mediators – cynicism toward government and business and beliefs about the role of government in the economy – that condition public support for CT laws and public trust. Understanding the link between public opinion and policy shifts around anti-corruption measures allows firms to better anticipate potential regulatory changes at home and abroad and its impact on trust in business.

Rising Multinationals: The Political Economy of South-North Investment Flows

PI: Aparna Ravi, PhD Student, Department of Political Science, CCAS

Brief Description: In the past two decades, there has been an unprecedented boom in outward foreign direct investment (OFDI) from developing countries. While existing theories predict that multinational activity should flow from capital-rich countries to capital-scarce countries in search of higher rates of return, witnessing movement in the opposite direction presents a puzzle. Many developing countries have also shifted their policy stances on outward capital flows from previously regulating outward investment to directly supporting the internationalization of domestic firms through state finance. Why are developing countries supporting a policy that would shift capital and jobs outside of domestic borders? How do they deploy the use of state finance to encourage outward investments? In this study, the PI employs a side-by-side comparison of OFDI with inward foreign direct investment (IFDI), demonstrating that OFDI mirrors IFDI in terms of the developmental benefits it confers to the home economy. This economic rationale forms the justification for state support for outward investment, as developing countries aim to boost their national economic competitiveness. The PI then uses survey evidence collected from a sample of firms in Brazil, India, and Turkey to examine the effects of state finance on the OFDI trajectories of firms from these emerging markets. This research sheds light on the role of states, institutions, and investment in the context of heightened globalization.

Property Rights Protection & Corruption in the Russian Arbitration Court System

PI: David Szakonyi, Assistant Professor, Department of Political Science, CCAS

Brief Description:

Cross-national work suggests stronger judicial systems lead to faster economic growth and more developed financial markets. Yet we have little understanding of how these institutions function in practice at the micro-level. Which reforms best promote judicial neutrality and the fair application of laws to all investors, foreign and domestic? How do individuals and political environments affect the way commercial judicial decisions are handed down? This project investigates the conditions under which both domestic and foreign companies can successfully use courts to defend against threats to their property rights. By collecting original data on 12mln arbitration court decisions in Russia from 2012-2018 together with a new dataset of official financial disclosures, the project tests arguments about how judges bring their pasts into the courtrooms, potentially introducing bias, but also pointing the way for how institutions should be strengthened to reduce personal influence. The project will also produce a new measure of institutional quality that can help explain cross-border investment into Russia. Overall, this project improves our knowledge of the institutional environment capital is entering, and how US multinationals and their Russian suppliers can better devise strategy to overcome obstacles to doing business in-country. The findings will contribute insights into how host countries can develop institutions that limit judicial discretion, deter influence from outside actors on the judicial process, and level the playing field between mismatched counterparties.

Going Global: Evidence from the Global Expansion of Chinese Smartphone Brands

PI: Yingyan Zhao, Assistant Professor, Department of Economics, CCAS

Brief Description: The project focuses on the smartphone industry and how firms in it form their foreign market entry strategies. The PIs aim to compile a comprehensive dataset that includes: (1) quarterly brand-model-level sales of all smartphone brands over 40 countries for 2009-2019; (2) detailed model-level product specifications, technological features and quality attributes in different markets over time; (3) transaction-level export activities of all smartphone companies from Chinese Customs Data; (4) firms’ patent applications from the State Intellectual Property Office. The PIs will also document novel patterns of firms’ product quality and pricing strategies over time, market entry decisions, and the pace of technological innovation.

Omnia Juncta in Uno”: Foreign Powers, Institutions, and Firms in Shanghai’s Concession Era

PI: Maggie X. Chen, Professor, Department of Economics, CCAS

Brief Description:

In this project the PIs investigate the influence of institutions on industrial and firm growth by exploiting the unique historical context in Shanghai, China, during the late 19th and early 20th century.  In contrast to previous studies that relied on comparing countries with different institutions either to one another or over time and faced the challenges of disentangling institutions from location fundamentals, this project examines the growth of firms and industries located in the same city, historical Shanghai, but subject to different institutions. As foreign political powers divided Shanghai into segments that shared similar natural advantages but were ruled by distinct institutions in a period displaying remarkable openness to trade, investment, and immigration, Shanghai’s concession era provides an ideal context for distinguishing the economic influence of institutions from the impacts of location fundamentals. The project digitizes a unique employer-employee dataset on firms in Shanghai between 1872 and 1941, covering firm-level outcomes on employment, trade, and firm organization, as well as several additional datasets, including the minutes of the Shanghai Municipal Council meetings and the texts of the municipal law, to measure various aspects of institutions at a micro level. Exploring these rich long panels of firm and governance data, the project examines how institutions shaped the birth and the growth of enterprises, industries, and one of the most dynamic cities in the world.

Arresting the Opposition: Labor Unions & Free Trade in Developing Countries

PI: Adam Dean, Assistant Professor, Department of Political Science, CCAS

Brief Description:

At the turn of the twenty-first century, why did country after country in the developing world open their economies to the global market? This paper places labor unions and government repression at the heart of the debate over trade liberalization in developing countries. It argues that the move towards free trade involved a top-down democratization process that empowered export-oriented businesses but silenced the demands of protectionist labor unions. In contrast, bottom-up democratization led by labor unions led to a continuation of trade protection. This paper supports these arguments with a multi-method approach that combines qualitative case studies of Argentina, Bolivia, and India with quantitative analysis of data from 126 developing countries from 1985 to 2010. In general, the empirical evidence suggests that the move towards free trade in developing countries was resisted by labor unions, and only proceeded in democratic countries to the extent that such opposition was repressed.

Buying Markets: Mandatory Corporate Giving and the Legitimacy of Business in India

PI: Sam Frantz, PhD Student, Department of Political Science, CCAS

Brief Description:

In a time of economic inequality and public skepticism of the corporate sector, can firms earn legitimacy by providing public services? In 2013, amid several high-profile corporate scandals and broad public concern about crony capitalism, Article 135 of India's Companies Act introduced a novel policy that requires thousands of Indian and multinational firms to spend two percent of their profits on socioeconomic development projects. Article 135 and its implementing rules turn companies into development actors in their own right. Directly and through partner civil society organizations, firms are running health clinics, writing school curricula, building irrigation infrastructure, and constructing tens of thousands of public toilets. Six years on, is there any evidence that such investments by firms – which amounted to around $1.9 billion in fiscal year 2016-17 – are changing public attitudes toward companies, the corporate sector, and economic policy? This project uses a household survey and embedded experiment to assess whether Article 135 projects are improving perceptions of the organized corporate sector and building the legitimacy of the market system as a whole. Because firms’ embeddedness in society and opportunities to use Article 135 to change relations with communities vary by context, the PI conducts the survey in three distinct settings, which he calls company towns, commercial zones, and corporate hinterlands. Overall, the project explores the challenges of economic legitimacy faced in countries whose residents earn their livelihoods primarily in the informal economy but whose development strategies rely heavily on promoting growth in the organized sector.

Global Virtual Teams Online Course

PI: Sharon Hill, Associate Professor, Department of Management, GWSB

Brief Description:

The purpose of this project was to develop teaching activities and materials for a new online course titled “Global Virtual Teams,” offered through the department of Management. Global virtual teams have members who are dispersed across different countries and interact primarily using technology-mediated communication rather than face-to-face. The Global Virtual Teams course develops students’ knowledge and skills related to leading teams in the global, digital age. The course was developed and launched in Fall 2019 (MGT6290). Materials included in the course include podcasts, self- and peer-assessment, case studies, technology tools to aid virtual collaboration, and leadership toolkit.

Patient vs. Impatient Capital: The Political Economy of Chinese Development Finance

PI: Stephen Kaplan, Associate Professor, Department of Political Science, CCAS

Brief Description:

China unquestionably has become a huge economic player in the Western Hemisphere. Its commercial presence alone has allowed Latin American countries to increasingly diversify their trade and investment ties. But what are the political implications of this growing interdependence? Does China’s emphasis on state-led capitalism signify a challenge to U.S. regional influence and Western governance standards? Does China’s lack of conditionality risk sowing the seeds for another Latin American debt crisis? To answer these questions, the PI has been working on a book manuscript (currently under contract with Cambridge University Press) over the last several years that offers one of the first systematic explorations of how the region’s deepening economic integration with China affects the specific policy choices of individual Latin American nations. It aims to help private and public-sector officials in the U.S. craft prudent responses to these economic developments and ensure a competitive landscape for U.S. firms and financial institutions.  Not only does this topic correspond to GW-CIBER’s umbrella theme of Institutions, Inclusive, Globalization, and US Competitiveness, but also the focal theme areas of Trade, Capital, and Investment Flows, and Poverty, Income Inequality, and Economic Development. This RFP project assesses the development consequences of China’s growing economic integration with Latin America, particularly the costs and benefits for firms and countries operating in the Western Hemisphere.

Does the Geographical Location of Exporter’s Clients Matter?

PI: Ahsan Butt, PhD Student, Department of Economics, CCAS

Brief Description:

This project examines the relationship between the locality of an exporter’s already existing clientele and its impact on the firm’s likelihood of finding a new export trading partner (i.e. importer) located in the same vicinity city as its existing clientele base. The research questions are two-fold: Firstly, does the presence of established importers in a given neighborhood buying from a particular exporter increase the likelihood of a first-time match between a new importer from the same neighborhood and that same particular exporter? In addition, does the probability of a first-time match between a new importer in the same locality as existing clientele (as discussed above) and the same particular exporter vary with the type of product that is being transacted?

Transnational Networks in Post-Conflict Stabilization and Development

PI: David Malet, Security Policy Studies Program, ESIA

Brief Description:

This project brings together experts from academia, industry, and governmental and non-governmental organizations in a workshop at George Washington University that will establish a cross-sectoral study of how transnational networks impact conditions in post-conflict states and identify best practices for U.S. business operating in these conditions. The focus of the workshop and resulting publications is on sub-Saharan Africa, an emerging regional market becoming a zone of competition for foreign direct investment (FDI) by transnational corporations and states, but where governance is also impacted by transnational networks of militants and activists.

The Politics of Comparative Advantage in South Asia’s Apparel Sector

Emmanuel Teitelbaum, Associate Professor, Department of Political Science, CCAS

With Aparna Ravi

Brief Description:

Through an analysis of the garment sector in South Asia, this study seeks to better understand the supply chain risk management and public facing policies of U.S. multinationals that rely extensively on subcontracting arrangements. Specifically, the study focuses on explaining why firms privilege some aspects of compliance with international labor standards over others when determining their sourcing strategies.  Recent evidence suggests that firms in labor-intensive manufacturing prioritize compliance with health and safety standards and the prevention of child labor but are less concerned with the protection of freedom of association and collective bargaining (FACB) rights. Little is known about the rationale for these preferences. Do firms emphasize health and safety or the eradication of child labor because they fear that consumers are more sensitive to these issues? Is it because labor activist campaigns are more focused on improving standards for workers and eradicating forced and child labor, rather than actively supporting union and collective bargaining rights? Is it because health and safety standards and child labor are easier to monitor and enforce? Or is it because firms have little risk in advocating for safety standards and the eradication of child labor but fear the economic implications of allowing workers to form unions and engage in collective bargaining? The PIs explore these questions through structured interviews with four sets of actors: 1) Chief Purchasing Officers (CPOs) from U.S. multinational apparel firms; 2) U.S. based labor rights advocates and NGOs; and 3) South Asian apparel manufactures; and 4) South Asian labor rights advocates, NGOs and trade unions. The findings of the study will provide the basis of one policy-oriented paper authored in conjunction with a consulting firm and one academic paper to be published in a peer-reviewed journal. The authors anticipate that the findings will have implications for broader debates about economic globalization and workers’ rights. Freedom of association rights and collective bargaining are stated as core ILO rights and are additionally protected through legislation like the U.S. GSP Renewal Act. Given this, and the recent emphasis on corporate social responsibility among U.S. multinationals, one would expect multinationals to source to countries that promote the protection of FACB rights. Yet countries with relatively strong freedom of association rights and union movements seem to be economically disadvantaged in terms of attracting investment. By illuminating firms’ motivations for privileging compliance with some labor standards and not others, this study will help to understand why we see this “penalization” effect in countries with relatively strong institutions and high levels of compliance with FACB rights.

