Article

Growing Exports by Signaling Product Quality: Trade Competition and the Cross-National Diffusion of ISO 9000 Quality Standards

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Abstract

Trade policy is an important topic in global public policy. It is recognized that trade is hampered when buyers have incomplete information about the offered products, a problem accentuated in the international markets by the physical and cultural distances between buyers and sellers. Buyers look for proxies to assess product quality, and exporters that can provide assurance about quality gain a competitive advantage. Our paper focuses on voluntary or private regulatory programs that have emerged as important instruments to correct policy failures. We examine how trade competition motivates firms to signal quality by joining ISO 9000, the most widely adopted voluntary quality certification program in the world. Methodologically, our study is novel because we observe trade competition at the bilateral and the sectoral levels. Structural equivalence, the measure of competition we introduce in this paper, captures competitive threats posed by actors that export similar products to the same overseas markets. We study ISO 9000 adoption levels from 1993 to 2002 for 134 countries, and separately for non-OECD countries and non-EU countries. Across a variety of specifications, we find that trade competition drives ISO adoption: The uptake of ISO 9000 is encouraged by ISO 9000 adoption by firms located in countries that are “structurally equivalent” trade competitors. Given that information problems about product quality are likely to be more salient for developing country exporters, we find that trade competition offers a stronger motivation for ISO 9000 adoption in non-OECD countries in relation to developed countries. © 2010 by the Association for Public Policy Analysis and Management.

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... Export orientation Many authors defend that ISO 9001 certification has a positive influence on competitiveness in international markets (Montoya-G omez, 2009;Sampaio et al. (2009b);Pacheco, 2014). In this regard, Cao and Prakash (2011) found that the pressures that emanate from commercial competitors that have adopted ISO 9001 induce exporters located in less developed countries to join this quality certification system. They argued that the problems of information on product quality are likely to be more important for developing exporting countries (Chiang and Masson, 1988;Potoski and Prakash, 2009;Cao and Prakash, 2011). ...
... In this regard, Cao and Prakash (2011) found that the pressures that emanate from commercial competitors that have adopted ISO 9001 induce exporters located in less developed countries to join this quality certification system. They argued that the problems of information on product quality are likely to be more important for developing exporting countries (Chiang and Masson, 1988;Potoski and Prakash, 2009;Cao and Prakash, 2011). Martincus et al. (2010) studied the ways in which certification affects the exports of companies, and found that ISO 9001 certification is associated with an increase in exports in terms of countries-destination, which means that there is a relationship but only with certain destination countries. ...
... Amongst the indicators of technological innovation, it included having any internationally recognized quality certificates such as ISO 9000 in place. Cao and Prakash (2011) also investigated how trade competition encourages countries to seek a decentralized, non-traditional solution -such as ISO 9001-to mitigate information barriers to trade. However, the authors raised some important questions: Why does a recognized brand-name company want to implement ISO 9001? ...
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Purpose This study has the main aim of analyzing the influence of six factors on ISO 9001 implementation: Economic Development, Exporting to Europe, Reputation, Competitiveness, Innovation and Business Sophistication. As a complement, a new factor relating to quality by country has been added: the World Quality Scoreboard. Design/methodology/approach Hypotheses are proposed that establish a (positive or negative) linear relationship between the diffusion of ISO 9001 and the indicators of the different factors analyzed in each country. The SPSS program was used to evaluate the hypotheses using data from 2009 to 2018. Findings The results indicate strong positive relationship for the country's economic development only when countries with low levels of income are considered. For the rest of the variables, the results indicate that their behavior varies according to the degree of development of the countries. When only developed countries are considered, significant and negative correlations are obtained for reputation, competitiveness, innovation and business sophistication, while considering the group of less developed countries, the results are reversed. The new World Quality Scoreboard has the same behavior whereas regarding exports; we did not obtain conclusive results. Originality/value This study adds important information on the studying of ISO 9000 phenomenon diffusion/evolution by analyzing the effect of six variables on the degree of implementation of the ISO 9001 standard in different countries. This information is interesting for companies and certification bodies across the world because it allows a better understanding of the reasons and conditions of implementing a quality management system.
... On the other hand, Cao and Prakash (2011) have argued that short-term trade relations may in fact be more salient for improving organizational practices. In their study of the cross-national diffusion of ISO protocols, for example, they show that corporations in peripheral countries employ voluntary frameworks like the ISO 9000 quality standards as signals to attract economic partners from core countries that otherwise would not have information on organizations in peripheral countries (cf. ...
... Although world society studies suggest that such initiatives will see rapid adoption across organizations around the world, it still remains an open question as to how applicable these new rationalized CSR standards will be to a broad constituency of corporations. Although these standards are typically freely available to interested organizations (Cao and Prakash 2011), actual auditing and certification will present considerable cost, for example, to smaller corporations. ...
... These results indicate that corporations in countries that export to countries with more UN Global Compact corporations are themselves more likely to also adopt CSR frameworks. This supportsCao and Prakash's (2011) argument that short-term, arm'slength economic transactions can encourage corporations to use CSR as a signaling strategy: not only does a country's bilateral export context encourage government endorsement of the UN Global Compact, it also encourages corporations to use more substantive frameworks like the Global Reporting Initiative. A country's bilateral investment context, on the other hand, does not have significant effects on CSR adoption and this suggests that long-term investment relations may be less important for demonstrating CSR through framework adoption.At the domestic level, countries that have more liberal, less regulated national economic systems also seem to encourage ceremonial commitment to CSR. ...
Article
This dissertation examines the global expansion of corporate social responsibility (CSR)???the worldwide convergence of CSR around human rights, environmental, and labor issues, and the widespread adoption of CSR frameworks. Contrary to studies that view CSR as the product of firm-level factors, I argue that the global expansion of CSR stems from factors in a firm???s external environment. In a multi-stage process, I explain how attempts by actors to shape the moral regulation of the global economy, especially in periods with profound contradictions in the institutional regulation of economic activity, drive the emergence, diffusion, and reception of global CSR frameworks. First, I discuss the theories of Emile Durkheim, Karl Polanyi, and John W. Meyer to construct an analytic framework of the moral regulation of the economy that specifies significant events, channels, and factors of moral regulation that stem from institutional and economic domains at both global and domestic levels. Second, I examine institutional emergence and change in the intergovernmental CSR field from 1964 to the present. Utilizing historical documents from the United Nations, I show how external events and changes in internal field composition lead to the emergence of global CSR frameworks and change in institutional outcomes for the intergovernmental CSR field. Third, I compare institutional and economic factors that drive the diffusion of CSR frameworks across various corporations and countries in the world. In cross-national time-series analyses, I show how global pressures through nongovernmental and bilateral trade channels lead to CSR framework adoption. I also demonstrate how corporations in developed and developing countries respond to these environmental pressures with different levels of CSR commitment. Finally, I examine the subsequent domestic reception of CSR frameworks in a case study of the Republic of Singapore. Using fieldwork and interview data with corporate, government, and nongovernmental actors, I examine lateral decoupling among domestic receptor sites and how corporations in Singapore respond to CSR pressures with different recoupling strategies. Throughout the dissertation, I use the case of the global expansion of CSR to critique and refine new institutional and world society explanations of the emergence, diffusion, and reception of social institutions.
... The emergence of supply chains, in which suppliers in one country produce intermediate inputs shipped to many countries, has been accompanied by the global diffusion of certifiable international management standards, such as ISO 9000, which focuses on quality, ISO 14000, which addresses environmental management , and recent ethical standards (Prado and Woodside, 2015). These types of voluntary standards help to overcome barriers related to information asymmetries among different actors in the supply chain (Potoski and Prakash, 2009;Cao and Prakash, 2011). ...
... Moreover, ISO 9000 diffusion is affected by foreign direct investment (FDI). Management practices can cause ISO 9000 used by multinational enterprises in their home countries to be eventually transferred and adopted by subsidiaries in foreign countries (Cao and Prakash, 2011). ...
... Auditing costs depend on the size of the organization and technical complexity, but they are substantial. The cost of a certification audit can range from $10,000 to $1 million per organization (Cao and Prakash, 2011). In sum, positive economic effects from signaling trough certificates occur when the reduction of transaction costs outweigh the costs associated with certification. ...
