This study introduces a new measure of ex ante litigation risk using scrutiny of SEC filings by the source of securities litigation (plaintiffs’ lawyers) to reduce measurement error, relative to existing measures. We show that plaintiff-lawyer views proxy for the largely unobservable factors that make firms more likely to face litigation risk. Lagged views precede the public bad news revelation that triggers litigation and predicts future realized litigation risk (i.e., securities class actions filings and plaintiff-lawyer investigations) and stock market outcomes. Finally, we provide new insights into the plaintiff-lawyer case selection process that otherwise cannot be observed.

The Wawanesa Mutual Insurance Company, successful in western Canada, struggled to replicate its business model in Quebec in the 1930s. The absence of financial responsibility law in Quebec, which made purchasing automobile insurance nearly compulsory for drivers, created a unique opportunity. Wawanesa could insure taxis and fleets in a market where uninsured drivers were the norm. To accommodate this change, it became a direct writer in Quebec. The company also loosened its previously rigid management style to allow branch managers to make regionally appropriate decisions. Insurance companies that fled Quebec in the 1940s would struggle to compete upon their return, because Wawanesa became a market leader. The introduction of financial responsibility law in the province in 1961 would grow the company in the years that followed. As historians work to understand the importance of regional and legislative change to the insurance industry, this story provides a snapshot of a single company in a single market.

While corporate social responsibility by firms aims at improving welfare for different social groups, whether it achieves this is often difficult to measure. After Apr. 2018 protests, Starbucks enacted policies that anybody could sit in their stores and use the bathroom without making a purchase. Using anonymized cellphone location data, we estimate this led to a 7.0% decline in attendance relative to other nearby coffee shops. The effect is 84% larger near homeless shelters and larger for Starbucks’ wealthier customers. The average time spent per visit declined by 4.1%. Public urination citations decreased near Starbucks locations, but other minor crimes were unchanged.

The opening of equity markets to foreign investment by developing countries appears to generate an enormously large positive growth effect (see Bekaert, Harvey, and Lundblad (2005), Journal of Financial Economics 77, 3–55) in spite of a relatively small role of such markets for financing investment in most economies. We propose a spillover channel from equity market opening to lower costs of bank loans, which helps to explain this puzzle. From analyzing bank loan data associated with China’s introduction of the Qualified Foreign Institutional Investors program, we find significant support for this channel. Furthermore, we show that a reduction in the risk premium in loans is an important mechanism.

This essay argues that to assess the likelihood that incumbent firms will successfully make the required transformations to their strategy and operations in the face of technological transformations, it is not sufficient to investigate their dynamic capabilities. Whether an incumbent is likely to succeed in its effort to change itself via dynamic capabilities depends also on how quickly start-ups or diversifying entrants can build ordinary capabilities to offer the new technology at scale. We offer a framework to assess dynamic competition that integrates both ordinary and dynamic capabilities into the analysis by systematically comparing incumbents, start-ups, and diversifying entrants. We illustrate the framework with a case study of electric vehicles and aim to show how crucial such comparative analyses are for making well-founded predictions about the likelihood that incumbents will be able to maintain their leadership positions in the future.

There can be a serious tension between the commitment to cost-benefit analysis and a realistic appreciation of the limits of official knowledge. Without significant efforts to reduce those limits, that analysis might be inadequately informed. Whenever regulators face significant informational deficits, or what is sometimes called “the knowledge problem,” it is important to explore tools that take advantage of what the private sector knows; market-friendly tools, such as economic incentives, have important advantages on that count. An advanced regulatory system should also try to reduce the knowledge problem through three routes: (i) creative use of notice-and-comment rulemaking; (ii) retrospective analysis of regulations and their costs and benefits; and (iii) advance testing, as a way of informing ex ante analysis. For the future, the most promising approach is (iii).

This article investigates spillovers from foreign economies to the U.S. through changes in long-term Treasury yields. We document a decline in the contribution of U.S. domestic news to the variance of long-term Treasury yields and an increased importance of overnight yield changes, a proxy for foreign shocks’ contribution to U.S. yields. A model that identifies U.S., Euro area, and U.K. shocks that move global yields suggests that foreign shocks account for at least 20% of the daily variation in long-term U.S. yields in recent years. We also document the predictability of long-term U.S. yields by the U.S.–foreign yield spread.

This study seeks to analyze the continuity and survival of the mining sector in one of the most long-lived mining districts in the world, and the socioeconomic externalities that arose over a period of 150 years. Its most characteristic element was the development of two diametrically opposed business models in the same space: one based on a system of very small-scale mines, which were highly labor-intensive with a low capitalization, and another that was implemented in the 1950s based on a large-scale model, which was intensive in capital but with lower profit margins. In both cases, the activity had a growing impact on the environment and little spillover effects on other economic activities. The process of environmental degradation culminated in the 1960s–1980s with the pollution of an extensive stretch of the Mediterranean coastline and the complete disappearance of Portmán Bay, in what was possibly the most important environmental disaster in the history of the Mediterranean Sea. The institutional framework in which this activity took place played a key role in all of this.