Towards a Research Agenda on African Philanthropy and Comparative Understandings of Practice and Research

PI: Jasmine McGinnis-Johnson, Assistant Professor, Public Policy, TSPPPA

Brief Description:

The importance of better understanding African philanthropy as it is endogenously practiced is increasingly recognized, as demonstrated by the establishment of African philanthropy networks, university teaching and research programs on the Continent, and foundations supporting them. A particular inspiration for this project is the establishment of a “Chair in African Philanthropy” (under development) at the Wits Business School at the University of Witwatersrand, South Africa. In his foundation paper for the Wits Chair, Alan Fowler (2016) refers to African philanthropy as, “seriously under-researched, poorly or prejudicially understood as ‘traditional’ and anti-modern as well as developmentally under-appreciated.”  The PIs largely adopt Fowler’s (2016) theoretical framework to inform the design of this workshop and lay the foundation for a research agenda we will produce from it. This framing includes explicit attention to “gifting” as opposed to giving and the reciprocity expectations that stem from this distinction (see source); and inclusion of a broad range of philanthropic practices and actors including community foundations, individuals (and particularly individual entrepreneurs and diasporans), SMEs (whose philanthropy is also understudied), and larger corporations, both through their CSR programming and philanthropy associated with their business models.

Foreign Investment in the Lens of Media

PI: Maggie Chen, Professor, Department of Economics, CCAS

Brief Description:

The rapid growth of foreign direct investments (FDI) in recent decades and its implications for labor market and income inequality have emerged as a central area of political debates across countries, including in the United States. The phenomenon has drawn immense attention from the general public; workers and voters in general are growingly concerned about the trends and impacts of FDI. A key channel of their information is media. The volume and composition of FDI news could directly influence the information and belief held by the general public and, furthermore, how they respond to the information. Any biases in the selection and substance of FDI news can lead to similar biases in the public's beliefs and responses towards FDI which, in turn, can exert real impacts on countries' economies, markets, and policies. In this project, the authors quantify FDI in the lens of media by building a global database of FDI news based on over 35,000 newspapers, trade presses, magazines, newswires, television and audio transcripts, and web and social media that span across over 100 countries in 2000-2016. The PIs plan to present an anatomy of FDI news by asking: How is FDI represented in the news relative to the reality? Are there discrepancies between the information presented in the news and actual FDI? What might explain these discrepancies? And do news have any influence on the general public, financial markets, and business decisions?

Protecting Whom from What? The Rise of Digital Protectionism

PI: Susan Aaronson, Research Professor, IIEP/ESIA

Brief Description:

In this project, the PI seeks to understand how Russian and Canadian officials, business leaders and activists view the growing problem of digital protectionism. The US defines digital protectionism as the erection of barriers to cross-border information flows including censorship, filtering, data localization measures, cyber theft, and regulations to protect privacy or ensure cyber-stability (USITC: 2014, USTR: 2016). In three short years, the US has made a dramatic shift from leading global efforts to expand digital trade through trade agreements to a widening focus on unilateral digital protectionism. But the internet is a shared global resource and information flows, which underpin the internet, can’t be effectively governed without internationally accepted norms, standards, rules and policies. The PI seeks to understand the Russian and Canadian view of this paradigm shift as well as their efforts to define and address digital protectionism.

Trade Frictions and Entrepreneurship Growth: An Online Experiment

PI: Maggie X. Chen, Professor of Economics & International Affairs, CCAS

Brief Description:

Frictions in international trade constitute central challenges to firms' ability to access the international markets. Some frictions are explicit such as transport costs and tariffs, while others are implicit and intricate such as search costs, uncertainties, and trade time. While transportation technologies and trade negotiations have dismantled most explicit trade barriers, the latter trade frictions largely remain and little is known how these implicit trade costs have inhibited firms' ability to engage in international trade. In this study, the authors perform a randomized experiment on the leading international trade platform, Alibaba, to evaluate the effects of various implicit trade frictions---including search costs, uncertainties, and trade time---and interventions addressing these frictions on export performance and entrepreneurship growth. Alibaba offers an ideal setting for pursuing randomized experiments in international trade, a field in which such experiments have traditionally been difficult to design and implement. First, Alibaba, the world's leading cross-border trade platform with more than 1.1 million active sellers, over 50 million product listings, and 3.8 million consumer flow each day, enables the researchers to access a large number of existing and potential exporters with ease, an important advantage compared to the offline trade environment. Second, it enables the authors to easily provide different interventions to existing and potential exporters at low administrative costs. Third, given the publically accessible nature of online trade platforms including the transparent transaction information, the authors can readily monitor and track the export performance and behavior of firms after the interventions. This project contributes to the fields of international economics and businesses by offering one of the first evidence on how different types of implicit trade frictions and corresponding interventions might differentially influence international trade and entrepreneurial growth. The present work will help identify the most critical trade frictions and trade policy interventions most needed to facilitate trade and entrepreneurship growth.

Are Bilateral Investment Treaties Really Bilateral

PI: Yonatan Lupu, Assistant Professor of Political Science & International Affairs, CCAS

Brief Description:

While IPE scholars have recently debated the importance of accounting for interdependence among interstate outcomes, recent work has not focused sufficiently on the extent to which such outcomes result from multilateral processes. The PI argues that important events of interest to IPE scholars often result from `k'-adic process involving groups of 2 or more states, rather than dyadic processes. The PI focuses in this project on the formation of Bilateral Investment Treaties (BITs) because the outcomes appear to be intuitively bilateral. The researcher argues that BITs often result from multilateral processes. After explaining this argument in detail, the PI uses the `k'-adic procedure outlined by Poast (2010) to model BIT formation as a multilateral process. The empirical results provide important new insights regarding the extent to which economic factors and host-state institutions predict BIT formations. The models also have significantly better fit and predictive power than equivalent dyadic models, demonstrating the appropriateness of `k'-adic models to study the BIT formation process. The PI concludes by offering IPE scholars guidance on deciding between `k'-adic and dyadic models.

Spending for Stability: Unemployment and Social Spending in Resource Dependent Countries

PI: Fabiana Perera, Ph.D. Candidate, Department of Political Science, CCAS

Brief Description:

This project examines government responses to unemployment in resource dependent countries. Natural resource extraction is a capital intensive industry, thus, countries that rely on extractible resources for a significant portion of their revenue face potentially high unemployment rates. At the same time, governments accrue income which they can use to mitigate this problem. This project compares the ways in which democracies and autocracies invest income from extractible natural resources in response to concerns about unemployment.   

Captor Capitalism: How Foreign Direct Investment Impacts Crony Capitalism in Developing Countries

PI: Aparna Ravi, Ph.D. Candidate, Department of Political Science, CCAS

Brief Description:

Which countries are better able to attract foreign direct investment (FDI) and why? How do institutional features – specifically, the level of business-government ties – condition countries’ ability to attract FDI? Traditional FDI models highlight that democracies are able to attract more FDI given that they can more credibly signal to investors that they will not expropriate assets. Empirically, however, two things are notable. First, oftentimes level of democracy does not correlate with robust protection of property rights. Second, despite the fact that corruption poses a real risk to investors, domestic firms' political connections to state actors can confer benefits to foreign investors in terms of obtaining contracts, licenses, and other political favors. The PI thus proposes that models of FDI should extend beyond discussions of country-level institutions and incorporate an analysis of how governance affects investor risk in developing countries. This study employs a mixed-methods approach involving statistical analysis and comparative case studies from India and Brazil to better understand the relationship between investment and corruption in developing countries.

The Value of Reputation in Trade: Evidence from Alibaba 

PI: Maggie Chen, Associate Professor, Department of Economics, ESIA

Brief Description:

In this project, the PI examines the value of reputation in international trade by exploring T-shirt exports on the world's leading online trade platform, Alibaba. The author first presents four new stylized facts about the online distribution of exporters including: (1) exports are more concentrated in superstar exporters online than offline; (2) the distribution of price closely resembles the distribution of reputation; (3) price and export volume become more dispersed as exporters age; and (4) the share of superstar exporters diminishes with the income and experience of importers. Exploiting detailed features of online reputation and Russian 2014-2015 ruble crisis, the author explains the stylized facts and offer causal evidence on the heterogeneous trade responses to reputation. The PI also builds a dynamic price and reputation model to show that exporters use dynamic prices to influence the rates of reputation diffusion and export growth and reducing the frictions of reputation diffusion could have an economically important impact on both the aggregate volume and distribution of trade.

Who is Not Afraid of Corruption? The Perverse Effect of Host-Country Government Transparency on OECD Countries’ Firms Investments to Emerging Markets

PI: Neli Loewenthal, Ph.D Candidate, Department of International Business, GWSB

Brief Description:

In the proposed project, the PI adds two key dimensions of focus that could explain the conflicting findings in the existing literature. First, the PI hypothesizes that a country’s corruption environment intersects importantly with the country’s tendency toward transparency of government records. Second, the PI argues that the relationship between a country’s institutional environment and a foreign firm’s propensity to make an investment will depend significantly on whether the firm is pursuing a traditional technology, or an innovative technology that is disruptive to the status quo. Both sets of hypotheses will be tested on data collected via scenario based surveys targeting international business executives. The survey will be administered by YouGov, a firm specializing in large panel surveys. The results will have important implications for scholars and policy makers attempting to stamp out corruption. Broadly speaking, the proposal addresses global issues at the intersection of Business, Government and Civil Society that affect economic development, poverty alleviation and sustainability.  The objective of this project is to offer insights on how business and government can collaboratively achieve greater progress on curbing corruption.

The Politics of Privatization: Electoral Competition and Public Sector Privatization in India

PI: Varun Piplani, Ph.D. Candidate, Department of Political Science, CCAS

Brief Description:

Why do some democratic governments privatize their public sector more rapidly than others, and why do they pick different methods of privatization? Privatization has been shown to be beneficial for economic growth and development. However, critics argue that privatization negatively impacts worker wages, working conditions, and increases inequality. In addition, governments also employ alternate methods of privatization. While the sale of public companies has been booming around the world, we have also seen the rise of public-private partnerships (PPPs). Since 2009, over $1.1 trillion worth of public sector enterprises (PSEs) have been sold, more than any other time since 1979. And according to the World Bank, PPPs are used today in 134 developing countries, and account for 15 to 20 percent of the total investment in infrastructure. So what explains the variation in levels and methods of privatization? The PI’s research tests the relationship between the politics of elections and privatization, using evidence from India at the national and state levels since 1991. The PI argues that while discouraging some forms of privatization, democratic competition encourages others. Using evidence from India, the project tests these claims using a mixed methods research design. The project generates a comprehensive, original database of privatization in India, and addresses the debate on the relationship between democracy and development. The PI finds that while democracy makes some economic policies harder to implement, it might make alternate economic policies easier.

The Cross-Border Spillover of the U.S. Unconventional Monetary Policy: Evidence from the Syndicated Loan Market

PI: Wenyu Zhu, Ph.D. Candidate, Department of International Business, GWSB

Brief Description:

This project focuses on the real effect (bank-lending effect) of the U.S. quantitative easing (QE) policy and tries to gauge the impact of the QE on the global liquidity. The PIs examine the “flight abroad effect” of the cross-border lending of those U.S. global banks during the QE periods. Several country-level determinants, in the hypotheses, contribute to the pattern of the liquidity spillover, including host-country economic fundamentals, geographical locations, institutions, and lenders’ previous experience. In addition, some bank-level (lender) characteristics are also important in forming the global lending pattern of the U.S. global banks. Banks that are less liquidity-constrained will have higher lending propensity compared to their counterparts during the QE periods. In general, the goal of this project is to tell a comprehensive story of the international spillover effect of Federal Reserve’s balance sheet policies via the international lending market.