Article
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Companies use standards as a tool to signal their investments in quality upgrading and performance. We argue that the impact of this signal depends on the trust in the accreditation system and the development status of a country. Representing the workhorse of research in international trade, we use a gravity model to examine the trade effects of ISO 9000 diffusion and cooperation in accreditation. The model is estimated by applying a country-pair fixed effects regression approach with instrumental variables and multilateral resistance terms to a panel data set covering a 13-year period from 1999 to 2012. This allows us to test our hypotheses with respect to the moderating role of international cooperation in accreditation on the trade effects of ISO 9000 diffusion. We show that certification promotes trade and that signatories to the Multilateral Recognition Arrangement of the International Accreditation Forum (IAF MLA) trade significantly more. The IAF MLA is of particular importance to the trade among developing countries. For policy makers, our results highlight the importance of support for accreditation institutions in developing countries.
... Countries embedded in international trade networks have domestic firms who participate in global trade networks as suppliers or as affiliates of multinational corporations. Typically, firms as well as countries take cognizance of the significance of exports to the well-being of their home firms and implement measures for securing their export market shares overseas [41,[48][49][50]. Increased competition between firms in export markets and a greater dependence on export markets have shifted the bargaining power to the importing firms. ...
... At an international level, competition between firms from different countries may be due to competition over the same market resources (i.e., import and export markets). International competition offers local firms the opportunity to learn about the profitability and technical performance of alternative practices or technologies that are adopted by foreign competitors [41,50,54,56]. In the context of competition, firms tend to imitate the practices of others, particularly those competitors who are deemed to be successful and of high-reputation, in order to avoid being left behind and/or losing critical market resources. ...
... Countries that are largely embedded in the global trading system face competitive pressures that may trigger the adoption of the legitimized B2B e-commerce technologies that have been successfully implemented or that work efficiently elsewhere. As competition offers opportunities to learn about the profitability and technical performance of alternatives [41,42,50], we expect more technology transfer to a country when its firms are competing with overseas competitors that are pioneers in B2B e-commerce technologies. Accordingly we postulate the following: Hypothesis 2. The level of B2B e-commerce diffusion will be high in countries whose major firms' competitors are from countries that are pioneers in B2B e-commerce technologies. ...
... Intense competition within the international arena is another factor that contributes to technology diffusion across national boundaries (Gertler, 2001;Guler et al., 2002;Henisz et al., 2005;Neumayer and Perkins, 2005). This stems from the fact that firms compete over import and export markets at an international level, exposing local firms to new ideas to achieve higher profits and performance and to new technologies and practices adopted by foreign competitors (Cao and Prakash, 2011;Gertler, 2001;Guler et al., 2002;Jandhyala and Phene, 2015). To secure critical market resources, local firms are more likely to imitate the practices of competing firms that are highly reputed in the global market. ...
... An example of this mimetic behavior across countries is some large Japanese companies that induced their trading partners in East Asia to adopt B2B EC, imitating the American companies with which they were in competition (Hara et al., 2003;Totonchi and Manshady, 2012). Thus, competitive pressures within international markets may trigger the adoption of B2B EC technologies to improve efficiency as firms gain new insights into the performance and revenues of other competing firms (Cao and Prakash, 2011;Guler et al., 2002;Henisz et al., 2005). 3. Normative pressures from global cohesive trade relationships. ...
... This finding is consistent with the world society perspective which predicts that countries embedded and operating in highly interdependent international systems will be increasingly prompted to adopt and isomorphically acquiesce to legitimate models of international society (Drori et al., 2006;Guler et al., 2002;Meyer, 2010;Meyer et al., 1997). The result is also in line with empirical findings of prior research (Cao and Prakash, 2011;Prakash, 2007;Prakash and Potoski, 2006). Unexpectedly, the effect of CPII was nonsignificant (β = 0.008, p > 0.05), suggesting that CPII does not affect the diffusion of B2B EC in different countries. ...
Article
Using institutional theory, this study offers an integrated framework that describes the diffusion of business-to-business e-commerce within a country. The model specifies the role of national institutional frameworks, international institutional pressures, and market complexity in business-to-business e-commerce diffusion. We test this model using archival, cross-sectional data from 146 countries for the period from 2013 to 2016. The study also compares the roles of these factors in business-to-business e-commerce diffusion across developed and developing countries. The results suggest that national institutional frameworks, international institutional pressures, and market complexity contribute positively to business-to-business e-commerce diffusion and that the influence of these variables varies according to the degree of a country’s development. Theoretical, research, and managerial implications of the study are also discussed.
... To this end, we have collected data across countries, review the literature and later analyze this data in order to draw valid conclusions on the basis of the influences of ISO 9001, ISO 14001, and SA 8000 (QES). We are particularly interested in learning more about international quality standards relationships to exports in the context of developed and developing countries Cao and Prakash, [13], Castka [14]. ...
... The impact on trade regarding the adoption of ISO 9000 fundamentally centers on accreditation as a device for exporters to signal quality to purchasers and to decrease data asymmetries and transaction costs. ISO accreditation is a reliable tool with which clients can recognize high quality production Cao and Prakash [13]. Finally, the adoption of international management standards have positive economic impacts which are exhibited when the reduction in transaction cost exceeds the accreditation cost Sroufe and Curkovic [30]. ...
Article
The purpose of this empirical study is to undertake a comparative analysis of developing vs. developed countries based on adoption of ISO 9001, ISO 14001 and SA8000 certifications and their impact on international trade. We utilize a combination of models including Deng’s Incidence Analysis (GIA), Absolute Degree GIA, Second Synthetic Degree GIA (SSDGIA) and Conservative (maximin) approach to inform decision making under uncertainty. Data was collected from the ISO and SAI official websites of the top fifteen certified countries for the period of 2002 to 2017. Additionally, export of goods and services data was gathered from the World Bank. The results reveal that the adoption of Quality, Environment and Social (QES) standards have a positive and significant effect on exports of goods and services in developing countries. While this is interesting, we also find that ISO 14001 certification contributes more to economic development than ISO 9001 and SA8000 in both developed and developing countries, with developing countries showed superior performance. This study is the first of its kind in evaluating the association of QES standards on international trade in developed and developing countries while using multiple grey relational analysis models. Finally, this article proposes recommendations for policymakers to improve international trade and sustainable development. [Citation: Ikram, M., Sroufe, R., Rehman, E., Shah, S. Z. A., & Mahmoudi, A. (2020). Do quality, environmental, and social (QES) certifications improve international trade? A comparative grey relation analysis of developing vs. developed countries. Physica A: Statistical Mechanics and its Applications, 545, 123486.]
... These articles applied network measures such as density and centralization to depict the structural properties of a wide array of networks, including regional economic development networks (Feiock et al. 2010;Lee, Lee, and Feiock 2012b), interlocal service collaboration networks (LeRoux and Carr 2010), community mental health networks (Milward et al. 2010;Provan and Huang 2012), cross-sector emergency management networks (Kapucu 2006), Swiss telecommunications regulatory networks (Fischer et al. 2012) and Climate Policy Coalitions (Ingold 2011). Researchers also described overall interaction patterns of networks to understand the collaboration patterns on innovation (Caloffi and Mariani 2011) and policy diffusion processes (Cao and Prakash 2011). Relatively few articles focused on the subgroups or substructures of networks through clique analysis, structural equivalence analysis, or cluster analysis. ...
... For directed data, two nodes are structurally equivalent when they send ties to the same actors and receive ties from the same actors in the network (Borgatti, Everett, and Johnson 2013). Through blockmodeling using CONCOR, researchers have identified key stakeholder groups and advocacy coalitions, measured trade competition, and evaluated the impact of similar network positions on the adoption of a new program and cooperative behavior (e.g., Cao and Prakash 2011;Ingold 2011;Ingold and Varone 2012;Jokisaari and Vuori 2010;Lambright et al. 2010;Robins et al. 2011). ...
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The rapid growth of network research in public administration calls for a systematic review of existing network scholarship. We performed bibliometric analysis and content analysis to identify the research that has had impact on empirical network research in public administration. We examined the key theoretical foundations of existing network research with a focus on empirical network articles that used social network analysis in their methods. We examined the evolution of network scholarship in public administration, identified key network concepts, and analyzed the research clusters. We further identified research gaps in existing empirical network literature and proposed some ideas or topics for future research.
... Consistent with the glocalization perspective, even as world society processes promote the overall structuration of the GCR movement, we expect that more nested and enduring countrylevel differences in trade and domestic governance to give rise to divergences in GCR framework diffusion. According to studies of cross-national policy diffusion, the differential (Greenhill, Mosley, & Prakash, 2009;Mosley & Uno, 2007) but conditioned by the existing effectiveness of domestic governance institutions (Jackson & Apostolakou, 2010), as well as by expectations of business responsibility from international trading partners (Cao & Prakash, 2010). At the domestic level, businesses in countries with historically weak regulatory structures may be more likely to adopt onerous external certification schemes in order to facilitate economic exchange with businesses in countries with higher sourcing standards. ...
