CAUSAL LINKS BETWEEN SUPPLY CHAIN CAPABILITY AND FDI: A PANEL GRANGER CAUSAL ANALYSIS
Arshad Alam, Vijay K. Vemuri, and Prabir K. Bagchi
Foreign Direct Investment (FDI) has grown significantly over the last few decades and it is seen as an engine for economic growth, especially for developing and transition economies, which account for more than 60% of global FDI flows. Location characteristics and supply-side factors are increasingly important in determining FDI flows. We borrow the concept of supply chain capability (SCC) of countries, developed by Alam and Bagchi (2011), to analyze the relationship between FDI and SCC for a panel of 64 countries for the period 1990 to 2013. We examine for causal rather than associative links between these factors using the Granger-causality methodology. Our results indicate that FDI Granger-causes SCC, but the causal relationship is not bidirectional. The paper contributes to the understanding of the link between FDI and SCC and has policy implications, especially for developing countries seeking to benefit from global investment flows.
IMPACT OF EXCHANGE RATE VOLATILITY ON THE EXPORT PERFORMANCE OF DEVELOPING COUNTRY: EVIDENCE FROM BILATERAL TRADE BETWEEN BANGLADESH AND THE US
Jahid Hasan, Dewan Muktadir-Al-Mukit, and Farjana Islam
The paper investigates the effects of exchange rate volatility on export volume from Bangladesh to the US market by using monthly time series data over the period of 1991 to 2012. A wide range of econometric techniques have been employed to analyze the relationship between the study variables. The study reveals a stable and significant long run relationship between the variables. By employing Cointegration technique, it is observed that in the long run, a 1% increase in exchange rate that is depreciation of Taka against US dollar causes 2.32% increase in export volume. The estimated error correction coefficient indicates that 36%deviation of export data is corrected in the short run. Impulse response function of the study also affirms the positive relationship between the variables. Finally, Granger causality analysis suggests the existence of a unidirectional causality running from exchange rate to export.
BOARD STRUCTURE, BOARD ACTIVITY AND FIRM PERFORMANCE: THE CASE OF KOREA
Jootae Kim and Jai S. Kang
In agency theory, it is asserted that boards with a high ratio of outside directors can monitor management effectively, but empirical results from past studies are not consistent. We suggest the “process perspective” as an alternative approach, arguing that the board activity, rather than the board structure, impacts the firm’s financial performance; and apply this perspective to Korean companies. We test the impact of board structure on both board activity and profitability, and then the impact of board activity on firm profitability. The test results were: the board structure [measured by the ratio of outside directors in the board membership] does not have positive influence on either board activity or profitability [measured by ROA] in Korean firms; however, the board activity, measured by the rate of outside directors’ participation in board meetings, has a positive relationship with a firm’s profitability. We explain this as a decoupling, based on institution theory, which occurred in the process of forced Korean governance reform of 1998.
COMPETITIVENESS OF INDUSTRIAL CLUSTERS: A COMPARATIVE STUDY OF PITHAMPUR AND INDORE CLUSTERS, INDIA
Pragya Bhawsar and Utpal Chattopadhyay
Industry clusters have proved critical for a region’s economic prosperity and a nation’s overall competitiveness. This study aims to evaluate and compare competitiveness performance of two select industry clusters from India viz. Pithampur Auto Cluster and Indore Pharma Cluster. For this purpose, the study has developed a comprehensive framework and a simplified methodology that incorporate both quantitative as well as qualitative data on various aspects of cluster competitiveness. It can be used as a foundation for future works related to assessing competitiveness of the clusters.
MOTIVATIONS FOR SOCIAL PARTNERSHIP AND CLUSTER BY MNCS: CONCEPTUAL MODEL USING THE DIAMOND APPROACH
Yeon W. Lee
The corporate social responsibility (CSR) is no longer a choice and now firms are increasingly engaging in social initiatives by approaching it strategically. There have been many attempts to foster competitiveness for firms’ social engagement and focusing on social partnership and social cluster has been one of the important areas where firms can increase the efficiency in creating shared value. The purpose of this paper is to discuss the multi-sector partnership and cluster. Then, it introduces a new conceptual model for multinational corporations’ motivations and benefits in engaging in multi-sector collaboration by incorporating the diamond model. This paper shows that social partnership or cluster can be more synergized and facilitated when understood with the four purposes: efficiencyseeking, solution-seeking, network-seeking, and strategic allianceseeking.