Leveraging Carbon Emissions: The Impact of Firm Engagement and Home Country Participation in the Carbon Sequestration Leadership Forum

PI: Anu Phene, Professor, Department of International Business, GWSB

Brief Description:
This study explores the impact on firm-level carbon emissions as a consequence of their home country’s participation in an inter-governmental organization (IGO), the Carbon Sequestration Leadership Forum (CSLF). The study proposes that firms from home countries that participate in CSLF are better able to achieve their emission outcomes through the deployment of mechanisms by virtue of better access to technology and knowledge, through CSLF sponsored activities. The study further hypothesizes that these baseline relationships are moderated by the extent of firm engagement in IGO events. Greater engagement by the firm in CSLF facilitated events enhances its understanding of and exposure to worldwide knowledge important for achieving its emissions outcomes and is expected to function as a positive moderator. On the other hand when the home country of the firm possesses strong capabilities in carbon capture and storage (CCS) technologies, the need for, and the value added by technology and knowledge from CSLF is reduced. Consequently home country capabilities in CCS technologies act as a negative moderator.

Radical and Incremental Innovation in Foreign Subsidiaries

PI: Heather Berry, Associate Professor, Department of International Business, GWSB

Brief Description:
This paper builds on insights from the innovation, operations management and international business literatures to explore how intra-MNC linkages including parent firm knowledge transfers and manufacturing integration influence the incremental and radical innovation generated in foreign subsidiaries. While both types of linkages help to embed foreign operations in the internal knowledge network of MNCs, the study argues that they are likely to have different effects on local host country knowledge search, which will impact the type of innovation that is generated in foreign operations. Considering parent firm knowledge transfers, the innovation and foreign knowledge seeking literatures suggest that knowledge dependence can limit the breadth of local host country knowledge search, which would make innovation in these operations more incremental in nature. In contrast, the operations management literature highlights both responsibility and autonomy associated with manufacturing specialization, which may increase local host country knowledge search and help to generate more radical innovation that assimilates local host country knowledge with MNC knowledge. Empirical results from a comprehensive panel of US MNCs and the patents from their 36 foreign subsidiaries support these arguments. Overall, this paper furthers our understanding of global innovation in MNCs by exploring how different types of linkages and integration within MNCs influence innovation outcomes in foreign operations.

Domestic-International Linkages on China’s Periphery: The Foreign Economic Liberalization of China’s Border Provinces Since 2000

PI: See-Won Byun, Ph.D. Candidate, Political Science

Brief Description:
Why have China’s late-developing border regions responded differently to the shared challenges of economic globalization? Theories of international political economy and accounts of China’s integration into the world economy remain divided on the relative significance of internal and external forces of change. This study argues that China’s foreign economic liberalization is best understood at the subnational level, where the interaction between (1) central, (2) local, and (3) international actors and their interests produces distinct provincial models of reform. The case studies of Jilin, Yunnan and Xinjiang since 2000 tie together “inside-out, outside-in” and “top-down, bottom-up” dynamics of China’s global economic integration.

A Multi-Method Study on Evaluation Systems and Organizational Change within the World Bank Group

PI: Estelle Raimondo, Ph.D. Candidate, Public Policy & Administration

Brief Description:
Over the past two decades, many in the development cooperation community have subscribed to the ‘Results-Based Management’ (RBM) agenda. Today, the practice of development Monitoring and Evaluation (M&E)—the bedrock of RBM—is routinized and embedded into organizational processes, thereby constituting evaluation systems. However, in the growth of M&E also lies a paradox: while the evidence on “what works”’ in development is steadily growing thanks to M&E, the evidence attesting to M&E’s own effectiveness in promoting programmatic and organizational change remains limited. Taking as its empirical turf the evaluation systems of the World Bank Group, this research will pursue three discrete, but related, questions regarding the influence of evaluation systems on organizational change. It will notably examine what effects M&E quality has on project performance; the factors explaining why some evaluation systems successfully promote learning and accountability whereas others do not; as well as the institutional mechanisms that underlie how these changes take place. Each research question prompts a different design (i.e., quasi-experimental, configurational case method, and Process-Tracing) and mobilizes a distinct theory of organizational change. Taken together, the three essays will offer diverse lenses to better understand the role of complex evaluation systems.

Do Stronger Intellectual Property Rights Induce More Innovation? Evidence That the Intellectual Property Rights Regime of Trade Partners Impacts Domestic Firm Innovation.

PI: Joel Blit, Assistant Professor, Department of Economics, CCAS

Brief Description:
Intellectual Property Rights (IPR) are among the key state institutions that frame the innovative activities of firms and this project seeks to understand its evolving role in a context of increasing globalization. While most studies have found a positive correlation between IPR and firm R&D in panel data (at least for developed countries), it is not clear that one can attribute a causal relationship. The correlation may arise because as firms increase their R&D they begin lobbying the government for increased IPR so as to better protect their investment. My project assesses whether the relationship is causal by examining whether the R&D expenditures of export-oriented sectors respond to changes in the IPR regimes of its export markets. In addition, the project will compare the relative impact of home and export market IPR on the R&D of home firms.

External Knowledge Sourcing Through Domestic and Foreign Acquisitions: Impact of M&As on Target, Acquirer, and Third-Party Innovation

PI: Wenjie Chen, Assistant Professor, Department of International Business, GWSB; Joel Blit, Assistant Professor, Department of Economics, CCAS

Brief Description:
Firms are increasingly seeking sources of innovation abroad and a primary method through which they do so is foreign mergers and acquisitions (M&As). This project examines how M&As affect innovation in the acquirer and target firm, and knowledge flows between: a. acquirer and target, b. acquirer and third-party firms in the location of the target, and c. target and third-party firms in the home country of the acquirer. We will also examine how the characteristics and national origin of the acquirer affects these outcomes. In particular, we make the distinction between acquirer country origin and acquirer type, i.e. a publicly listed firm, a private firm or a government owned entity. As a result, this study will examine the effects of state owned enterprises as vehicles to access foreign knowledge and develop national innovative capability.

Looking Beyond Home and Host Countries: International Institutions and Foreign Investment

PI: Srividya Jandhyala, Assistant Professor, Department of International Business, GWSB

Brief Description:
Although the impact of home and host country property rights institutions on Multinational Enterprises’ (MNE) investment strategies has received significant attention in the literature, domestic institutions tend to be relatively stable with small changes over time in their composition, strength, and effectiveness. On the other hand, international institutional systems, such as Bilateral Investment Treaties (BITs), providing extensive rights and protection to foreign investors have proliferated rapidly during the last few decades. This project examines the impact of Bilateral Investment Treaties on investors’ willingness to pay for foreign petroleum assets. The results are expected to inform managers about the security and valuation of their foreign assets as well as policy makers about the effectiveness of BITs in conferring incentives to foreign investors.

The Politics of International Investment and Intellectual Property Rights

PI: Susan Sell, Professor, Department of Political Science, CCAS

Brief Description:
This project proposes to design a graduate course for the ESIA International Trade and Investment Program that addresses and analyzes the politics of investment and intellectual property. The course will provide students with an understanding of the firm-state-society relations that animate this complex and dynamic policy area. The course will be team-taught with Jacques Gorlin, an economics PhD who was a leading adviser to the Fortune 500 business firms (including Microsoft, IBM, Monsanto, and Merck) that succeeded in developing the WTO Agreement on Trade-related Intellectual Property Rights (TRIPs). The course will exist as a three or four week course in May 2012. The first two or three weeks would consist of intensive seminars in which students would learn about the issues, read primary and secondary source material, and hear from DC-based industry, government, and NGO representatives active in this policy area. After providing students with sufficient background about the issues, the controversies, the core actors, the interests, and the relevant institutions, we would bring the students to Geneva for a week of briefings and lectures by international organization representatives (e.g., from WIPO and WTO), developing country think tanks (Third World Network, the South Centre, and International Center for Trade and Sustainable Development), Geneva-based industry associations (e.g., International Federation for Pharmaceutical Manufacturers Association), and IP-Watch.

Characteristics and Implications of Chinese Macroeconomic Data Revisions

PI: Tara M. Sinclair, Assistant Professor, Department of Economics, CCAS

Brief Description:
Firms depend on macroeconomic data as key inputs to their production and pricing decisions. Generally data released by official government agencies are considered trustworthy and valuable for business decisions, but the quality of data released by the China’s statistical authorities has regularly been questioned by both the media and researchers. One aspect of the data quality that has yet to be fully studied is the pattern of the revisions to the data made by the Chinese government. Two different types of data revisions are made: regular revisions as delayed data arrive and more substantial benchmark revisions which have occurred following the two economic censuses. Open research questions include: Are the revisions more commonly made in one direction or another resulting in a bias in the revisions on average? Is there a pattern in the revisions over time, such as is a positive revision more likely to be followed by another positive revision, or are there certain times when larger revisions are likely to occur? The proposed study will substantially improve our understanding of the properties of Chinese statistical data releases.

FDI & Energy Security. Do Managers Carry the Flag?

PI: Robert Weiner, Professor, Department of International Business, GWSB

Brief Description:
The resurgence of the state in the global economy has led researchers to refocus on the effects of government actions. This paper investigates whether the return of state capitalism is taking place through multinational enterprises (MNEs), private as well as state-owned. In particular, we examine whether MNE managers act in the interest of their home-country policies in foreign direct investment (FDI) decisions, termed carrying the flag. While widely discussed in the press, state capitalism presents stiff research challenges – state objectives are typically hard to characterize at best, unclear or conflicting at worst. How can we determine if MNE managers are carrying the flag in the absence of clear home-country policy goals? We meet this challenge by examining an arena wherein the governments of some countries have a clearly stated goal – energy security, specifically access to oil.

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African Diaspora Marketplace Longitudinal Study

PI: Liesl Riddle, Associate Professor, Department of International Business, GWSB

Brief Description:
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.

Publications:
African Diaspora Marketplace: Investment Interest Survey Report
African Diaspora Marketplace: Investment Interest Survey Factsheet

Syndicated Lending to Emerging Markets: Foreign Banks and Local Subsidiaries

PI: Hein Bogaard, Assistant Professor, Department of International Business

Brief Description:
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

Brief Description:
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

Brief Description:
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

Brief Description:
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

Brief Description:
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

Brief Description:
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

Brief Description:
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.

How Does Democratization Affect Governance in Developing Countries?

PI: Alasdair Bowie, Associate Professor, Department of Political Science, CCAS

Brief Description:
This project is aimed at better understanding the ramifications for business of the rapidly changing institutional landscape of government in countries where administrative and fiscal authority has been passed to sub-national governments whose leaders are now democratically elected. By comparing local level impacts of governance reform in Vietnam and Indonesia, this project can inform U.S. democratization initiatives that strengthen those political institutions which achieve political stability and representation. It will have implications for the design of U.S. development assistance programs and will enhance risk assessment of U.S. firms engaged in trade and/or investment in developing countries.

Agglomeration of Vertically Linked Multinational Firms

PI: Maggie Xiaoyang Chen, Assistant Professor, Department of Economics, CCAS

Brief Description:
Multinational corporations (MNCs), despite their usually different headquarter origins, often cluster in host countries. The goal of this project is to examine the interdependence of location choices by vertically linked multinational firms. The project uses a unique multinational subsidiary dataset and estimates how a multinational firm’s location decision in a foreign country depends on the location choices of its upstream and downstream companies and how the interdependence varies with the extent of input-output linkage, firm productivity and market structure.

How do Political Institutions Affect Post-Conflict Reconstruction

PI: Jai Kwan Jung, Assistant Professor, Department of Political Science, CCAS

Brief Description:
In the aftermath of civil wars, the most important task is to maintain the fragile peace. Managing post-war hostilities and reducing the risk of a return to conflict are, in turn, essential for successful reconstruction of war-torn economies, because political stability is necessary for attracting investment from multinational corporations and foreign capital. Economic development is, in turn, considered the prerequisite for democracy building. This supposedly reciprocal relationship of peace, development, and democracy promotion in post-conflict societies raises the core questions of this project: under what conditions can the promotion of sustainable peace and development be mutually reinforcing?; what political institutions are more conducive than others to contributing to the “democratic reconstruction” of civil-war-torn countries?; what role do various international actors play in shaping the long-term prospects for building democratic governance in post-civil war countries? The PI is collecting a large-N dataset to conduct quantitative analyses that investigate how different types of political institutions and varying degrees of international commitment affect the pace and outcome of post-conflict reconstruction.