... Businesses operating in environments with weak social and environmental protections may realize competitive advantages over their local peers by adopting forms of GCR that are codified, stringent, and certifiable. These advantages may stem from greater access to foreign trading partners through the demonstration of substantive attention to corporate responsibility (Cao & Prakash, 2010). In less effective governance contexts, lax reporting frameworks might not be perceived as providing the necessary degree of external assurance of labor and environmental management. ...
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In recent decades, as worldwide attention to corporate responsibility increased, the global corporate responsibility (GCR) movement did not converge on a singular governance model nor hybridize into myriad country-specific models. The movement, rather, bifurcated into onerous certification frameworks and more lax reporting frameworks. We examine this “governance divide” in the GCR movement by investigating the cross-national diffusion of seven core GCR frameworks. We adopt a glocalization perspective that conceptualizes a vertical nesting of local and global contexts. Our cross-national quantitative analyses suggest that, while linkages to global culture have encouraged business participation in all GCR frameworks, power dependencies related to international trade and domestic factors related to effectiveness of local governance institutions have contributed to divergent diffusion patterns across reporting and certification frameworks. We discuss these findings in relation to several organizational perspectives and note their implications for further research on corporate responsibility.
... We apply insights from economic theory on quality uncertainty and adapt it to the context of solar PV auctions [46,47,50,[67][68][69]. As mentioned in section 3.1, compliance with international quality standards has been shown to overcome the buyer's insufficient information or lack of trust, for example in international trade [47,67,69] and foreign direct investment [48,68]. ...
... We apply insights from economic theory on quality uncertainty and adapt it to the context of solar PV auctions [46,47,50,[67][68][69]. As mentioned in section 3.1, compliance with international quality standards has been shown to overcome the buyer's insufficient information or lack of trust, for example in international trade [47,67,69] and foreign direct investment [48,68]. International quality standards create trust, as they signal use of state-of-the-art production processes. ...
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Solar technology diffuses across the globe as countries transition from fossil to renewable energy. Little solar-specific experience and capacity in newly adopting countries can result in technical failures and lower solar plant performance. This contributes to making the investment in solar plants in newcomer countries risky and may undermine political targets of solar energy deployment. One solution suggested by international organizations is for policymakers in adopting countries to include international quality standards as technical requirements in public auctions. Here, we develop a conceptual framework on how international quality standards could help build a solar sector. As a case study, we analyze the explanatory factors of technical requirements in 100 public auctions of utility-scale solar photovoltaic plants carried out in India between 2013 and 2019. Our findings suggest that more international quality standards are required in auctions in which the government rather than a private actor ultimately carries the commercial risk. On the other hand, local content requirements and attracting foreign investors do not correlate with technical requirements. We argue that using minimal quality standards is unlikely to promote local technological catch-up or attract long-term foreign investments but transfers the techno-commercial risk from the government to the private sector.
... The diversity of approaches used in studies on ISO 9001 is noteworthy, ranging from studies focused on technical aspects regarding implementation of the standard and obtain a certificate [27], costs and difficulties of obtaining the ISO 9001 [13,[28][29][30][31][32], critical success factors [33], studies with focus on the diffusion pattern [6,[34][35], including predictive models for such diffusion [18]. In the last decade, many papers were published on exploring the relationship between the certificate and the influence on organizational performance [1,11,21,[31][32][33][36][37][38][39], showing the concern of scholars to understand what effects can be correlated the implementation of ISO 9001. ...
Article
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The ISO 9001 standard allows companies to have a consistent quality system. The compliance with ISO 9001 requirements can lead a company to a superior organizational performance. A literature review has identified seven quality management constructs. Six of them are related with independent variables (customers, suppliers, employees, top management leadership, processes, information and communication system) and one with dependent variable (product quality). This paper shows the results of a survey in Brazilian companies from automotive sector. The purpose was to measure the quality management system efficiency. A questionnaire was sent to the companies in the automotive sector in Brazil, which resulted in 44 response received. No significant differences in terms of waste (time, materials, rework, and labor) were observed, although the findings has pointed out there are differences in terms of defective products rate and costs of quality. Besides there are high correlation between costs of quality and variables from customers and processes constructs while there are high correlation between defective products rate with suppliers and top management leadership constructs. Further studies focusing on impact of knowledge processes on quality management system maturity are necessary.
... Lin and Wu (2007) show how ISO 9000 impacts on the 'modes of knowledge creation' by providing an example of ISO 9000's contribution to the creation of knowledge for the organisational innovation process toward customer satisfaction. ISO 9000 certification can signal the quality of a company's management system and reduce the variance of quality perceived by the consumers (Cao and Prakash, 2011;Hudson and Jones, 2003). Therefore, the standard can increase the chances of acceptance of new goods and services. ...
Article
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Innovation and quality are both important aspects of business excellence. ISO 9000 is a well-known quality management standard but its relationship with innovation is not completely understood. Previous quantitative studies have shown that ISO 9000 is positively correlated with technological innovation (product and process) in the manufacturing sector, while the effect of ISO 9000 on service innovation is positive only when considering non-technological innovation (organisational and marketing). Adopting a qualitative methodology, the current study investigates simultaneously the adoption and the impact of ISO 9000 on innovation in high-tech manufacturing firms and in low-knowledge-intensive services. The units of analysis are selected by adopting a simple coarsened exact matching model to increase the external reliability of the study. Innovation is investigated before and after the adoption of ISO 9000. The results suggest that the client focus and the formalisation of appropriate business practices (ISO 9000 requirements) impact on the innovation propensity. In the opinion of most of the interviewees, ISO 9000 certification, especially in the versions after the year 2000, does not limit technical and non-technical innovation. As some companies refused to participate in the study, potential selection bias suggests that further research could be required.
... phenomenon within federal system, and empirical studies of policy innovation and diffusion traditionally focus on federal or decentralized political structure (Berry & Berry, 1990;Cao & Prakash, 2011;Collier & Messick, 1975;Elkins, Guzman, & Simmons, 2006;Oakley, 1998;Radaelli, 2000Radaelli, , 2008. Although policy innovation and diffusion are highly encouraged under authoritarian structures and also have recently begun to draw scholarly attention (Chien & Ho, 2011;Heilmann, 2008;Heilmann & Perry, 2011;Ma, 2012;Wang, 2009;Zhang, 2012;Zhu, 2013), the research is still scant; thus the mechanisms of policy diffusion, and their conditions and characteristics under authoritarian structures, are still unclear. ...
Article
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This research focuses on policy diffusion of performance management in authoritarian China. A three-stage theory of diffusion is proposed by conducting a process that traces divergence and convergence in the diffusion of performance management in China. When a superior government only has a policy goal, the inferior governments, competing for innovation, will develop divergent policy instruments. When the superior government’s policy goal and policy content seem clear, local governments, competing for loyalty or bandwagoning, adjust their diverged policy instruments to converged ones conforming to the superior’s policy content. Finally, when the superior government issues a systematic set of policy goals, content, and instruments, it may use coercive power to promote diffusion. In the process, when the contents of diffusion are different, the superior government applies different levels of coercive power, and the mechanisms, characteristics, and outcomes of diffusion also differ. This research claims that in authoritarian China, the superior government, as a third party in the process of policy diffusion, will play a more sophisticated role than is currently expected in the policy diffusion literature.
... Alternatively, this marketing advantage may be derived from a successful effort to mimic competitors or to respond to competitive pressures. (See discussion in Cao and Prakash, 2011). ...
Article
Purpose ISO 9001 can offer users substantial management benefits. For developing country firms, this standard could offer both important management improvements and serve as a quality signal to foreign suppliers and potential buyers. The purpose of this paper is to explore the impact of ISO 9001 on food manufacturing firms in Guyana. Design/methodology/approach A multiple case study approach, using interviews with multiple managers, was used to assess the impacts of ISO 9001 in six registered and non-registered firms. Findings ISO 9001 offers supply chain management benefits. Non-registered firms reported using the standard to formalize their monitoring procedures and improve planning, sourcing, manufacturing, and delivery efficiency. Registration helped firms formalize their quality management systems; it provided guidance on improving their customer/supplier relationships, and offered tools to monitor internal processes. Registered and non-registered firms reported increased customer satisfaction, market share and inventory turnover, and reduced lead times, rework, waste, and customer complaints. Research limitations/implications The number of cases examined in this study is limited. Interview data are based on managers’ perceived experiences; it was not possible to verify this information independently. Originality/value The paper examines management benefits of adopting an international quality management standard in developing country agrifood firms.
