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We summarize and synthesize the results of the articles in this symposium issue on research in financial economics related to the COVID-19 pandemic. We argue that the articles, taken together, present evidence that the pandemic resulted in a distributional shock to capital allocation. The underlying mechanisms include accelerating technological shifts, government stimulus programs, and heterogeneous responses of investors and firms. We augment these articles with evidence on the heterogeneous effects of the pandemic on profitability, payout, investment, employment, and productivity across sectors.
During technology transitions, incumbents are frequently faced with the ambidextrous challenge of exploiting existing capabilities and exploring new ones. While extant studies focus on radical changes in the product domain, we notice radical changes can happen in both product and market domains. Pioneering studies indicate that cross-functional ambidexterity addresses this challenge at the business-unit level by juxtaposing exploration and exploitation across different functional domains (particularly in product and market domains) and that complementary assets address this challenge at the organizational level. However, how efforts at two levels can be combined to build cross-functional ambidexterity and what roles complementary assets play remain unclear. Therefore, this study conducts an in-depth case study of Huawei Mobile, which managed to achieve superior performance during a technology transition that triggers radical changes in both product and market domains. We find that multi-level synergies contribute to the transition process. Specifically, cross-functional ambidexterity is constructed by prioritizing exploration in the product domain ahead of that in the market domain, and that it generates learning, brand and channel extension, matching, and brand alliance benefits at the business-unit level. Complementary assets help to reduce the uncertainty of exploration and resolve functional conflicts at the organizational level.
Current recruitment and retention issues within the armed forces draw links with breach of the psychological contract – the dynamics of the employee–employer relationship. Compared with civilian contexts, a military position is unique, however, there is a dearth of conceptual investigation regarding the lived experiences of military personnel, particularly with respect to how such contracts form. This paper combined a phenomenological approach with the critical decision method to investigate the lived experiences informing contract formation and contract trajectory of ex-military personnel. Lived experiences pointed to the formulation of ‘fuzzy’ contracts, impressions from defence force recruitment, specific tipping points around organisational commitment, and large differences between the fidelity of the idealised and actualised self/job. Seven superordinate themes are elicited that trace the formation and trajectory of the contract. A schematised account of findings is developed to provide avenues to investigate how beliefs form in a military contract context and their outcomes.
Based on interviews and documentary analysis, we analyzed the mechanisms being adopted by the HQ of Huawei, a Chinese MNC, for controlling the outputs and processes of its foreign subsidiaries and social behaviours within them and how these controls were supported by corresponding strategies of legitimation. The controls comprise key performance indicators, standard operating procedures, divided subsidiary mandates, HQ-centric rotational expatriation, military-style induction, public oath-taking and self-criticism ceremonies, and training in and role-modelling of core values. The HQ provides comprehensive legitimation for each of these control mechanisms, drawing on five strategies of legitimation, which comprise espousals of organizational benefits, inducement, affirmation, moral exhortation, and narrativization. In many cases, the legitimizing statements have been provided by Mr. Ren, Huawei's founder and CEO, whose authority appears to have been important in conferring legitimacy to the HQ. The historical path of Huawei's development as an MNC has also been salient in conferring legitimacy to the HQ. Our findings suggest that interviewees regard the controls as legitimate, that the subsidiaries broadly comply with the controls, and that micro-political contestation is largely absent.
The scholarship on fiduciary duties in business organizations is often pulled in two directions. While most observers would agree that business organizations are one of the key contexts for the application of the fiduciary obligation, corporate law theorists have often expressed disdain for the role of fiduciary duties, with the result that fiduciary law and theory have been out of step with the business world. This volume aims to rectify this situation by bringing together a range of scholars to analyze fiduciary relationships and the fiduciary obligation in the business context. Contributing authors examine fiduciary obligations in fields ranging from entity structure to bankruptcy to investment regulation. The volume demonstrates that fiduciary law can inform pressing corporate governance debates, including discussions over stakeholder models of the corporation that move beyond shareholder interests.
Why do states participate in bilateral investment treaties (BITs)? In this article, I examine the role of indirect investment on BIT formation. Indirect investment flows are an important aspect of the global investment regime that are underexamined by research focused on direct flows only. Indirect flows play an important role in affecting incentives for BIT participation because firms channel investment through intermediary destinations to take advantage of existing BITs. I argue that governments are more likely to participate in BITs when states expect to access groups of capital exporting states through second order links. When selecting BIT partners, states evaluate expected indirect foreign direct investment (FDI) flows by considering characteristics of a potential partner's second order FDI partners. States are thus more likely to participate in BITs when expectations for indirect flows are high. I use a variety of analyses to demonstrate evidence in favor of my hypotheses. I find evidence that indirect flows affect the likelihood of BIT formation and increase dyadic FDI flows. This research provides a novel explanation for BIT formation and contributes to research on indirect capital flows, treaty shopping and BIT formation.