Facing a Post-Multilateral Trade World: The Future of the WTO

PI: Michael Moore, Professor, Department of Economics, CCAS

Brief Description:
This project will consider the impact of the changing trade policy world on the World Trade Organization and what might me done to manage these changes, with a special focus on the U.S. and EU responses. Research will examine the following issues: what are the forces that are undercutting the WTO’s position as the principal anchor in the international trading system?; what are the implications for the WTO if it does not change its structure to deal with an alternative and emerging trade system?; can the U.S. and EU find a common approach to help guide a reformed international trade architecture and what features would it have?; and what are the implications of those changes for U.S. trade policy and U.S. businesses? The research will include interviews with U.S. trade policymakers in Washington, DC, EU trade policy officials in Brussels and WTO officials in Geneva.

The Complex Dynamics of Diaspora Investment Motivation: A Comparative Analysis

PI: Tjai M. Nielsen, Assistant Professor, Department of Management, GWSB
Leisl Riddle, Associate Professor, Department of International Business, GWSB

Brief Description:
This project plans to study the mobilized diaspora communities of Ethiopia and Nigeria in the northeastern part of the US. Through interviews and surveys of diaspora organizations and key stakeholders within the Ethiopian and Nigerian embassies, will enable examination of: which diaspora organizations are most involved in promoting diaspora investment, specific investment-facilitation roles played by these organizations and degree of perceived efficacy, levels of interest of diasporans in various types of investment, level of actual investment activity and the financial, social and emotional motivations potentially driving diaspora investment. Field experiences and lessons learned during this research will be incorporated into MGT 358, Research Methods and Design, and interview data and survey findings will be used to enhance an existing teaching module on diaspora investment used in IBUS 269/190, Managing in Developing Countries.

Voluntary Environmental Regulation in Central America: Assessment of Costa Rica’s Blue Flag Certification Program

PI: Jorge Rivera, Associate Professor, Department of Strategic Management and Public Policy, GWSB

Brief Description:
The broad objective of this project is to evaluate the performance of Costa Rica’s voluntary Blue Flag certification program, focusing on beach communities. More specifically, we seek to address two questions:

i. What factors drive participation of beach communities in the Blue Flag program?
ii. Has the program had a significant impact?

The Blue Flag Program is an international initiative that has been implemented in about 40 countries across the world. Originally created in France in 1987, it has independently certified the environmental quality or more 3000 tourist destinations. The program requires businesses operating in a specific tourist destination to apply jointly to receive certification. Since most, if not all, other voluntary regulatory programs require individual firm participation, the requirement for joint application and certification offers a rare opportunity to study voluntary business collective action to promote positive environmental externalities. In Costa Rica, the Blue Flag program was launched in 1996 and it includes more that 100 tourist destination communities that have received different levels of certification. We will focus on beaches communities. A total of 58 Costa Rican beaches have been certified.

Cross-border Mergers and Acquisitions in Time of Crises: New Evidence from Latin America

PI: Wenjie Chen, Assistant Professor, Department of International Business, GWSB

Brief Description:
This project aims to understand the impacts of mergers and acquisitions (M&As) during crisis periods. Combining M&A information and firm level data in seven Latin American countries that underwent financial crises between 1990-2008, this study evaluates the performance of firms that are bought during the crisis periods. The research explores the following questions: (i) what firms are being acquired during periods of crises; (ii) what happens to the firm after the acquisition; and (iii) what the welfare implications of these cross-border M&A transactions are.

Remittances and the Real Exchange Rate

PI: Brett Rayner, Doctoral Student, Department of Economics, CCAS

Brief Description:
The goal of this study is to determine the effects that remittances may have on the equilibrium real exchange rate and therefore the competitiveness of the export sector in the receiving country. The PI investigates the extent to which the marginal propensity to consume non-tradables is different from that of tradables in remittance receiving households. The relevant question is how expenditures stemming from remittance receipts affect the relative demand and therefore relative price of non-tradables. There exists a lack of study in this area due to the fact that there is a conventional wisdom which suggests that households or individuals will spend their income without regard to the source of that income. However, the PI contends that, compared to other income, remittances are used in different way by the receiving households. This study uses household-level micro data in order to determine how remittances are used.

Surviving (Even Thriving?) Under Excessive Volatility: A Case Study of the Firestone Plantation Company in Liberia from 1980 to 2007

PI: Suzanne Kathleen McCoskey, Assistant Professor, Department of Economics, CCAS

Brief Description:
This research aims at determining how the Firestone Plantation Company in Liberia was able to survive in the presence of an extreme combination of domestic shocks and near chaos in the country during the years of 1980-2007. Thus, this study promotes the understanding of U.S. foreign direct investment (FDI) in developing countries, particularly in the presence of conflict. Further identifying reasons for Firestone’s survival could allow for competitive lessons learned for other U.S. companies interested in FDI in Africa. An additional hypothesis of the research is that the ability for Firestone to thrive, not only survive, in the future will depend on the institutional capacity of Liberia and its ability to work with the company to strengthen its bond with the people and future of the nation.

Transnational Washington: Immigrant Entrepreneurship and Development Linkages in a Global City

PI: Marie Price, Professor, Department of Geography, CCAS
Elizabeth Chacko, Associate Professor, Department of Geography, CCAS

Brief Description:
The study examines business strategies and trade linkages of Ethiopian, Bolivian and Indian immigrant entrepreneurs in the Washington metropolitan area with their respective countries, and sheds light on how they use their social networks and cultural connections to start new business ventures, build business relationships, and gain market share. Through a web survey of immigrant entrepreneurs from the above country groups, the project documents the entrepreneurial histories and strategies of the members, identifying obstacles as well as opportunities for business growth and development. This project also enhances our understanding of how immigrants’ investments in their home countries are linked to U.S. enterprises and the extent to which such connections have contributed to the firms’ success.

Public-Private Partnerships: Addressing Global Challenges and Opportunities

PI: Jennifer Brinkerhoff, Associate Professor, Trachtenberg School of Public Policy and Public Administration

Brief Description:
This project builds on the conceptual and empirical knowledge of public-private partnerships (PPPs) in the international arena. Although PPPs have traditionally been used for service delivery and infrastructure, they have the potential to contribute to providing global public goods, establishing new global governance architecture, coping with the unprecedented movement of people and information, and mitigating intra-state conflict and its security implications. Therefore, a better understanding of the range and potential of PPPs can: clarify the role of the private sector’s contribution; inform U.S. businesses’ competitiveness strategies in terms of new markets, new partners, new marketing opportunities, and risk management; and help guide government policymaking to better support initiatives that capitalize on the strengths of the private sector.

Indigenous Firm Response to FDI Investment: A Dyadic Analysis

PI: Meghana Ayyagari, Associate Professor, Department of International Business, GWSB

Brief Description:
Despite extensive research, the direction and magnitude of spillovers from foreign direct investment (FDI) to local firms in developing countries remain unclear. This project takes a different methodological approach focusing on multinational enterprises’ (MNEs) characteristics that contribute to differential spillovers in India. The PI uses a unique database that tracks the capital investments of MNEs and local firms in India; since the country is vast, it offers the opportunity to study the role of FDI across different institutional environments. A greater understanding of the impact of FDI can assist U.S. trade negotiators in making the case for liberalization, and help MNE managers predict the probable response of local policy makers and the strategic response of local competitors to their investment. In addition, identifying how governance-related factors influence MNE investment and local firm response will help contrast U.S. governance models with non-market based models in other countries.

Do Financial Development and Strong Institutions Reduce Corporate Level Financial Constraints

PI: Senay Agca, Associate Professor, Department of Finance, GWSB

Brief Description:
This research project addresses important issues that are relevant for cross-discipline studies of corporate finance and international business. More specifically, the project investigates whether firms in countries with strong institutions, better governance, and improved financial sector (factors that reduce capital market imperfections) raise external funds easier and depend less on internal funds. Additionally, the PI examines whether the above-mentioned factors really matter in each country, and, if there are deviations in the countries, what the possible reasons for this are.

Working Paper:
Senay Agca, Gianni De Nicolo and Enrica Detragiache: Credit Market Reforms and Corporate Debt Policy: International Evidence
Abstract: We study how the deregulation of the domestic banking sector affects corporate debt policy. If deregulation lowers the cost of credit and increasing its availability, as intended, firms should use more debt in their capital structure following deregulation. We test this hypothesis with a large panel of publicly traded non-financial firms using a new index that carefully tracks policies to deregulate domestic credit markets. After controlling for other factors, we find that reforms seem to be associated with a reduction, rather than an increase, in corporate debt in emerging market firms. This negative effect is attenuated in countries with better institutions, and it disappears in advanced countries. Furthermore, we do not find evidence of a differential effect of reforms on financially constrained firms, financially dependent firms and firms with no access to global markets.

How Do Labor Standards Affect Trade and Investment in Developing Countries

PI: Emmanuel Teitelbaum, Assistant Professor, Department of Political Science, CCAS

Brief Description:
In recent years, social scientists have become increasingly interested in how government respect for worker rights affects trade and investment in low- and middle-income countries. According to the general discussion in the econometric literature, higher labor standards result in increased labor costs. If the principle comparative advantage of developing countries lies in their low labor costs, and higher labor standards result in higher level of unionization and therefore higher wages, more respect for worker rights should cut against export performance and foreign direct investment (FDI). However, the literature examining how worker rights affect investment has been characterized by contradictory findings. A fundamental reason for this may be that the mechanisms through which labor standards affect trade and investment have not been fully explored. Therefore, the PI takes up on investigating one such underdeveloped mechanism of this relationship, and this mechanism refers to the argument that higher labor standards facilitate trade and investment by enhancing social stability and promoting human capital.

Working Paper: 
Emmanuel Tietelbaum. Measuring Trade Union Rights Through Violations Recorded in Textual Sources: An Assessment
Abstract: The author uses Item Response Theory to evaluate the increasingly prominent method of measuring labor rights developed by Kucera (2007). The analysis shows that most of the component items in the Kucera index relate to the same latent variable, which can be construed as ‘the propensity to violate labor rights.’ At the same time, individual country scores highlight the method’s inability to distinguish between countries known to have excellent respect for worker rights and extremely repressive countries. The final section tests the robustness of Kucera’s finding that there is no relationship between observed labor rights violations and foreign direct investment.

Globalization & Transnational Terrorism: An Empirical Investigation

PI: Holger Schmidt, Assistant Professor, Department of Political Science, CCAS

Brief Description:
This project examines the links between economic globalization and countries’ vulnerability to transnational terrorism. Many analysts and policymakers assert that the current surge of transnational terrorist activity is at least partly rooted in a backlash against economic globalization. While this argument is not entirely implausible, the evidence used to support it is anecdotal. The goal of the present study is to move this debate onto more solid empirical ground by conducting a quantitative analysis of the link between economic openness and the level of terrorist activity experienced by countries. In addition, the project also aims to examine whether U.S. businesses abroad are at particular risk when operating in societies that are underdeveloped yet highly exposed to economic globalization, or whether moves toward greater economic openness help reduce the likelihood that U.S. firms and personnel become the targets of transnational terrorist activity.

The Subsidiary Network of Multinational Firms

PI: Maggie Xiaoyang Chen, Assistant Professor, Department of Economics, CCAS

Brief Description:
Existing theoretical studies have predicted that a multinational firm’s location choices are interdependent across countries. However, little has been done to test the hypothesis at individual subsidiary level. This project seeks to use a detailed French multinational subsidiary dataset and estimate how a firm’s decision to invest in a foreign country is not only conditional on the characteristics of that country but also the firm’s existing subsidiary network. Preliminary results suggest there is evidence of both horizontal and vertical interdependence in multinationals’ location decisions. While multinational firms have little incentive to duplicate their production in countries with low bilateral trade costs, they are motivated to build a vertical subsidiary network in these countries – especially when the countries have complementary comparative advantages.

Diaspora Investment Motivation in Post-Conflict Economies

PI: Tjai Nielsen, Assistant Professor, Department of Management, GWSB

Brief Description:
Diaspora investment can be a critical source of foreign investment for countries experiencing post-conflict economic recovery. Gillespie, Riddle, Sayre, and Sturges (1999) argued that diaspora homeland investment is particularly useful for countries that are deemed less attractive by non-diaspora investors because of weak structural characteristics, inadequate infrastructure, and/or small domestic market size. In fact, politically and economically risky states are seeking creative ways of promoting diaspora homeland investment (Riddle, Brinkerhoff, & Nielsen, 2007). While diasporas constitute an important subset of global foreign investment, we know relatively little about what motivates individuals in the diaspora to invest in their home countries. As part of the GW Diaspora Capital Investment Project (GW-DCIP), our team will survey U.S. Afghans, Lebanese, and Liberians and conduct in-depth interviews with leaders of major diaspora organizations associated with each community. This approach will enable us to empirically examine: (1) the specific investment-facilitation roles that diaspora organizations play and their degree of efficacy; (2) the ways in which diaspora organizations impact these individual-investment motivations; and (3) the individual investment motivations among three different post-conflict diasporas.