... As explained above, standardization creates product compatibility and market integration, which together result in new opportunities for firms that want to expand their market coverage (Cao and Prakash 2011). Moreover, such integrated markets are often much more competitive after standardization programs are implemented. ...
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We examine how the European Union (EU) standardization policy is perceived by firms by exploiting a survey dataset on firms’ benefits. We explore whether perceived benefits are associated with firm size and firm capabilities. We find strong evidence that the perceived benefits of standardization is not equally distributed across firm size classes, industries and countries. Our study indicates that small ventures are less likely to perceive benefits from EU standardization than their larger counterparts, in particular in Eastern European and Mediterranean countries. Additionally, we find evidence that firms with the capabilities to be innovative, exporting and that employ foreign labor are more likely to perceive benefits from standardization than their non–innovative, non–exporting and non–foreign labour–employing counterparts. We suggest EU and EU Member States, in particular in Eastern and Mediterranean Europe, to focus on facilitating standardization compliance by enhancing the critical firm capabilities identified. Stimulation efforts could also be considered to address simultaneously supporting capabilities and standardization literacy.
... The importance of policy transfer is such that Graham, Shipan, & Volden (2013, p. 673) have calculated that "between 1958 and 2008 political science journals published nearly 800 articles about the politics of public policies spreading from one government to another". The dynamics that imply such growing need for policy transfer, in line with some of the arguments previously introduced with reference to the importance of knowledge management, point to key aspects of the current global information era: the impact of ITC facilitates the exchange processes of ideas and knowledge (Dolowitz & Marsh, 2000), while global economy entails that public policy is basically interdependent, framed both within national boundaries as abroad (Parsons, 1996), even getting to the extreme, Cao & Prakash (2011) notice, that national governments examine foreign policies and compete with each other in order not to be disadvantaged. ...
Research
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The growing urbanization process and the core characteristics of the information society have situated cities and their knowledge management capacities at the center of scientific and policy-making debate. The current project conceptualizes knowledge as a policy resource and focuses on the theoretical framework of policy transfer and combines it with theoretical insights on knowledge management. In light of the historic momentum knowledge management and cities are experiencing, specific and formally dedicated cities networks have been established with the purpose to structure knowledge exchange among urban communities. The current project sets out as research problem the importance of these networks for local governments interests; it undertakes this endeavor by identifying a recently established cities network to explore the production of learning and policy knowledge exchange through a specific empirical case: the City Protocol.
... This means that certification actually reduces the information asymmetry and hence acts as a signal of quality. Similar findings are supported by Cao and Prakash (2011) who have found growth of exports as a consequence of ISO adoption. But both of these studies have focused on manufacturing firms and products. ...
Article
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Signalling quality in the service domain and finding optimal strategies for the same have not been explored well in marketing literature. The study proposes a price–certification combination strategy to signal the service quality when the quality level remains unobserved by the consumers. Theoretical modelling has been done in a duopoly setting to determine the possible separating and pooling equilibriums when there is a possible long-term effect of low-quality belief. The separating equilibrium shows that the low-quality firm will not opt for certification and its price will depend on its quality distance from and the price of the high-quality firm. The high-quality firm’s certification costs will also depend on the quality distance of the two firms, its price level and the possible future effects of not participating in the certification programme. The range of possible certification costs of the high-quality firm increases as the future loss of not being certified increases. Moreover, as the quality difference between the firms increases, the high-quality firm can reduce its certification costs and after some level can actually signal only by its high price without any certification. The polling equilibrium of the analysis shows a Bertrand equilibrium, where both the firms set their price and certification costs to zero. The implications and future research directions are suggested in the article.
... If customers cannot differentiate between 'good' and 'bad' products, the good products will be driven out of the market (since customers are not willing to pay more due to lack of information) resulting in a smaller market with both buyer and seller adversely affected (Akerlof, 1970). Therefore, for markets to function properly, buyers and sellers are in constant search of screening mechanism to assess product quality (Cao and Prakash, 2010). ...
Article
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This paper investigates whether internationally recognized quality certifications can facilitate firms in developing countries to penetrate the export markets, a typical challenge owing mainly to information asymmetries on product quality. Applying a multi-level regression approach that controls for endogeneity to the 2006-2013 firmlevel and national-level data for 111 developing countries primarily from the World Bank Enterprise Survey, results indicated that adopting ISO certifications enable firms in developing nations to enter foreign markets. This underscores the importance of policymakers in developing countries to encourage their domestic firms to acquire internationally recognized certificates for both the firm's and the nation's growth.
... Pues bien, en la literatura especializada no existe un claro consenso a la hora de establecer cuáles son las razones explicativas principales de la gran heterogeneidad existente en el grado de penetración de las normas ISO 9000 en los países industrializados. Se subraya la importancia de la apertura del país a los mercados internacionales, los lazos comerciales de los países con otros paí ses en los que la certificación es un fenómeno importante o las presiones transnacionales en la cadena de suministro (Guler et al., 2002; Neumayer y Perkins, 2005; Corbett, 2006; Albuquerque et al., 2007; Cao y Prakash, 2011; Bodas e Iizukac, 2012). Con todo, las evidencias obtenidas hasta la fecha no resultan suficientes para explicar, por ejemplo , las diferencias de calado existentes en la intensidad de certificación entre los distintos países miembros de la UE. ...
... Corporations adopt voluntary frameworks to signal their CSR to external actors such as citizens, policymakers and NGOs (Cao and Prakash 2011). To measure CSR adoption, we follow established practice (Berliner andPrakash 2012, Lim andTsutsui 2012, van den Broek 2021) and use two widely endorsed global CSR frameworks. ...
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This paper explores the role of corporate social responsibility (CSR) as an element in a corporation’s political action repertoire. Previous research has studied lobbying and CSR as a distinct means by which corporations seek to manage their non-market environment. Analyzing CSR as a political activity, we argue that corporations engage in CSR for the same reasons that prompt them to engage in lobbying. More specifically, we expect corporations to adopt CSR frameworks that are suitable to enhance their reputation in a given political arena. To evaluate this argument, we analyze the lobbying and CSR behavior in the EU and USA of over 2000 corporations from around the world. Our results show that lobbying and adopting CSR frameworks can be predicted by similar empirical models. Moreover, controlling for common predictors and endogeneity, lobbying in the EU is associated with an increased likelihood of a corporation adopting an appropriate CSR framework. However, corporations that lobby in Washington DC become less likely to engage in CSR the more they spend on lobbying. These findings shed new light on the relationship between lobbying and CSR while highlighting important differences in corporate non-market behavior across political arenas.
... Or, an organization may compete statewide or nationally with other organizations of similar size or prestige (rather than with those that are geographically close) when trying to hire top executives, for example. A system in which organizations alter their policies or practices in response to competition from other organizations has been referred to as either "race to the top" or "race to the bottom" (Cao and Prakash 2011;Konisky 2008;Konisky 2009). ...
Article
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Interdependence in the decision-making or behaviors of various organizations and administrators is often neglected in the study of public administration. Failing to account for such interdependence risks an incomplete understanding of the choices made by these actors and agencies. As such, we show how researchers analyzing cross-sectional or time-series-cross-sectional (TSCS) data can utilize spatial econometric methods to improve inference on existing questions and, more interestingly, engage a new set of theoretical questions. Specifically, we articulate several general mechanisms for spatial dependence that are likely to appear in research on public administration (isomorphism, competition, benchmarking, and common exposure). We then demonstrate how these mechanisms can be tested using spatial econometric models in two applications: first, a cross-sectional study of district-level bilingual education spending and, second, a TSCS analysis on state-level healthcare administration. In our presentation, we also briefly discuss many of the practical challenges confronted in estimating spatial models (e.g., weights specification, model selection, effects calculation) and offer some guidance on each.
... Criminalization may constitute a signal about intent when there is little information about the actual quality of enforcement. Analogously, see the argument about signaling as competition in competitive markets where product information is poor in Cao and Prakash 2011. 38 Becker 1968. ...
Article
In the past few decades new laws criminalizing certain transnational activities have proliferated: from money laundering, corruption, and insider trading to trafficking in weapons and drugs. Human trafficking is one example. We argue that criminalization of trafficking in persons has diffused in large part because of the way the issue has been framed: primarily as a problem of organized crime rather than predominantly an egregious human rights abuse. Framing human trafficking as an organized crime practice empowers states to confront cross-border human movements viewed as potentially threatening. We show that the diffusion of criminalization is explained by road networks that reflect potential vulnerabilities to the diversion of transnational crime. We interpret our results as evidence of the importance of context and issue framing, which in turn affects perceptions of vulnerability to neighbors' policy choices. In doing so, we unify diffusion studies of liberalization with the spread of prohibition regimes to explain the globalization of aspects of criminal law.