This is a follow-up discussion about the Chinese electric vehicle (EV) sector, in particular the relative prospects of traditional automotive manufacturers and new ‘species’, four years after our last conversation on this topic (Jiang & Lu, 2018). It is also a response to Murmann and Vogt's (2022) latest article, which goes beyond Teece's (2019) focus on dynamic capabilities and constructs a systematic framework of firm capabilities to understand the competitive dynamics during a transformational shift of products.

Open innovation (OI) has been appointed as a key factor to promote innovative performance, but some research gaps remain especially when it comes to SMEs in developing countries. This article deals with (1) the effect of formalization of innovation strategy on OI activities in SMEs, (2) the impact of OI activities on SMEs’ innovative performance, and (3) the moderating role played by control on the relationship between inbound and outbound activities and the innovative performance. OI encompasses a range of innovative methods and procedures in firms to stimulate internal innovation and widen the external use of innovation (inbound and outbound). In this work, an empirical study is carried out on 543 Ecuadorian SMEs. The results show that the formalization of the innovation strategy promotes OI activities, both inbound and outbound. While outbound activities carried out by SMEs enhance innovative performance, this positive effect is only identified for inbound open innovation activities when control exists and increases, acting this variable as a moderating factor. These results have important implications both for the management of companies and the development of public policies aimed at promoting OI in SMEs in developing countries. This research contributes to the literature as it deals with a developing country context and considers a wide range of OI activities.

In this study, we conceptualize the thus far little explored relationship between expatriate and host country as a form of social exchange governed by the norm of reciprocity. Drawing from social exchange theory and our analysis of 451 self-initiated expatriates (SIEs) living and working in the United Arab Emirates, we examine whether the degree of SIEs’ career and community embeddedness explains their host country withdrawal intention via enhanced perceived institutional trust and a more tolerant attitude toward workplace discrimination. Our results provide general support for our theoretical model and most of our hypotheses. In this way, our article makes three contributions. First, it suggests a novel way to conceptualize the relationship between SIEs and host country as a form of social exchange. Second, it differentiates between two dimensions of embeddedness and explicates how the two contribute to SIEs’ intentions to stay in the host country. Finally, the analysis theorizes and empirically tests two previously little explored mechanisms of enhanced institutional trust and a more tolerant attitude toward workplace discrimination through which SIEs’ host country embeddedness influences their host country withdrawal intentions.

We present an equilibrium model of hedging for commodity processing firms. We show the optimal hedge ratio depends on the convexity of the firm’s cost function and the elasticity of the supply of the input and the demand for the output. Our calibrated model suggests that hedging tends to be ineffective. When uncertainty comes exclusively from either the supply or from the demand side, updating the hedge dynamically, and using nonlinear contracts improves hedging effectiveness. However, with both supply and demand uncertainty, hedging effectiveness can be low even with option-based and dynamic hedging strategies.

This article presents an analysis of the operations of the Peruvian Amazon Company through an accounting lens. It is suggested that a focus on asset categories augments our knowledge of the company’s exploitation of the land and Indigenous peoples of Amazonia. In particular, the study explores the PAC’s questionable ownership of estates in the Putumayo, what its approach to valuing those estates implied about enslavement, how its treatment of “expenses of conquest” and the inclusion of armaments on the balance sheet indicated the forced subjugation of labor, and how the classification of rubber collectors and their Barbadian overseers as debtors further suggests the practice of debt peonage. Although the findings affirm the utilization of accounting as a facilitator of subjugation, it is shown that in the hands of humanitarians such as Roger Casement, accounting could also be deployed in the pursuit of emancipation.

This article uses the case of Oppel Electric Manufacturing Co. Ltd.—the most important Chinese manufacturer of light bulbs before 1937—to explore the early development of the Chinese electrical lamp industry. The article first explores the Chinese market for electrical lamps before the 1920s and shows how the market was dominated by imports and lamps locally manufactured by foreign firms. It then traces how Oppel was established in the 1920s and subsequently grew into a successful manufacturing business able to compete with foreign products. The article explores how the fact that government institutions were major purchasers of light bulbs allowed Oppel to engage in nationalist lobbying and thereby win government contracts. The article shows how the absence of Western-style intellectual property rights allowed Oppel to transfer technology cheaply, efficiently, and without needing to enter into Sino–foreign joint ventures. These discussions of nationalist lobbying and China’s intellectual property environment contribute to our understanding of China’s early industrialization, both in terms of the rapid industrial growth early twentieth century China saw and the leading role that Chinese firms played in this growth.