Intra-Arab, Arab MENA-US and Arab MENA-EU Trade: Is It Too Little, Too Late? The Competitive Consequences of Arab Non-Oil Participation in the Global Economy to the US

PI: Joseph Pelzman, Professor, Department of Economics, CCAS

Brief Description:
This study discusses the issues of international trade and regional integration for the Arab states of Middle East and North Africa (MENA). More specifically, the PI investigates the reasons behind the insignificant share of intra-Arab, MENA-US, and MENA-EU trade, and seeks to provide an answer to the following question: compared with a sample of other countries, with the same endowment and income, do Arab countries trade less with the EU, U.S., and intra-regionally with each other? In order to assess the competitiveness impact of the volume of intra-Arab and inter-regional trade on the U.S., one needs to make a judgment on the ‘normal or ‘expected’ level of trade in the absence of policy-related trade barriers. The project employs a basic gravity model as a method to measure this ‘expected’ level of intra- and inter-regional trade for the Arab MENA region.

Antidumping Use in Developing Countries: Implications for U.S. Business

PI: Michael Moore, Professor, Department of Economics, CCAS

Brief Description:
This project, consisting of an empirical study and a one-day conference, is an investigation of how U.S. exporters have been affected by the increased use of antidumping in other countries, especially in the developing world. The focus is on determining the economic factors that explain why these nations launch investigations and impose antidumping duties on U.S. firms. The results could help guide U.S. policymakers as they deal with potential antidumping reform in multilateral and bilateral trade talks.

Working Paper:
Michael Moore. Sanctuary Markets and Anti-Dumping: An Empirical Analysis of US Exporters.
Abstract: Proponents of antidumping, especially in the United States, have long argued that foreign firms use profits obtained behind formal and informal barriers in their home markets as a way to “subsidize” aggressive pricing abroad. It has been difficult to analyze whether U.S. accusations of sanctuary markets have any basis in reality. On the one hand, authorities are not required to consider such behavior when administering antidumping. On the other, detailed information about internal market structure is difficult to obtain on a systematic basis in a host of countries exporting to the U.S. This project exploits the increased targeting of U.S. exporters in antidumping actions to examine whether there is evidence of the sanctuary markets hypothesis in the U.S. home market. The work expands on the work of many authors who have examined the determinants of antidumping petition initiations. The empirical study focuses on economic factors that explain why these nations launch investigations against U.S. firms. We find no evidence in support of the general proposition that U.S. firms facing frequent antidumping actions abroad are beneficiaries of a home market sanctuary. Instead, capital-intensive sectors that are successful exporters, especially those in sectors that are characterized by antidumping actions involving other countries, are more likely to experience antidumping actions. This evidence casts doubt on one of the main arguments used in favor of antidumping in the United States.

Capitalizing on Spillovers: The Cease of Immigration Indian Inventors

PI: Anupama Phene, Associate Professor, Department of International Business, GWSB

Brief Description:
Research points to a growing immigrant contribution to U.S. technological development particularly by Indian scientists with concentrations in high technology industries like computers and pharmaceuticals. This study tracks the development and innovation patterns of the immigrant inventor community and the process of their integration into the mainstream technological community in the U.S. The PI explores the effects of knowledge spillovers from four social networks based on geography, profession, organization and ethnicity on the quality of innovation that an immigrant, Indian inventor can produce. The PI further evaluates how immigrant inventors can overcome the lack of legitimacy in a foreign context by utilizing the mechanism of knowledge spillovers to improve the quality of their innovation.

Permanent and Transitory Macroeconomic Relationships between the U.S. and Developing Countries

PI: Tara Sinclair, Assistant Professor, Department of Economics, CCAS

Brief Description:
This project explores the relationships between macroeconomic variables over time for the U.S. and China. The research uses a recently developed statistical model and a new macroeconomic dataset for China. The new statistical model allows to distinguish cross-country correlations driven by the relationships between permanent innovations, caused by real shocks such as changes in technology and institutions, from those between transitory or cyclical movements, caused by changes in aggregate demand in the two countries. The new dataset addresses some of the concerns about the quality of Chinese macroeconomic data.

Working Paper:
Tara Sinclair and Yueqing Jai. Permanent and Transitory Macroeconomic Relationships between the U.S. and China
Abstract: The relationships between the economic fluctuations of the US and China, the largest developed and developing countries respectively, are very important not only to both countries but also to the world economy. This paper applies a two-country correlated unobserved components model to explore the relationships between the real output fluctuations for the US and China over the period 1978q1-2008q4. The model allows us to distinguish cross-country correlations driven by permanent movements, caused by real shocks such as changes in technology and institutions, from those due to transitory movements. We find that the two countries share approximately half of their permanent and transitory shocks. With information from the real output of China, the magnitude of estimated transitory components fluctuations of the US real GDP is larger, while the transitory component of China’s real GDP does not change much with the addition of US information.

National Institutions and Firm Characteristics as Determinants of Corruption: Evidence from the U.N. Oil-for-Food Program

PI: Yujin Jeong, Doctoral Student, Department of International Business, GWSB

Brief Description:
Corruption is a major concern in international business, affecting international trade, foreign direct investment, and economic growth. Research on corruption is limited, however, as illicit activity by its very nature is hard to observe. The project examines the determinants of corrupt behavior in international business using an unusual, detailed bribe payment data from a forensic investigation into the UN Oil-for-Food Program (OFFP). The OFFP, as a natural laboratory, enables us to address the question of whether country institutions, firm characteristics, or both matter for corruption in international business.

The Determinants of Technological Change Towards Renewable Energies in the Electricity Industry: Perspectives from the Global Wind Energy Sector

PI: Jocelyn Leitzinger, Doctoral Student, Department of International Business, GWSB

Brief Description:
This project aims to identify why countries vary in their adoption rates of renewable energy technologies. Focusing on the wind energy sector within the electricity industry, this project examines cross-country differences in renewable energy technology adoption rates over the past 30 years. The study presents the hypotheses that (i) a nation’s institutions moderate the ability of its national and regional policies to increase levels of renewable energy technology adoption in the wind energy sector; and (ii) a nation’s adoption activity is influenced by economic factors such as prices and the available supply of traditional energy sources. Furthermore, the study considers the effect of institutional factors such as path dependency in the electricity industry, knowledge ties between industry and research institutions, and policy risk, and how they may impede or enhance the effectiveness of policy instruments.

The Business Climate in Sierra Leone for US Companies: Consequences of US and Chinese Economic Policy on African Institutional Development

PI: Jeremey Streatfeild, Doctoral Student, Department of Political Science, CCAS

Brief Description:
This research project investigates how U.S. trade and investment policies affect development of institutions in Sierra Leone to provide a more transparent and predictable climate for US businesses and whether this process is undermined or aided by China’s growing economic role in the country. From an academic standpoint, Sierra Leone provides a test case of whether political and economic institutions can arise “bottom-up” through economic development, as the Chinese model appears to suggest, or whether economic development must be coordinated with political development in order to provide a longer term stable business climate for US interests, as the U.S. model and the literature suggest.

Timing Matters: Market Structure, Export Composition, and Growth

PI: Anna Rakhman, Doctoral Student, Department of Economics, CCAS

Brief Description:
This research project expands on the existing literature in international trade which examines the relationships between the composition of a country’s export basket and its economic growth. In particular, this study analyzes how the relationship between specific exports and per capita GDP growth changes over time based on the extent of other countries’ exports of competing goods.

Role of Institutions and the Business Environment in Determining Industry Life Cycles

PI: Meghana Ayyagari, Assistant Professor, Department of International Business, GWSB

Brief Description:
Using new panel data on 30 industries across 100 countries, this study examines the impact of institutions on industry life cycles. The PI discusses factors such as industry and country characteristics, as well as the interaction between the two, to analyze the changes in number of producers within an industry and thus predict its life-cycle stage. Additionally, the impact of stock market liberalizations on industry life cycles is analyzed, and a new algorithm is also used in order to identify and map out structural breaks in both industry life cycles and in growth rates of countries. The research consists of three components – research, dissemination, and teaching.

Publications:
Meghana Ayyagari, A. Demirguc-Kunt, and V. Maksimovic. What determines protection of Property Rights? An Analysis of Direct and Indirect Effects

Abstract: Using cross-country data, this paper evaluates historical determinants of protection of property rights. We examine four historical theories that focus on conceptually distinct causal variables believed to shape institutions: legal origin, endowments, ethnic diversity and religion. There is only one realization of the data with relatively few observations, which have by now been well explored in the literature. Given the correlations between the explanatory variables, it is difficult to fashion empirical tests which are consistent in their treatment of the competing theories and to know which regressions to take seriously, giving rise to competing interpretations in the literature. We use Directed Acyclic Graph (DAG) methodology to identify which historical factors are direct determinants of property rights protection and which are not, and subject the outcomes to a battery of robustness tests. The empirical results support ethnic fractionalization as a robust determinant of property rights protection. Despite the attention it has received in the literature, the impact of legal origin on protection of property rights appears fragile and dependent on the inclusion of transition economies in the sample.

Meghana Ayyagari, A. Demirguc-Kunt, and V. Maksimovic. Firm Innovation in Emerging Markets

Abstract: In this paper we investigate the determinants of firm innovation in over 19,000 firms across 47 developing economies. We define the innovation process broadly, to include not only core innovation such as the introduction of new products and new technologies, but also other types of activities that promote knowledge transfers and adapt production processes. We find that more innovative firms are large exporting firms characterized by private ownership, highly educated managers with mid-level managerial experience, and access to external finance. By contrast, firms that innovate less are typically state owned firms without foreign competitors. Identity of the controlling shareholder seems to be particularly important for core innovation – private firms whose controlling shareholder is a financial institution are the least innovative. While the use of external finance is associated with greater innovation by all private firms, it does not make state owned firms more innovative. Financing from foreign banks is associated with higher levels of innovation compared to financing from domestic banks.

Economic Determinants of the Preferential Trade Agreement Network

PI: Maggie Xiaoyang Chen, Assistant Professor, Department of Economics, CCAS

Brief Description:
Preferential Trade Agreements (PTAs) have become an increasingly favored approach for countries who are seeking free trade. However, although economists have extensively studied the effect of these agreements, little attention has been devoted to analyzing their determinants. This project aims to identify the economic and strategic factors that play a significant role in countries’ decision to form a PTA and their choice of preferential trading partners. Research for the project includes inquiry into current PTAs that have been adopted by nearly all WTO member nations.

Publications: 
Maggie Xiaoyang Chen. Third-Country Effects in the Formation of Free Trade Agreements

Abstract: The proliferation of regional economic integration has resulted in a complex and continually expanding network of free trade agreements (FTAs). In explaining the formation of these agreements, the literature has generally focused on the effect of country-pair characteristics and ignored the role of existing FTA network. In this paper we investigate, both theoretically and empirically, how third countries affect nations’ incentives to form new FTAs in various types of network. Compared to an empty network where there is no FTA between countries, having an exclusive FTA with a third country raises a country’s incentives to form new FTAs but weakens the incentives of others to reciprocate. A new FTA will therefore only be jointly supported when the country with exclusive FTA partners has a sufficiently large market size and high marginal cost of production. In a hub-and-spoke network, however, where two countries are mutually linked to a third country, the existence of the mutual FTA partner raises both nations’ incentives to form an agreement leading to an unambiguous increase in the probability of jointly supported FTAs.

Trade Openness, Property Rights and Private Investment

PI: Shahe Emran, Assistant Professor, Department of Economics, CCAS

Brief Description:
This project seeks to understand the link between trade-growth and institutions-growth by looking at the effects of trade openness and quality of property rights institutions on private investment across a sample of developed and developing countries. According to the PI, this is an important analysis since capital accumulation is found to be the most robust determinant of growth, and trade liberalization that is conditioned by higher quality institutions (especially such as those that protect property rights) encourages private investment and entrepreneurship. The project involves econometric analysis using cross panel data for the period 1960-2003 to investigate the above conjectures and interactions.