... With bounded rationality, importers will look for proxies to assess product quality. Exporters that can provide quality assurance, for example, via certification, gain a competitive edge (Cao and Prakash, 2011). ...
Article
The empirical evidence that institutional differences across countries affect bilateral trade is robust. The crucial question remains how countries can enhance trade amid these differences. In this paper, we measure the degree to which governance and institutions differ between countries as “governance distance”. Using a sample of EU/EFTA imports, we examine how adopting private agrifood safety standards modify the effect of governance distance on exports of fruits and vegetables, in particular apples, bananas and grapes within a structural gravity framework. Our results show that while increasing governance distance hinders bilateral trade, the interaction of standards and the governance distance is positively associated with exports, hence partially offsetting the direct trade–inhibiting effects of the latter. GlobalGAP certified countries see the trade‐inhibiting effects of governance distance on their exports reduced by about 50%, ceteris paribus. This article is protected by copyright. All rights reserved
... The purpose of an international standard is to provide clear identifiable references acknowledged worldwide and, thus, indirectly foster international trade by signaling product quality, reliability, and the firm's values and sound business management acumen [41,42]. Notice that certification does not guarantee that the firm is better or more efficient than its competitors. ...
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In the last decades, the academic literature has devoted considerable attention to the determinants of export performance. In result of those research efforts in identifying and examining the influence of such determinants, the literature presents a wide set of variables associated with higher levels of exports. This paper provides a contribution to that literature by trying to evidence the impact of firm certification—namely, in terms of the firm’s quality, environmental, and health and safety management systems—on export performance. The paper analyses an unbalanced sample of 1684 Portuguese industrial SMEs for the period 2010 to 2020, uses other determinants of internationalization as control variables, and explores the possibility of moderating effects on the certification–internationalization relationship. Two alternative econometric methods are employed: a random-effects model and a Tobit model. The results evidence the importance for firms, especially in the low or medium–low technology sectors, to have certain ISO certifications in order to further develop their export activities and increase their foreign acceptance, particularly in the European Union markets. Further, certification seems to reinforce the positive relation between firm size and internationalization.
... Building on this approach, Siciliano and Thompson (2018) constructed a weight matrix that adjusts the relative influence of any given alter's organizational commitment based on the strength of the ego's connection to that alter relative to the strength of the ego's other connections. An alternative way, based on the structural equivalence mechanism, is to look at whether two actors have the same patterns of connections with other actors (Cao & Prakash, 2011). In the context of international trade, competing actors will tend to emulate each other if they have the same patterns of connections with others because they want to be perceived to be at least equally legitimate. ...
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This article contributes to the network effectiveness literature by identifying the theoretical mechanisms and network measures scholars in public administration and policy use to draw inferences between network structures and network effects. We conducted a systematic review of empirical network effects research in 40 journals of public administration and policy from 1998 to 2019. We reviewed and coded 89 articles and described the main social theories used in the network effectiveness literature and the associated mechanisms that translate network structures to network effects. We also explain how scholars operationalize those theoretical mechanisms through network measures. Overall, our findings reflect that there is a limited use of social theories for the explanation of network effects and in some cases, there is an inconsistent use of network measures associated with theories. Moreover, we identify the main challenges related to network effects, including the difficulty of isolating specific mechanisms related to a particular social theory, the use of network structures both as a mechanism and as a measure, and the lack of data to examine network dynamics and coevolution.
... These private governance initiatives allowed firms, NGOs and developed country governments to address some of the negative consequences of economic integration, without significantly limiting its scope (Bartley 2007;Fransen 2011;Knudsen and Moon 2017). 1 Some brands, including Knights Apparel, Apple, Levi Strauss & Co. and Nike, sought to define themselves as leaders in responsible production (Bartley et al. 2015;Berliner et al. 2015b). Firms based in developing countries used participation in global voluntary schemes to signal commitments to protecting workers and the environment (Berliner and Prakash 2014;Cao and Prakash 2011;Potoski and Prakash 2009). Indeed, Distelhorst and Locke (2018) find that manufacturing firms' compliance with labor and environmental standards is associated with a significant increase in purchases by supply-chain partners (also see Görg et al. 2016). 2 Research on effectiveness of these voluntary private governance schemes typically finds that they fall short in protecting workers, for a variety of reasons (Applebaum and Lichtenstein 2016, Berliner and Prakash 2015). ...
Article
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Most research on private governance examines the design and negotiation of particular initiatives or their operation and effectiveness once established, with relatively little work on why firms join in the first place. We contribute to this literature by exploring firms’ willingness to participate in two recent, high-profile private initiatives established in the aftermath of the Rana Plaza disaster in the Bangladesh ready-made garment (RMG) sector: the Accord on Building and Fire Safety and the Alliance for Worker Safety in Bangladesh. Using novel shipment-level data from U.S. customs declarations, we generate a set of firms that were “eligible” to join these remediation initiatives. We are able to positively attribute only a minority of US RMG imports from Bangladesh to Accord and Alliance signatories. Firms with consumer-facing brands, publicly-traded firms, and those importing more RMG product from Bangladesh were more likely to sign up for the Accord and Alliance. Firms headquartered in the USA were much less likely to sign onto remediation plans, especially the Accord.
... Sometimes the theoretical basis is still primarily at the firm level, as in the stream of work that takes an institutional perspective to determine whether standards diffuse across countries due to coercive, normative, and mimetic forces (Guler et al., 2002). Other studies take a public policy perspective and focus on the role of governments, trade relations and country regulation and their impact on the diffusion (Cao and Prakash, 2011). The studies on ISO 14000 enhance the trade focus already present in work on ISO 9000 by introducing a number of broader factors, such as the impact of NGOs and environmental activism of citizens on adoption (Potoski and Prakash, 2004)) or the role of cultural similarity between countries (Albuquerque et al., 2007). ...
Book
The literature on the ISO standards is multidisciplinary and scattered around a broad collection of journals, making it near-impossible to get an overview of what we do and do not know about Management Systems Standards. This monograph fills that gap by providing an integrated perspective on the entire body of academic literature related to ISO 9000, ISO 14000, and related standards. The aim is to provide an overview of the academic empirical literature on ISO 9000, ISO 14000 and related management systems standards to improve the quality, relevance and coherence of that literature. The authors provide an overview of the design, governance and evolution of the ISO 9000 and 14000 standards. They then offer a very short chronological overview of the evolution of research into ISO management standards. The monograph contains a section "about this monograph," which provides details about the methodology we followed, and refers to the intended audience and novelty of the work.
... A formidable body of scholarship has examined policy diffusion, both internationally (Acharya, 2004) and within the U.S. (Shipan & Volden, 2008). Extant literature has assessed the dynamics that underlie diffusion, such as learning, emulation, competition, and sometimes coercion, as well as the factors that influence diffusion, including geography, ideology, and interest groups (Cao & Prakash, 2011;Graham et al., 2013). A surprisingly small amount of attention has been devoted to the role that the "characteristics of the policies themselves play in determining the speed of diffusion and the mechanisms through which diffusion occurs" (Makse & Volden, 2011, p. 108). ...