Eight senior advisors were members of Trump’s Team specifically as it pertained to the pandemic. Each was in some way directly and heavily involved in how the president managed/mismanaged America’s worst public health crisis in over a century. Discussed in the chapter are senior advisor, Jared Kushner; chiefs of staff Mick Mulvaney and Mark Meadows; assistant to the president Peter Navarro; national security advisor Robert O’Brien and his deputy Matthew Pottinger; and counselors to the president Kellyanne Conway and Hope Hicks. During the coronavirus crisis, each of these advisors, like everyone else named in Part III of the book, prioritized the president’s political interest over the national interest.
This chapter is the first in a series of four that together comprise Part III of The Enablers, “Trump’s Team.” This final part of the book focuses on key individuals, each of them named, who were the most prominent and important of Trump’s enablers. As the title of this chapter suggests, it focuses first on Vice President Pence, who played a critical part in the president’s enablement. Then it proceeds to the four members of the president’s cabinet who during the period under discussion were the most involved with the administration’s management of the pandemic, and to the president himself. The four cabinet members are: Secretary of State Mike Pompeo, Secretary of Treasury Steven Mnuchin, Attorney General William Barr, and Secretary of Heath and Human Services Alex Azar.
This chapter tracks what happened when America’s virus crisis became heavily politicized, even weaponized. Moreover, the pandemic was politicized not only at home but abroad, specifically regarding Sino-American relations, which deteriorated significantly from what they had been for four decades previous. At home were two obvious casualties. The first was the truth. The president’s proclivity outrageously to lie, now also about Covid-19, and his enablers’ proclivity no matter what to protect him, became increasingly costly. Now the cost was not only public trust but people’s lives. The second casualty to be chronicled was the comity of the American body politic. The growing divisiveness was symbolized by the wearing, or the not wearing, of masks which came to be emblematic of what here is called the politics of the pandemic.
Chapter 2 provides a brief history of the Republican Party – which explains in part how it became the Party of Trump. It describes the Republican demographic, how it differs from the Democratic demographic, and how it was possible for Trump essentially to take over what only recently was an establishment conglomerate. One better known for its institutionalist orientation than its outrageous attacks on political norms – norms that in most cases go back to the beginning of the Republic. The chapter further explores the links between the Republican Party and the house that Roger Ailes built, that is, Fox News. As the book makes clear, the importance of Party media, and for that matter Party Money, to the Trump phenomenon is impossible to overestimate. Above all the chapter begins to explore the party’s remarkable fealty to a man who demanded it with every fiber of his being, but who at an earlier moment in Republican Party history would have been dismissed with the flick of a wrist.
The Epilogue returns us to the Prologue. To the big questions as they pertain to leadership and followership. To leaders and their followers. To what is the role of and the responsibility of followers who find themselves in situations that are uncomfortable. That are uncomfortable because their leaders, those more highly positioned then they, are either incompetent, or immoral, or both. “The fault, dear Brutus, is not in our stars, But in ourselves, that we are underlings,” wrote Shakespeare in “Julius Caesar.” In other words, if we are followers, not leaders, we are not, not at all, absolved of responsibility. If things go wrong, we share blame for not speaking up and out, for not having the guts to speak truth to power – even if doing so comes at a cost.
The chapter singles out two senators, two governors, and four Fox News heavyweights as having played especially important parts among the president’s enablers. The two senators – Majority Leader Mitch McConnell and inveterate Trump loyalist Lindsey Graham – were remarkable for the prominence, persistence, and importance of their fealty. The two governors – Florida’s Mike DeSantis and Georgia’s Brian Kemp – were standouts for standing strong in Trump’s corner, no matter the rising numbers of Covid-19 cases in their respective states. And the four Fox News heavyweights – Rupert Murdoch, Tucker Carlson, Laura Ingraham, and Sean Hannity – were striking for their staunch and some would say slavish clinging to the president’s coattails. As with every enabler, most notably those singled out by name in this book, Trump’s presidency, and even his subsequent electoral viability, would not have been possible without them.
The chapter explores the prequel to the coronavirus crisis of 2020. Our knowledge of plagues dates back almost to the beginning of recorded history. They have haunted and hounded us for eons, now being no exception to the historical rule. The pandemic that most vividly predates this one, the deadly “Spanish Flu” that spread the world in 1918/19 provides an apt backdrop to the arrival of the new coronavirus for which Americans were prepared, but only poorly. Certainly, poorly in comparison with other countries loosely thought of as US peers, such as Germany in Europe and, in Asia, South Korea. The chapter concludes with a discussion of why people do a poor job of preparing for “predictable disasters.” Disasters which, though they are foretold, we prefer to avoid.
Chapter 3 traces the nature and trajectory of the Trump administration – especially given he was a president who came into office without any political, government, or military experience whatsoever. While for a time there were several “adults in the room,” for example Secretary of Defense James Mattis, in relatively short order they disappeared from the administration. This left the federal government in the hands effectively of only those who were reliable and relentless Trump loyalists. Trump’s extraordinary need for, insistence on, almost slavish personal and political loyalty meant that turnover in the administration was inordinately high which, among other things, explains why it was so poorly equipped to cope with the pandemic.