Publications:
Shahe Emran, M. and Stiglitz, Joseph E., “Financial Liberalization, Financial Restraint, and Entrepreneurial Development.”

Abstract: This paper argues that there is a fundamental conflict between financial liberalization and private sector led development strategy in developing countries. Using a simple model of occupational choice with moral hazard, it shows that under financial liberalization banks may (i) fail to finance new entrepreneurs because of poaching externality, and (ii) systematically favor projects with front-loaded returns at the expense of projects with strong learning effects. We identify two types of policies that are helpful in escaping from a ‘no entrepreneurial experimentation equilibrium’: intersectoral and intertemporal policies. Among intersectoral policies, a deposit rate ceiling, or a tax on the deposits coupled with a ‘contingent subsidy’ to the new industrial financing (but not interest rate subsidy) may be helpful for entrepreneurial discovery. The intersectoral policies are, however, not effective in weeding out short-termism in project choice. Among intertemporal policies, a dual track policy where competition is preserved in the lending to competing activities (agriculture) but limited duration monopoly is awarded to industrial lending is shown to be effective for both the discovery of new industrial entrepreneurs and tackling short-termism in project choices.

Domestic Institutions and State-Private Actor Relations in Electronic Information Governance

PI: Henry Farrell, Associate Professor, Elliott School of International Affairs

Brief Description:
This project seeks to understand how states’ domestic institutions shape new forms of global governance. The specific objectives of the study are: (i) to map the relationship between domestic institutions, private actors, and global governance arrangements in key fields of e-commerce and information policy; and (ii) using cases from the field of e-commerce, to examine the circumstances under which states can or cannot use these domestic institutions to press private actors into service as proxy regulators, and thus to shape effective international regulatory outcomes.

Publications: 
Henry Farrell
“Making International Markets: Domestic Institutions in International Political Economy” Review of International Political Economy. Forthcoming 2010.

This article will be the lead article of a special issue on the topic of new forms of business and market regulation.

Diaspora Homeland Investment

PI: Tjai Nielsen, Assistant Professor, Department of Management, GWSB

Brief Description:
This project seeks to contribute to the literature on the role of diasporas in homeland foreign direct investment by: (i) empirically testing a multi-level model of diaspora homeland investment; (ii) exploring the process of interested diaspora homeland investors becoming actual investors; (iii) investigating how diaspora business incubators might play a vital role in encouraging diaspora homeland investment; and (iv) bringing together leading scholars to discuss the relationship between participation in transnational cultures and managerial attitudes, values, and performance.

Publications:
Nielsen, Tjai M. and Riddle, Liesl
Why Diasporas Invest in the Homeland: A Conceptual Model of Motivation

Abstract: Little is known about why diaspora members invest in their homelands or why investment intensity varies among diaspora communities. Employing an interdisciplinary approach, we generate a multi-level, conceptual model of diaspora homeland investment. Our model examines the effects of inter-diaspora cultural differences, support from diaspora organizations, and three types of investment expectations—financial, social, and emotional—to better understand this phenomenon.

Transnational Washington: Leveraging Diasporic Entrepreneurship in a Global City

PI: Marie Price, Associate Professor, Department of Geography, CCAS
Elizabeth Chacko, Associate Professor, Department of Geography, CCAS
Robert Albro, Associate Professorial Lecturer, Department of Anthropology, CCAS

Brief Description:
This study investigates the Washington metropolitan area’s diasporic communities as a base of the economic pyramid approach to understand how diasporic entrepreneurs interact with each other, as well as with other immigrant and native-born groups, in making the area more transnational and competitive. The research compares a range of diasporic groups and asks: (i) where and how they build local and global entrepreneurship; (ii) what sectors of the economy they are most active in; (iii) what the role of ethnic and social capital in creating entrepreneurship is; and (iv) how this capital is most effectively integrated with the economies of global cities. By shifting analysis from the scale of the nation-state to that of the metropolitan area, this research highlights the often invisible local contexts, institutions, and networks facilitating (or impeding) entrepreneurship among a range of diasporic groups.

Business Responses to the Protective Public Policy Process

PI: Jorge Rivera, Associate Professor, Department of Strategic Management and Public Policy, GWSB

Brief Description:
Building on a previously-funded GW-CIBER project, this study explores the business responses to the enactment and implementation of public policies requiring enhanced social labor standards, worker health and safety, consumer protection, and environmental protection. The current study aims at developing a more robust theoretical model of the protective policy process-business response relationship.

Publications:

Voluntary Environmental Programs: A Policy Perspective
Edited by Peter deLeon and Jorge E. Rivera

Protecting the environment is often not the primary objective of businesses. As the world has become more environmentally aware, the necessity of environmental regulations becomes apparent. Voluntary Environmental Programs: A Policy Perspective examines different approaches to environmental protection in business. Environmental improvements on the part of industry often result from government regulations that command certain action on the part of industry and then control how well they perform. An alternative approach is Voluntary Environmental Agreements (VEA), where firms voluntarily commit to make certain environmental improvements individually, as part of an industry association, or under the guidance of a government entity. For example, many new initiatives targeted towards climate change originate from companies that voluntarily commit to reduce their carbon output or “footprint.” Voluntary Environmental Programs (VEP) provides an overview of current research on VEPs, looking at issues such as what motivates firms to participate, how a VEP structure affects a company’s efficiency and credibility with stakeholders, and who monitors compliance of participants. This current work examines how a firm’s environmental performance over time compares with VEP commitments. This book also discusses the particular considerations for VEPs in developing countries, where information flows and regulatory oversight capacities differ from the U.S. This book has been published by Lexington Books.

The Role of Targeted Promotion of FDI in Industrialization Strategy: An Analysis of Institutions Promoting or Curtailing FDI into Developing Countries in Light of Recent Research

PI: Stephen Smith, Professor, Department of Economics, CCAS

Brief Description:
This project examines incentives designed to promote (or sometimes channel or curtail) Foreign Direct Investment (FDI) into developing countries by multilateral, bilateral, and domestic developing country agencies. The project focuses on theory and (conjecture) practice of targeted promotion of particular types of FDI as part of an industrialization strategy (and more broadly of national economic development policies). In particular, the study will examine the relationship between strategic export promotion and strategic FDI promotion. Related economic development policy issues to be considered in the context of FDI promotion are human capital policy and infrastructure planning.

Resource Nationalism Meets the Market: Competition between Private and State-Owned Enterprise in Oil

PI: Robert Weiner, Professor, Department of International Business, GWSB

Brief Description:
This project examines the impact of resource nationalism in oil industry (where state-owned enterprises remain dominant) on the competitiveness of multinational enterprises (MNEs). More specifically, it investigates if the state role in the industry provides an unfair competitive advantage to national oil companies (NOCs) over MNEs. The assessment of NOC-MNE competition involves the identification of the market with (i) relevance to resource nationalism; (ii) head-to-head competition between the two groups; (iii) many transactions (to permit statistical analysis); and (iv) detailed information about each transaction and its counterparties, including their ownership.

Cross-border Mergers: The Role of International Competitiveness

PI: Protiti Dastidar, Assistant Professor, Department of International Business, GWSB

Brief Description:
This project consists of two research papers addressing the following questions: (i) the impact of the institutional framework on cross-border acquisitions; and (ii) the cyclical patterns in and causes of cross-border acquisition activity. The PI investigates the characteristics that distinguish cross-border acquisitions from U.S. domestic ones, and examines how the macro-economic environment and market trends drive managers to take decisions that impact the international competitiveness of firms. Both research studies develop an interdisciplinary approach that draws from the international business, finance, and economics fields to develop testable hypotheses.

Publications:
Alexander Sleptsov and Protiti Dastidar.
 Riding the Waves: Cross-border Acquisitions as a Quest for new Capabilities

Abstract: We argue that the cross-border acquisition activity is characterized by a cyclical pattern similar to the domestic merger waves. We consider several factors that can influence the cross-border merger waves, including the changes in the firms’ resource requirements following economic or regulatory shocks. The results of the tests on a large-scale archival dataset suggest that the motivations for cross-border and domestic waves may be different. In the cross-border waves, many acquirers are motivated by the search for new capabilities abroad; in the domestic waves, more acquirers are motivated by the desire to redeploy their existing capabilities.

Anju Seth and Protiti Dastidar. Motives for Domestic and Cross-border Acquisitions: A Comparative Analysis

Abstract: Studies examining value creation in cross-border acquisitions are few, and there are none that compare value creation of domestic vs. cross-border acquisitions. Institutional differences (at both the firm and industry level) may, in addition to economic factors, cause systematic differences in the value created by cross border vs. domestic acquisitions, thus affecting a firm’s international competitiveness. We seek to investigate the characteristic features that distinguish cross-border acquisitions from U.S. domestic acquisitions and how total gains are shared between the target and the acquirer. Our empirical results indicate that acquisitions are primarily driven by synergy motives though managerialism and hubris also coexist in the sample. Acquisitions by US acquirers of domestic as well as international targets are characterized by hubris rather than managerialism in our sample of negative total gains, while acquisitions by foreign acquirers of US targets are characterized by managerialism. We show that institutional characteristics matter and that target gains are lower for US acquirers of foreign targets in bank or group oriented countries, which is consistent with the evidence on lower valuations with lower protection of minority shareholder rights in these countries. For the foreign acquirer-US target sub-sample the institutional structure of the foreign acquirer’s home country appears to have no impact on target gains.

Motivating Diaspora Homeland Investment

PI: Tjai M. Nielsen, Assistant Professor, Department of Management, GWSB
Associate Professor, Department of International Business, GWSB

Brief Description:
This research project examines the role of diasporas in homeland Foreign Direct Investment (FDI) by: (i) identifying diaspora-oriented trade and investment promotion programs and services offered by homeland governments; and (2) exploring diaspora-related psychological motivations for homeland investment interest and action. Some of the specific questions addressed here concern the extent to which diasporas are viewed as important in their country’s economic development, and how cultural similarities and business environment knowledge affect diaspora investment interest.

Publications: 
Tjai Nielsen and Liesl Riddle. Bridging Cultural Distance: A Multi-level Model of Diaspora Homeland Investment

Abstract: Little is known about why diaspora members invest in their homelands or why investment intensity varies among diaspora communities. Employing an interdisciplinary approach, we generate a multi-level, conceptual model of diaspora homeland investment. Our model examines the effects of inter-diaspora cultural differences, support from diaspora organizations, and three types of investment expectations-financial, social, and emotional-to better understand this phenomenon.

Tjai Nielsen and Liesl Riddle. (In Press) “Partnering to Beckon Them Home: Public-Sector Innovation for Diaspora Homeland Investment Promotion” Public Administration and Development Journal.

Abstract: This paper examines a little-studied component of public administration existing in most countries around the world and particularly important for developing countries: national investment promotion agencies (IPAs). Diasporas are an increasingly important and relatively untapped resource for development and many homeland governments view diaspora foreign investment as key to their economic development. In addition to being generally under-resourced, many IPAs struggle to identify ways to effectively target, cultivate, and facilitate diaspora homeland investment (DHI). To accomplish these goals, these public-sector entities are beginning to identify and leverage key partnerships in the NGO sector. This paper describes the services IPAs offer and enumerates the challenges they face associated with DHI. Drawing on three illustrations of IPA-NGO partnerships, the paper develops preliminary tools for identifying and designing partnerships for the purpose of promoting DHI based on their scope, function, and degree of formality.

Energy Security in a Market Era

PI: Robert J. Weiner, Professor, Department of International Business, GWSB

Brief Description:
This project investigates the role of institutions in responding to oil shocks, as well as host-government/petroleum-MNE relationships. The PI analyzes the reasons behind the dramatic price spikes and the likely effects on oil exporters and importers, as well as on the international petroleum industry. The project has two components: (i) a workshop, aimed at policymakers, researchers, development practitioners, institutional investors, and industry people, to evaluate the state of knowledge in the area and discuss future directions; and (ii) research into political-risk aspects of energy security.

Publications: 
Reid Click and Robert Weiner. 
Does the Shadow of Risk Fall on Asset Prices?