Article
en Human trafficking is a compelling and persistent problem that has attracted a great amount of attention among political leaders, government institutions, NGOs, and nonprofit organizations. While there is consensus that trafficking necessitates a multipronged policy response commonly known as the “3Ps” (prosecution, protection, and prevention), anti-trafficking policies diffused across U.S. states in a piecemeal fashion. In this paper, we explore the fragmented diffusion of the different types of anti-trafficking laws. Drawing from social constructivist approaches, we posit that the differential diffusion rates depend on the social construction of the target population and policy intention of the law. Using event history analysis, we examine the diffusion of 14 types of human trafficking laws throughout the U.S. during 2003–2013. We find strong support for our hypotheses and show substantial differences in the rates at which prosecution, protection, and prevention-related laws diffuse. 摘要 zh 人口贩运是一个迫切且持续的问题,它已吸引了政治领导者、政府机构、非政府组织和非营利组织的大量关注。尽管存在共识认为,非法贩运需要多方面的政策响应,即公认的“3Ps”(起诉、保护和预防),但反贩运政策在美国各州以零散的方式扩散。本文中,我们对不同类型的反贩运法的分散式扩散加以探究。基于社会建构主义方法,我们假设,差异化的扩散率取决于目标群体的社会建构和法律的政策意图。通过事件史分析,我们检验了2003–2013年间美国14种反人口贩运法的扩散。我们的研究发现强烈支持所提出的假设,并发现起诉法、保护法和预防法的扩散速率存在显著差异。 Resumen es La trata de personas es un problema persistente y apremiante que ha atraído una gran cantidad de atención entre líderes políticos, instituciones gubernamentales, ONG y organizaciones sin fines de lucro. Si bien existe consenso en que la trata de personas necesita una respuesta política de múltiples frentes comúnmente conocida como las "3P" (enjuiciamiento, protección y prevención), las políticas contra la trata de personas se difundieron en los estados de EE. UU. De manera fragmentada. En este artículo, exploramos la difusión fragmentada de los diferentes tipos de leyes contra la trata. Partiendo de enfoques constructivistas sociales, postulamos que las tasas de difusión diferencial dependen de la construcción social de la población objetivo y de la intención política de la ley. Utilizando el análisis del historial de eventos, examinamos la difusión de 14 tipos de leyes sobre la trata de personas en los EE. UU. Durante 2003–2013. Encontramos un fuerte apoyo para nuestras hipótesis y mostramos diferencias sustanciales en las tasas de difusión de las leyes relacionadas con el enjuiciamiento, la protección y la prevención.
... Moreover, other studies highlight that ISO 9000 certification could signal a company's management system's quality and reduce the consumers' quality difference (Cao and Prakash 2011;Hudson and Jones 2003). Thus, the quality standard might enhance chances for an acceptance of new product and service of firms. ...
Article
The study examines how quality certification and firm-level attributes (firm age and size) support firms' innovative ecosystems that use trademarks in developing countries. The study combines data from the World Bank Enterprise Survey (WBES) and Innovation Follow-up Surveys (IFS) for 11 countries to test the hypotheses. The estimations are performed using an instrumental variable treatment model with direct-2sls for the primary analysis and a Tobit model for the robustness checks. Our findings indicate a positive effect of quality certification and trademark on product innovation. There is a synergistic effect of quality certification and trademark on product innovation. Similarly, firm age and size significantly and positively moderate the link between a trademark and product innovation. Interestingly, in the multi-level estimations, we still find the synergistic effect of quality certification and trademark on product innovation to hold. Our findings provide accommodating arguments for the complementary utilization of trademark and quality certification to support the focal firms' product innovation. The results also show that firm-level attributes (firm age & size) constitute essential elements for firms to gain from a trademark possession to enhance performance.
... However, the adoption of a management system standard and particularly seeking certification is time consuming and costly, especially regarding the costs for external auditors [46]. These costs involve the setting up of a management system, the involvement of consultants, and, in the case of additional certification, the cost of external auditing [47]. ...
Article
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In the light of digitalization and recent EU policy initiatives, information is an important asset that organizations of all sizes and from all sectors should secure. However, in order to provide common requirements for the implementation of an information security management system, the internationally well-accepted ISO/IEC 27001 standard has not shown the expected growth rate since its publication more than a decade ago. In this article, we apply web mining to explore the adoption of ISO/IEC 27001 through a series of 2664 out of more than 900 000 German firms from the Mannheim Enterprise Panel dataset that refers to this standard on their websites. As a result, we present a ‘‘landscape’’ of ISO/IEC 27001 in Germany, which shows that firms not only seek certifications themselves but often refer on their websites to partners who are certified instead. Consequently, we estimate a probit model and find that larger and more innovative firms are more likely to be certified to ISO/IEC 27001 and that almost half of all certified firms belong to the information and communications technology (ICT) service sector. Based on our findings, we derive implications for policy makers and management and critically assess the suitability of web mining to explore the adoption of management system standards.
... In the case of exports, we argue that intangibles such as InfoSec are subject to adverse selection in countries, where consumers need signals to assess the quality of products and services (Anderson and Moore, 2006). Certificates such as ISO/IEC 27001 might be a means for companies to signal certain attributes (Stiglitz, 2000;Blind and Mangelsdorf, 2016), to mitigate information asymmetries (Cao and Prakash, 2011) and could in turn impact trade (Lim and Prakash, 2017;Blind et al., 2018). However, future studies could also consider bilateral trade flows and certification figures in partner countries to investigate possible cohesion in trade effects (Guler et al., 2002). ...
Conference Paper
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In the wake of digitalization, organizations are increasingly exposed to risks associated with security breaches and must take measures to preserve the confidentiality, integrity, and availability of information, and to ensure business continuity. The international standard ISO/IEC 27001 assists organizations in setting up, maintaining and continuously improving their information security management systems. However, despite high growth rates, its international diffusion rates are quite heterogeneous. This paper explores why the diffusion of the international management system standard ISO/IEC 27001 differs across countries. We classify the adoption of ISO/IEC 27001 as a ‘preventive organizational innovation’ and draw from diffusion studies of other management system standards and information security research to develop a set of hypotheses. These relate to the impact of cultural dimensions and national ICT development. We use a negative binomial regression model with panel data covering 57 countries over a 12-year period from 2006 to 2017 to test our hypotheses. We find that the cultural dimensions future orientation, power distance, and institutional collectivism as well as high ICT development are driving factors for the diffusion of ISO/IEC 27001. We derive policy recommendations and avenues for future research.
... An additional source of efficiency gains comes from the reduction of fixed and variable transaction costs, between incompletely informed parties, obtained by respecting internationally agreed norms in the production and delivery process of products with a foreign destination. Finally, from a financial perspective, 2 According to Cao and Prakash (2011), the cost of a certification audit might fluctuate from 10,000 dollars to even 1 million dollars, depending on the companies' characteristics. 3 This is a common issue in the literature on certifications, as also recognized by Tian and Lin (2019). ...
Article
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Environmental and quality management practices are extremely relevant for a firm’s development and international recognition. However, dealing with the standards required and obtaining an international standards certification involves costs for employee training, procedure documents, and third-party audit fees that must be paid in advance by companies. This paper attempts to analyze the impact of difficulties in accessing external financing on the likelihood of possessing the standards and the certification, for firms based in 64 countries. A crucial aspect in uncovering such a causal effect is the potential endogeneity of financial constraints with respect to international standards certification. I address this issue by adopting a bivariate probit model and a set of firm-level instrumental variables. The empirical results showed that financially constrained firms were less likely to possess the standards required and the associated international certification, and that this impact was more relevant for small and young firms.
Chapter
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The integration of the world economy and the internationalization of companies have resulted in consumers' demand for high quality goods. Standards have emerged as a way of reducing the information asymmetries that consumers face when purchasing a product, and have gained importance in the processed food industry as they allow them to assess the quality of goods and may influence the export performance of certified firms (An & Maskus, 2009). Certifications may act as promoters of international trade, but they can also constitute a barrier when the costs associated with the certification process exceed the potential benefits (Jarasueiya et al., 2006). The present study aims to compare the export performance of certified vs. non-certified firms in the Colombian processed food industry. A Mann-Whitney Test was used to analyze the difference of exports value for the selected companies, and then, non-structured interviews to the quality managers of these companies were conducted to gain greater understanding about the impact of standards certifications on their export performance.
Article
Corporate social responsibility (CSR) has steadily grown in importance. We show government regulation on corporate reporting of CSR, aimed to spur its growth and increase transparency, has grown in tandem. Such reporting regulation is more readily observable than CSR itself and can be used as a proxy for the latter. We show that larger economies with higher institutional capacity find it easier to develop reporting regulations, and that international influences and local pollution increase concerns are important contributing factors. We show that such regulation also increases CSR, even after accounting for common unobserved factors that may affect both.
Chapter
Fifteen years ago the concept of “conflict commodities” did not exist, and no one demanded that corporations prevent the resources they produced or used from financing war and corruption. Precious commodities – gems, gold, drugs – had long been used by both rebels and governments to hire soldiers, buy weapons, and fund Swiss bank accounts. But, until recently, no one saw this trade as a significant contributor to conflict, and no one linked it to corporate social responsibility (CSR) or sought to regulate it as a way to promote peace and good governance. After the end of the Cold War, however, transnational activists launched successful campaigns that publicized the connection between resource wealth and civil war and promoted a regulatory agenda that spawned multiple governance initiatives in the past fifteen years that seek to ensure that the exploitation of natural resource wealth does not finance conflict. These initiatives are some of the latest in the evolution of global CSR, reaching into areas that had previously been considered the sole responsibility of states. Issues of war and peace are the very stuff of traditional "high politics," in which powerful states establish the rules of the game. Until recently, few contemporary scholars of international relations focused their attention on corporate behavior as an independent factor in war, and still fewer identified firms as a potential instrument of peace. As Meyer, Pope, and Isaacson demonstrate (this volume), transnational corporations have become subject to increased pressure over time for legitimation and accountability across a wide range of issues and problems. The perception that corporations are complicit in violence and bloodshed in areas of the world remote from their main markets has energized activists, consumers, and citizens; pushed firms to adopt new practices; and led governments to offer new regulations that respond to these demands. The regulation of conflict minerals is part of a broader effort by activists and policy makers to address conflict both as a matter for corporate responsibility and as a regulatory issue, and not one that is restricted to traditional international diplomacy among sovereign states.
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On December 14, 2010, twenty-nine people perished in a factory fire in Dhaka, Bangladesh. At the time of the fire, the factory, “That's It Sportswear,” was subcontracting for several well-known brands and retailers, including Gap, J.C. Penney, and Abercrombie & Fitch. In the aftermath of the tragedy, activists called on these and other leading American and European companies to address the high incidence of fire-related workplace deaths occurring annually in Bangladesh. On March 21, 2012, one of the brands that had been placing orders with the factory at the time of the fire, Philips Van Heusen (PVH), signed a contractual, two-year landmark fire safety agreement. Under this agreement, which had been negotiated with local and international nongovernmental organizations (INGOs) and trade unions, Philips Van Heusen committed to spending at least $1 million on improving worker safety via independent inspection of its Bangladeshi suppliers, disclosure and remediation of inspection results, and the creation of worker-led health and safety committees in all supplier factories. Given the lack of an equity relationship between PVH and its subcontractors, and in the absence of any legal obligation on the part of PVH toward the workers employed by its suppliers, how do we explain PVH's voluntary decision to make these commitments? The Bangladesh fire safety agreement is an outgrowth of the phenomenon analyzed in this chapter, which we call “supply chain corporate social responsibility (CSR)”: the discourses and practices by which firms voluntarily pledge to guarantee labor standards in the production facilities of independent suppliers. At one level, this phenomenon is not new; since the 1960s, there have been numerous initiatives to develop voluntary schemes addressing the social and developmental implications of multinational corporations and their overseas subsidiaries, particularly in the Global South. These include the OECD Guidelines for Multinational Enterprises (1976), the International Labour Organization (ILO) Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (1977), and the United Nations' decade-long project to draft a code of conduct for multinational corporations.
Chapter
The concept of corporate social responsibility (CSR) is closely tied to the rise of the public corporation as a central institution of Western capitalism. CSR promises to ameliorate the potential negative social impact of the pursuit of profit by appealing to norms of stewardship, responsibility, and charity (see, e.g., Freeman and Liedtka 1991; Jacoby 1998). The idea of CSR evolved in the specific historical context of twentieth century North American market liberalism and, in the postwar period, became increasingly defined in relation to the rising legal doctrine and normative discourse of shareholder primacy. CSR retains the voluntaristic and contractarian premises of liberal market capitalism in that it proposes moral and normative rather than regulatory checks on corporate behavior. Notwithstanding its idiosyncratic origins, the idea of CSR has, since the 1980s, become part of an international discourse on the role of corporations in society that is promoted by global elites and other agents of world society, such as multinational corporations, nongovernmental organizations (NGOs) like the Global Reporting Initiative (GRI), intergovernmental organizations such as the Organisation for Economic Cooperation and Development (OECD) and United Nations, and civil society and social movement groups (Smith 2001; Lim and Tsutsui 2012; Zhang and Luo 2013). An important contemporary motivator and justification for corporate CSR efforts is the concept of sustainability that was theorized in the international development community. Sustainability justifies CSR in terms of self-interest rather than on strictly normative-moral grounds. Proponents of sustainability argue that contributing to social well-being and environmental preservation is necessary for the long-term realization of economic goals (Brundtl and and World Commission on Environment and Development 1987; United Nations Secretary-General's High Level Panel on Global Sustainability 2012). Sustainability as an ideological underpinning for CSR practices therefore goes beyond the moral discourse of traditional CSR to provide a theorization for CSR that draws on scientific and instrumentally rational forms of authority (Meyer, Boli, Thomas, and Ramirez 1997).
Article
The article explores the notion of liquid authority by examining the ways in which the central organisations in three transnational regulatory governance regimes do or do not attempt to establish interpretive control over the norms that they issue: the International Accounting Standards Board (IASB), the International Organisation of Standardisation (ISO), and the Forest Stewardship Council (FSC). The need to ‘solidify’ their authority ranges across their regulatory functions; this article focuses on just one of those functions: interpretation. In focusing on how these regulators seek to exercise interpretive control, the article seeks to show how liquid authority can crystallise. Further, the article develops the notion of liquid authority by arguing that the establishment, exercise and continual maintenance of authority in transnational regulatory regimes, which are characterised by liquid authority as they lack a formal, legal base, are fundamentally linked to the issue of legitimacy. It argues in turn that legitimacy, and thus authority, is endogenously produced, a fact which exogenous, normative assessments of legitimacy can overlook. The article argues that regulators play an active role in their own legitimation – in creating, exercising and maintaining their legitimacy, and in turn their authority, and that their success or otherwise in doing so is linked in part to their functional effectiveness, but that transnational regulators face a legitimacy paradox: they depend in part on such effectiveness for their legitimacy. The article supplements the ‘anatomical’ analysis of liquid authority with an understanding of the physiology of legitimation.
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Das fünfte Kapitel beschreibt die historische Entwicklung des Fair Trade Feldes in der Schweiz sowie die Nutzung und Rolle von Standards bei der Realisierung von gerechten Nord-Süd Handelsbeziehungen. Die empirischen Ergebnisse werden entlang der identifizierten Untersuchungseinheiten vorgestellt. Im ersten Teil wird die Vorgeschichte des standardisierten Fairen Handels (1973-1992) nachgezeichnet.
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Over the past years, we have witnessed the development of a variety of voluntary transnational corporate social responsibility (CSR) initiatives at various levels. As other chapters in this volume have documented, many companies have joined these initiatives. This chapter focuses on the following question: why do companies decide to join them? To answer this question, we take up the case of the largest initiative among them, the United Nations Global Compact (UNGC), and investigate its corporate signatories in Japan. Spearheaded by then UN Secretary-General Kofi Annan, the UNGC was launched in July 2000. It can be depicted as a mechanism to disseminate an idea of global corporate citizenship and to encourage companies to voluntarily implement principles in the fields of human rights, labor, environment, and anticorruption through learning processes. The UNGC is based on the "leadership model," which means that only the signature of top management and support from the corporate board are required for a company to become a signatory. The number of UNGC participants has increased steadily over the past years from about fifty to more than 10,000, including more than 7,000 companies. There have been discussions on why companies join the UNGC and what impacts, if any, its membership might have on them. Earlier critics of the UNGC, for example, argued that its signatories were merely "bluewashing" (i.e., wrapping their wrongdoings with the UN blue flag and enhancing their reputation) and that, lacking the necessary "teeth" to punish noncompliance, UNGC membership would not affect their behavior in any way (Bruno and Karliner 2000; for a summary of arguments against the UNGC, see Rasche 2012). Proponents of the UNGC, on the other hand, have argued that the UNGC is "a necessary supplement" to legal regulations and that its membership will encourage learning and collective action (Rasche 2009; see also Kell 2013). Despite the heated discussion by both practitioners and academics on this topic, they have mostly based their arguments on assumed motives of companies.
Article
The product composition of bilateral trade encapsulates complex relationships about comparative advantage, global production networks, and domestic politics. Despite the availability of product‐level trade data, most researchers rely on either the total volume of trade or certain sets of aggregated products. In this article, we develop a new dynamic clustering method to effectively summarize this massive amount of product‐level information. The proposed method classifies a set of dyads into several clusters based on their similarities in trade profile—the product composition of imports and exports—and captures the evolution of the resulting clusters over time. We apply this method to two billion observations of product‐level annual trade flows. We show how typical dyadic trade relationships evolve from sparse trade to interindustry trade and then to intra‐industry trade. Finally, we illustrate the critical roles of our trade profile measure in international relations research on trade competition.