Abstract: In the oil sector, emerging economies appear to be moving in the opposite direction from that assumed in the conventional wisdom on their integration into the world economy – as oil prices have soared, institutions such as regulatory stability, and contract sanctity and enforcement appear to be in decline, while political risk appears to be increasing. Does institutional deterioration harm the value of the very natural resources on which these countries depend? This paper investigates the effect of political risk on the value of real assets – here petroleum (crude oil and natural gas) reserves – associated with the country in which the reserves are located. We utilize a global transactions database of 1,655 mergers and acquisitions in which petroleum reserves were traded during the period 2000-2006. To capture the riskiness of the location, we consider the political risk rating calculated by International Country Risk Guide (ICRG) and the country risk rating published in Institutional Investor. Controlling for factors that affect reserve value, we demonstrate the value-destruction of political risk, and estimate the asset discount for 37 countries. Furthermore, contrary to the assumption in the scholarly literature, we show that the discount depends on market conditions – the higher the expected future market prices of oil and gas, the larger is the discount, regardless of a country’s riskiness. Our findings suggest that treating political risk and market risk separately is likely to yield inaccurate estimates of asset value. The results are salient for evaluating investment opportunities in industries where political risk depends on world markets.

Organizational Challenges for Businesses, PVOs and Developing Country Partners: Strategy of Bottom-Up Market Development, Scope of International Enterprises, and the Case of BRAC

PI: Stephen Smith, Professor, Department of Economics, CCAS

Brief Description:
This project presents an in-depth analysis of the management and influence of BRAC, the world’s largest NGO and developing-country-based non-profit multinational enterprise. Strategies for escaping poverty traps and helping the ultrapoor reach the first step of the economic ladder are researched, and comparative case studies, as well as econometric research on household impacts with different program combinations, are examined. Uganda and Bangladesh are the two focal countries of this study.

Publications:
M. Shahe Emran, Virginia Robano, and Stephen Smith. 
Assessing the Frontiers of Ultra-Poverty Reduction: Evidence from CFPR/TUP, an Innovative program in Bangladesh

Abstract: This paper uses household panel data to provide evidence on the effects of a pioneering anti-poverty program of BRAC in Bangladesh (called Challenging the Frontiers of Poverty Reduction/Targeting the Ultrapoor, or CFPR/TUP) that attempts to target the poorest of the poor. We focus on the effects of program participation on a set of household outcomes including food security, income, and asset accumulation. To construct appropriate treatment-control groups, we partition the sample using type 1 and type 2 assignment errors according to BRAC’s criteria for inclusion into and exclusion from the TUP program. We use a wide set of econometric approaches including the difference-in-difference matching estimator to identify and estimate the average treatment effect. To capture the potential heterogeneity of the treatment effect, we use a quantile difference in difference approach. The evidence shows that program participation had a significant positive effect on income, and food security of the ultra poor, but there is weak or no evidence in favor of a program impact on health related outcomes and ownership of homestead land. The quantile difference-in difference results show that the lowest two deciles get much less benefit from program participation compared with the two highest deciles among the ultrapoor.

Stephen Smith and Sumit Joshi. Endogenous Formation of Coops and Cooperative Leagues

Abstract: The labor-managed Mondragon cooperatives in the Basque country, and La Lega coops concentrated in North Central Italy, are grouped into leagues that enable them to reap economies of scale in key services such as R&D, marketing and finance. These leagues are relatively rare and there are fewer than a dozen of them globally. We develop a game-theoretic model of league formation to capture some of the strategic incentives behind the formation of labor-managed cooperatives (coops) and their agglomeration into a league.We then compare these incentives with those of conventional profit-maximizing firms to organize into a league. The main result of this paper shows that a divergence in these incentives stemming from their organizational differences may lead to the formation of a league of firms but not one of coops. This turns out to be true even though the coop has lower costs of production and the existence of a coop league would have been socially efficient. Anticipating the non-existence of a coop league then creates a disincentive for individual agents to form coops in the first place. This explains the relative rarity of coops, competing individually or as a part of a league, with conventional firms in imperfect markets.

The Public Policy Process and Business Political Strategies in Developing Nations

PI: Jorge Rivera, Associate Professor, Department of Strategic Management and Public Policy, GWSB

Brief Description:
This project investigates business political strategies addressing governmental demands for increased corporate social/environmental responsibility in developing countries. The PI develops a framework which explains the underlying institutional logic determining business political strategies adopted during the different stages of the public policy process in developing countries. Additionally, several cases are identified and documented that illustrate how business political resistance to environmental/social responsibility and regulatory demands varies depending on the stage of the policy process and country contextual characteristics.

Publications:
Jorge Rivera and Kalim Shah.
  Export processing zones and corporate environmental performance in emerging economies: The case of the oil, gas, and chemical sectors of Trinidad and Tobago

Abstract: Export processing zones (EPZs) are increasingly being established to promote economic growth in developing countries. However, they remain controversial and are often criticized for being associated with a ‘‘race to the bottom’’ characterized by the easing of labor and environmental standards. This paper investigates whether the decision to locate facilities inside these zones is associated with higher corporate environmental performance. Findings indicate that facilities operating in Trinidad and Tobago’s EPZs are more likely to show higher corporate environmental performance than those outside. Additionally, firms in state-managed zones appear to show higher corporate environmental performance than those located in privately managed zones. Enhanced institutional pressures from regulators, local communities, and fellow tenant firms may explain these differences. These results suggest that environmental policy makers and environmentalists can take advantage of already established EPZs to promote enclave enhanced institutional pressures associated with superior corporate environmental performance.
* See Also: Results Table Erratum

Jorge Rivera, Jennifer Oetzel, Peter deLeon, and Mark Starik. Business responses to environmental and social protection policies: toward a framework for analysis

Abstract: This conceptual paper seeks to advance neo-institutional work that has traditionally portrayed environmental and social protection policies as constraints followed by businesses. Drawing from the policy sciences literature, we propose that in the United States, businesses tend to show increasing resistance as the protective policy process moves from initiation to selection and growing cooperation thereafter. Most importantly, we also contribute to the neo-institutional theory literature by positing that this inverted U-shaped policy process–business response relationship proposed for the U.S. context may be moderated by variations in the level of democracy, system of interest representation, regulatory approach, and national income.

The Bloom of Regionalism: Implications for U.S. Multinational Firms

PI: Maggie Chen, Assistant Professor, Department of Economics, CCAS

Brief Description:
The main objective of this project is to investigate and quantify the impact of regional trade agreements (RTAs) on U.S. multinational firms and Foreign Direct Investment (FDI). The PI examines the complexity of regionalism and the opportunities and challenges that it presents to U.S. Multinational Enterprises (MNE) as they consider optimal geographical locations in order to maximize the gains from regional economic integration. The project aims at generating publishable research papers, policy briefings, and a series of presentations and seminars, as well as serving as a foundation for International Trade course development.

Publications:
Maggie Xiaoyang Chen.
 Regional Economic Integration and Geographic Concentration of U.S. Multinational Firms

Abstract: A volume of theoretical studies emphasizes that regional economic integration, by improving intra-bloc market accessibility, prompts multinationals to restructure their activities geographically within the bloc and improve the economies of scale. However, little has been done to test this prediction. This paper thus examines theoretically and empirically the divergent impact of economic integration on U.S. multinational firms affiliate sales across host countries. It is found that economic integration does lead to an increase in multinationals’ activities especially in countries that are integrated with a large size of markets, because the benefit of a lower trade cost is exclusive to insidefirms. However, this effect is significantly asymmetric both across and within the integrated regions, as multinationals are now motivated to serve the less attractive production locations via exports. In particular, countries with a comparative advantage gain multinationals at the expense of others, including their Preferential Trade Agreement (PTA) partners. Accounting for the potential issues of omitted variables and the endogeneity of PTA does not lead to any significant change in the results.

Does FDI Facilitate Domestic Entrepreneurship? Evidence from the Czech Republic

PI: Meghana Ayyagari, Assistant Professor, School of Business, Department of International Business
Renata Kosova, Assistant Professor, School of Business, Department of International Business

Brief Description:
The project investigates the impact of foreign direct investment (FDI) on domestic firm formation and entrepreneurship in transition economies. More specifically, the study examines: (i) if FDI generates positive spillovers that stimulate domestic firms’ entry or if it creates barriers to entry; (ii) the nature of the possible spillovers (intra-industry vs. inter-industry); (iii) if the extent of these spillovers vary across countries; and (iv) if the presence of FDI affect the firm size distribution of domestic firms. The focus of the project is on the Czech Republic and encompasses data for an 8-year period and for 245 industries.

Publications: 
Meghana Ayyagari and Renáta Kosová. 
Does FDI Facilitate Domestic Entrepreneurship? Evidence from the Czech Republic

Abstract: This paper analyzes the impact of FDI on domestic firm entry and firm size distributions in 245 industries in the Czech Republic during 1994 to 2000. We find that larger foreign presence stimulates the entry of domestic firms within the same industry indicating the existence of positive horizontal spillovers from FDI. We also find evidence of significant vertical entry spillovers – FDI in downstream (upstream) industries initiates entry in upstream (downstream) sectors via the presence of backward (forward) linkages. Our results also show that entry spillovers through vertical linkages are stronger than horizontal spillovers. However, these entry spillovers vary substantially across industries: while service industries benefit from both horizontal and vertical spillovers, manufacturing industries do not experience significant positive entry spillovers of any kind. In addition, while vertical spillovers prevail among competitive industries, horizontal spillovers dominate in less competitive industries. We also find that country of origin of FDI matters – horizontal spillovers are driven by FDI from the EU countries. The right skewness of the firm size distributions in industries without FDI further emphasizes an important role of FDI presence for overall industry dynamics.

The Security Behavior of International Business and NGOs

PI: Deborah Avant, Associate Professor, Department of Political Science, CCAS

Brief Description:
This project examines how non-state actors, such as businesses and NGOs, respond to new security threats, and how these actors’ risk-management activities impact the surrounding communities and the relationships between their home and host government and societies. The study’s main contribution is twofold in that it (i) analyses both corporate and NGO behavior, and (ii) relies on a variety of not usually combined sources of information on comparative security behavior. The final outcome of the research provides both theoretical and practical benefits and encompasses (i) a conceptual paper that develops a framework of analysis for non-state actors and security planning, (ii) a database of corporate and NGO response to security, conflict, and crisis management issues over times and territory, and (iii) a book, series of articles, and policy papers utilizing the database to answer theoretical and policy questions.

Publications:
Deborah Avant. 
Organizational Security in Areas of Weak Governance.

Abstract: Transnational non-state actors, both corporations and non-profit groups, increasingly confront security challenges in unstable territories around the world. Existing work on how these actors behave in conflict zones demonstrates that their responses have significant political effects, but does not provide a framework for understanding of their role as security actors. We outline a new research agenda that examines the security strategies of transnational non-state actors and their consequences for violence and governance. We outline the array of options transnational organizations choose from and then a set of questions that need to be answered in order to understand why they make different choices, and the ways in which their choices impact their organization’s effectiveness as well as violence and governance in unstable territories.

The Implications of Union Political Ties for Economic Development

PI: Emmanuel Teitelbaum, Assistant Professor, Department of Political Science, CCAS

Brief Description:
This project examines the economic effects of union political ties in developing countries by testing the hypothesis that major political parties restrain and institutionalize protest. For this purpose, the PI compiles three original cross-national datasets, which help (i) determine how the political structure of the labor movement affects worker protest, (ii) the ability of the working-class to influence legislative outcomes, and (iii) the impact of labor protest and working-class political mobilization on economic performance.

Publications:
Emmanuel Tietelbaum. 
Globalization, Regime Type and Labor Protest in Developing Countries

Abstract: How can states best manage the social dislocations associated with rapid economic development and greater exposure to market forces? In this paper, we explore the relationship between foreign direct investment (FDI), regime type and strikes in low-and middle-income countries. We argue that FDI produces social tensions and a higher demand for labor that can result in higher levels of industrial conflict. However, the effect of FDI is moderated by regime type. While democracies tend to have higher levels of protest overall, they are better able to cope with the strains arising from FDI because conflict can be channeled through state institutions or union-party ties. More institutionalized authoritarian regimes or hybrid regimes also perform better than other kinds of authoritarian regimes. We test the argument using a new dataset of labor protest in low- and middle-income countries for the period 1980-2005.

Enduring Industries-Foster Economics Development by Safeguarding Human Capital

PI: Tenagne Haile-Mariam, Assistant Professor, School of Medicine and Health Services

Brief Description:
This project, undertaken in the form of a conference, addresses the problem of brain drain of health care professionals coming from emerging and developing countries, and the impact that this loss of human capital has on the economic development of these nations. Focusing on Ethiopia, the venue examines strategies developed by businesses that have successfully recruited and retained local talent, and seeks ways to apply these strategies to the healthcare sector. Invited business leaders and healthcare policy makers collaborate on building healthcare models that can sustain economic growth. Healthcare models created by other countries are analyzed for possible application to Ethiopia.

Diasporas and Institution-Building in War-torn Societies: International Collaboration in Assessing the Methodological State of the Art

PI: Stephen Lubkemann, Assistant Professor, Department of Anthropology, CCAS

Brief Description:
This project aims at convening a symposium of 15-20 leading researchers in order to share key methodological insights about displacement diaspora research. This group will: 1) be inter-disciplinary; and 2) have established records of fieldwork in/with displacement diasporas. In partnership with Oxford University and Tufts University, this conference will: 1) produce a landmark methodological volume to be published as a book or as a special peer-review journal edition; 2) consolidate GWU’s emerging international profile in contemporary diaspora research; 3) develop GWU’s working relationship with three key international centers in this field (COMPAS-Oxford, Danish Institute for International Studies, Tufts); 4) take steps to create an international network of diaspora research centers based on research collaboration and annual workshops; 5) enhance GWU’s standing with major donors interested in supporting “diasporas in war-torn societies” research; and 6) establish a stronger US institutional presence in an important domain of development and international security policy research.

Transnational Washington: Diasporic Institutions and Networks of the 21st Century Global Gateway

PI: Marie Price, Professor, Department of Geography, CCAS
Elizabeth Chacko, Associate Professor, Department of Geography, CCAS

Brief Description:
The research project traces the transnational linkages and institutions that tie Washington, D.C. to numerous sending communities and their impacts on development. The project’s focus is on seven of the largest country-of-origin diaspora groups in the region (Afghans, Bolivians, Ethiopians, Indians, Koreans, Salvadorans, and Vietnamese), and it elaborates on the diversity of transnational actors which have converged upon a relatively new urban immigrant destination. The study’s objective is to demonstrate the complementary and competing strategies of diverse immigrant streams and organizations while providing the unifying context of one urban space – Greater Washington. Another potential of the project is to theoretically advance our understanding of how immigrant transnational networks in global cities create new institutions that promote development.

International Business and Economic Development Research Projects Sponsored by rkl3d

GW-CIBER’s research projects under this category were funded by GW School of Business alumna Robin Liebowitz. Robin is the founder and CEO of rkl3d, LLC, a consulting firm that helps companies achieve global growth, innovation, and brand-building objectives. The projects, proposed and undertaken by GW School of Business faculty members, are related to GW-CIBER’s focal areas of “Innovation, Technology and Entrepreneurship” and “The Intersection of Business, Government and Civil Society.”

U.S. Venture Capital Investment into Developing Countries: Which Institutions Pose Binding Constraints?

PI: Jennifer Spencer, Professor, Department of International Business, GWSB

Brief Description:

“High growth” entrepreneurship contributes to economic growth, stability, and human development in developing countries. Although empirical results regarding the relationship between overall levels of entrepreneurship and development are mixed, scholars have found high growth firms to be crucial for job creation (Henrekson & Johansson, 2010;Acs & Mueller,2008), and to contribute significantly to countries’ economic development (Wong, et al.,2005).

Entrepreneurial firms in developing country contexts face a number of constraints to growth. In developed countries, high growth enterprises are often financed by venture capital firms (VCs), which invest in risky ventures knowing that a small number of investments will grow quickly enough to cover unsuccessful investments in their portfolio. Given that local capital is generally limited in developing countries, and that US VCs have significantly increased investments in developing markets in recent years, local policy makers would benefit from understanding which country-level factors encourage, and which discourage, foreign VCs considering investing capital into the local entrepreneurial sector. The authors address the question “Which host country institutions have the greatest effect on US VCs’ investment and performance in developing countries?”

How Does Disclosure Regulation Affect Competitiveness of US-Listed Extractive-Industry Firms?

PI: Robert Weiner, Professor, Department of International Business, GWSB

Brief Description:

Drawing from the corporate transparency literatures in accounting and finance, and the international business and political economy literatures on transparency and corruption, the PIs develop theory and hypotheses regarding whether and how anti-corruption regulations mandating transparency in multinational enterprise (MNE) investments abroad affect firm value. The PIs' theory suggests that investors should value anti-corruption transparency regulations, contingent on exposure to corrupt environments, and to alternative anti-corruption reporting regimes. The authors use an event-study approach to estimate the impact of Section 1504 of the Dodd-Frank Act (which requires project-level disclosure of payments to host governments by extractive-industry MNEs) on firm value. The brief life of Rule 13(q)-1 that implemented Section 1504 provides us several events through which to gauge investor reaction. The findings suggest that the disclosure rule initially had a positive impact on firm value, and that this effect was strongest in MNEs operating in corrupt countries. However, results for subsequent events are mixed.

Mandatory Disclosure and Investment Transparency: Exploratory Evidence from Reserve Acquisition

PI: Robert Weiner, Professor, Department of International Business, GWSB

Transparency in Foreign Direct Investment: Theory and Evidence from Petroleum-Reserve Acquisitions

PI: Robert Weiner, Professor, Department of International Business, GWSB

Brief Description:
Transparency in multinational enterprises (MNEs) is widely viewed by policy makers as necessary for alleviating the challenges of poor governance, weak institutions, and corruption common in developing countries. These problems are acute in oil-rich countries, a phenomenon known as the “resource curse.” Recent rulemaking under the Dodd-Frank Wall Street Reform and Consumer Protection Act in the United States, and similar laws around the world, seeks to mandate project-level disclosures by extractive industry firms listed on stock exchanges. These measures have proven highly contentious among MNEs, who contend that mandating disclosure of proprietary information increases their risks abroad, especially when competing against foreign state-owned enterprises (SOEs). Yet, scholarly work on MNE transparency is limited. Theory does not yield consistent predictions, and little empirical work has examined transparency in foreign direct investment, focusing instead on cross-country comparisons of domestic firms. To address these gaps, this project seeks to extend the literature in two ways. First, we will explicitly examine MNE transparency with respect to foreign investments, which we term investment transparency. Second, we expand beyond prior work that focuses solely on publicly traded companies to understand how SOEs differ from traditional MNEs in regards to transparency decisions. The implications of this project should be of interest to US policy makers, and MNE managers competing against increasingly-internationalized SOEs.

Leveraging Carbon Emissions: The Impact of Firm Engagement and Home Country Participation in the Carbon Sequestration Leadership Forum

PI: Anu Phene, Professor, Department of International Business, GWSB 

Partial Funding

Brief Description:
This study explores the impact on firm-level carbon emissions as a consequence of their home country’s participation in an inter-governmental organization (IGO), the Carbon Sequestration Leadership Forum (CSLF). The study proposes that firms from home countries that participate in CSLF are better able to achieve their emission outcomes through the deployment of mechanisms by virtue of better access to technology and knowledge, through CSLF sponsored activities. The study further hypothesizes that these baseline relationships are moderated by the extent of firm engagement in IGO events. Greater engagement by the firm in CSLF facilitated events enhances its understanding of and exposure to worldwide knowledge important for achieving its emissions outcomes and is expected to function as a positive moderator. On the other hand when the home country of the firm possesses strong capabilities in carbon capture and storage (CCS) technologies, the need for, and the value added by technology and knowledge from CSLF is reduced. Consequently home country capabilities in CCS technologies act as a negative moderator.

Radical and Incremental Innovation in Foreign Subsidiaries

PI: Heather Berry, Associate Professor, Department of International Business, GWSB

Partial Funding

Brief Description:
This paper builds on insights from the innovation, operations management and international business literatures to explore how intra-MNC linkages including parent firm knowledge transfers and manufacturing integration influence the incremental and radical innovation generated in foreign subsidiaries. While both types of linkages help to embed foreign operations in the internal knowledge network of MNCs, the study argues that they are likely to have different effects on local host country knowledge search, which will impact the type of innovation that is generated in foreign operations. Considering parent firm knowledge transfers, the innovation and foreign knowledge seeking literatures suggest that knowledge dependence can limit the breadth of local host country knowledge search, which would make innovation in these operations more incremental in nature. In contrast, the operations management literature highlights both responsibility and autonomy associated with manufacturing specialization, which may increase local host country knowledge search and help to generate more radical innovation that assimilates local host country knowledge with MNC knowledge. Empirical results from a comprehensive panel of US MNCs and the patents from their 36 foreign subsidiaries support these arguments. Overall, this paper furthers our understanding of global innovation in MNCs by exploring how different types of linkages and integration within MNCs influence innovation outcomes in foreign operations.

How Do European International Contractors Adapt to the Changing Project Environments?

PI: Young Hoon Kwak, Associate Professor, Department of Decision Sciences, GWSB

Brief Description:

The aim of this research is to better understand how European international contractors sustain their competitive advantages despite multiple challenges in both domestic and global market. This study explores a theoretical framework to examine international general contractor’s strategies by looking into market environments, firm resources, and firm capabilities. In addition, actual cases of successful global strategy formulation and implementation of European international contractors that adapt to the new environment are examined, analyzed, and discussed. This study provides insights to the engineering and construction industry to consider diverse strategies including foreign direct investment and cross-border mergers and acquisition in the ever-changing global project environments.

Legal Origins, Democracy, and Environmental Technology Innovation: A Cross-Country Examination

PI: Jorge Rivera, Professor, Department of Strategic Management & Public Policy, GWSB

Brief Description:

Environmental technology innovation has long been characterized as offering the best prospect for responding to environmental needs with minimal impact on business. Yet despite this potential “win-win” for businesses, the production of this innovation is far from even across countries. In order to shed light on the drivers of ET innovation, researchers have examined a variety of policy instruments. However, evidence regarding the effectiveness of specific policy instruments in stimulating ET innovation has been inconclusive. In this study, the PIs propose that missing from this emerging body of literature has been sufficient attention to the broad legal and political institutional contexts from which ET innovation may also emanate. Specifically, they argue that the legal origins of a country affect its orientation toward ET innovation activity. Further, the authors argue that the level of democracy should positively moderate these relationships. Thus, in this study the PIs propose to examine the following research question: how does national institutional environment (i.e. legal, political) influence the development of ET innovations? To test the proposed relationships, the authors use panel logit and negative binomial regression techniques and draw wind-energy patent data from The National Bureau of Economic Research’s (NBER) database of all patents granted in the United States between 1976-06.

Transparency in Foreign Direct Investment: Theory and Evidence from Petroleum-reserve Acquisitions

PI: Robert Weiner, Professor, Department of International Business, GWSB

Brief Description:

Transparency in multinational enterprises (MNEs) is widely viewed by policy makers as necessary for alleviating the challenges of poor governance, weak institutions, and corruption common in developing countries. These problems are acute in oil-rich countries, a phenomenon known as the “resource curse.” Recent rulemaking under the Dodd-Frank Wall Street Reform and Consumer Protection Act in the United States, and similar laws around the world, seeks to mandate project-level disclosures by extractive industry firms listed on stock exchanges. These measures have proven highly contentious among MNEs, who contend that mandating disclosure of proprietary information increases their risks abroad, especially when competing against foreign state-owned enterprises (SOEs). Scholarly work on MNE transparency is limited. Theory does not yield consistent predictions, and little empirical work has examined transparency in foreign direct investment, focusing instead on cross-country comparisons of domestic firms. To address these gaps, this project seeks to extend the literature in two ways. First, it will explicitly examine MNE transparency with respect to foreign investments, which we term investment transparency. Second, it expands beyond prior work that focuses solely on publicly traded companies to understand how SOEs differ from traditional MNEs in regards to transparency decisions. The implications of this project should be of interest to US policy makers, and MNE managers competing against increasingly-internationalized SOEs.