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The discourse and practice of corporate social responsibility (CSR) have become standard features of consumer products industries in affluent countries. Mega-retailers and brands from Apple to Ikea to Zara have developed voluntary standards, ethical sourcing guidelines, and benchmarking systems for the social and environmental impacts of their supply chains. New forms of auditing have been developed to provide assurances that can be included in “sustainability reports” or communicated through certification and labeling. Numerous voluntary programs seek to oversee and guide the CSR practices of firms and add credibility to their assurances. Many of these initiatives first gained traction in the apparel and footwear industry, where responses to anti-sweatshop activism in the 1990s made “codes of conduct” and factory monitoring nearly ubiquitous among large, branded firms. As these activities have expanded and spread to other industries (e.g., electronics, home furnishings), their limitations have also become clearer: labor-related CSR initiatives have failed to transform “low road” models of global production or even to greatly reduce allegations of sweatshops and labor rights abuses. The list of reasons for this is long and, by now, well-known: auditing is often done poorly and falls prey to falsification by resistant factory managers and coached responses from workers (Pun 2005; Ethical Trading Initiative 2006; Frank 2008; China Labor Watch 2009). Even when imperfect auditing turns up significant problems, business often goes on as usual, since compliance ratings are only loosely coupled with sourcing decisions (Egels-Zanden 2007; Locke, Amengual, and Mangla 2009). Improvements tend to be marginal and fail to shift fundamental power dynamics within firms or within the industry (Esbenshade 2004; Mamic 2004; Barrientos and Smith 2007). More broadly, voluntary CSR commitments and programs lack the capacity – and often the willingness – to force change upon recalcitrant actors. Many CSR programs are little more than “fairwash,” and this problem is made worse by the proliferation of programs and subsequent confusion among consumers (Seidman 2007).
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The global expansion of corporate social responsibility (CSR) in recent decades has been spectacular. Although much debate continues on the content and efficacy of CSR, the notion that corporations are accountable for the social and environmental consequences of their activities has become widely accepted in the worlds of business, government, and civil society. Global CSR frameworks such as the United Nations Global Compact (UNGC) and the Global Reporting Initiative (GRI) include thousands of business participants across multiple countries and industries and attract wide support from governments and civil society organizations. Corresponding to the rising global profile of CSR, scholarly attention to CSR has grown tremendously (Haufler 2001; Hoffman 2001; Hoffman and Ventresca 2002; Vogel 2005; Prakash and Potoski 2006; May, Cheney, and Roper 2007; Potoski and Prakash 2009; Soule 2009; Smith et al. 2010; Utting and Marques 2010; Crouch and Maclean 2011; Lindgreen et al. 2012). Building on this literature, this volume examines two key issues in contemporary CSR activities. The first is the global nature of contemporary CSR efforts. Many CSR debates and activities today assume that CSR entails global problems that require global solutions. Through what historical and institutional processes have we come to accept this global approach to CSR? How did different actors engage in the politics of legitimation and contestation in the evolution of CSR in international society? How have global and national forces combined to construct specific fields of CSR, such as cross-national supply chains, sustainability, and conflict minerals? Second, the global expansion of CSR ideas and practices exerts considerable pressure on corporations to take a position. What factors shape their reaction to this growing call for CSR action? Why have some corporations joined the global CSR movement while others have resisted or rejected it? If corporations participate in this CSR movement, do they gain anything from their efforts, or do they become targets of further criticism? What impact do these global pressures ultimately have on actual CSR outcomes? This volume addresses these questions using rich historical data, innovative discourse analysis, in-depth interviews, and sophisticated quantitative methods.
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Reporting corporate social responsibility (CSR) initiatives has become standard practice among large corporations in recent times. Worldwide, the number of top 250 companies that issued CSR reports has increased from 45 percent in 2002 to nearly 80 percent in 2008. In the United States, the number of top-100 companies that publish a sustainability report increased from 36 in 2002 to 78 in 2008. Many of the sustainability reports conform to the guidelines created by nonprofit organizations such as the United Nations Global Compact (UNGC), the Global Reporting Initiative (GRI), or the World Business Council on Sustainable Development (WBCSD). Indeed, the number of US companies that publish sustainability reports that conform to the GRI's guidelines increased from 24 in 2003 to 183 in 2010. Academic studies on CSR have also proliferated during the last two decades (Hart and Ahuja 1996; Russo and Fouts 1997; Dowell, Hart, and Yeung 1999; Andersson and Bateman 2000; Bansal and Roth 2000; Konar and Cohen 2001; Jiang and Bansal 2003; Kanter 2003; Porter and Kramer 2003; Toffel 2005; Potosky and Prakash 2005; Vogel 2006; Bullis and Ie 2007; Cetindamar and Husoy 2007; Etzion 2007; Delmas and Montiel 2008; Janney, Dess, and Forlani 2009; Runhaar and Lafferty 2009; Chen and Delmas 2011; Delmas and Montes-Sancho 2011). Many of these studies focus on firms' environmental performance (EP) because, as Vogel (2006: 133) points out, “no dimension of corporate social responsibility has attracted as much attention from the business community as environmental protection. Since the mid-1990s, hundreds of corporations, both large and small, have initiated or expanded programs and policies to reduce their environmental impact and made 'sustainability' part of their professed business mission." Numerous studies examine the relationship between environmental and financial corporate performance and argue that doing the right thing for the environment provides a competitive advantage (Hart and Ahuja 1996; Russo and Fouts 1997; Dowell, Hart, and Yeung 1999; Konar and Cohen 2001; Porter and Kramer 2003; Margolis and Walsh 2003).
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Contents BOLI JOHN THOMAS GEORGE M. Part One: 1. BOLI JOHN THOMAS GEORGE M. 2. BOLI JOHN LOYA THOMAS A. LOFTIN TERESA Part Two: 3. FRANK DAVID JOHN HIRONAKA ANN MEYER JOHN W. SCHOFER EVAN TUMA NANCY BRANDON 4. BERKOVITCH NITZA 5. KIM YOUNG S. 6. FINNEMORE MARTHA Part Three: 7. LOYA THOMAS A. BOLI JOHN 8. BARRETT DEBORAH FRANK DAVID JOHN 9. CHABBOTT COLETTE 10. SCHOFER EVAN BOLI JOHN
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With the publication of his best-selling books "Competitive Strategy (1980) and "Competitive Advantage (1985), Michael E. Porter of the Harvard Business School established himself as the world's leading authority on competitive advantage. Now, at a time when economic performance rather than military might will be the index of national strength, Porter builds on the seminal ideas of his earlier works to explore what makes a nation's firms and industries competitive in global markets and propels a whole nation's economy. In so doing, he presents a brilliant new paradigm which, in addition to its practical applications, may well supplant the 200-year-old concept of "comparative advantage" in economic analysis of international competitiveness. To write this important new work, Porter and his associates conducted in-country research in ten leading nations, closely studying the patterns of industry success as well as the company strategies and national policies that achieved it. The nations are Britain, Denmark, Germany, Italy, Japan, Korea, Singapore, Sweden, Switzerland, and the United States. The three leading industrial powers are included, as well as other nations intentionally varied in size, government policy toward industry, social philosophy, and geography. Porter's research identifies the fundamental determinants of national competitive advantage in an industry, and how they work together as a system. He explains the important phenomenon of "clustering," in which related groups of successful firms and industries emerge in one nation to gain leading positions in the world market. Among the over 100 industries examined are the German chemical and printing industries, Swisstextile equipment and pharmaceuticals, Swedish mining equipment and truck manufacturing, Italian fabric and home appliances, and American computer software and movies. Building on his theory of national advantage in industries and clusters, Porter identifies the stages of competitive development through which entire national economies advance and decline. Porter's finding are rich in implications for both firms and governments. He describes how a company can tap and extend its nation's advantages in international competition. He provides a blueprint for government policy to enhance national competitive advantage and also outlines the agendas in the years ahead for the nations studied. This is a work which will become the standard for all further discussions of global competition and the sources of the new wealth of nations.
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When a model for panel data includes lagged dependent explanatory variables, then the habitual estimation procedures are asymptotically valid only when the number of observations in the time dimension (T) gets large. Usually, however, such datasets have substantial sample size in the cross-section dimension (N), whereas T is often a single-digit number. Results on the asymptotic bias (N → ∞) in this situation have been published a decade ago, but, hence far, analytic small sample assessments of the actual bias have not been presented. Here we derive a formula for the bias of the Least-Squares Dummy Variable (LSDV) estimator which has a approximation error. In a simulation study this is found to be remarkably accurate. Due to the small variance of the LSDV estimator, which is usually much smaller than the variance of consistent (Generalized) Method of Moments estimators, a very efficient procedure results when we remove the bias from the LSDV estimator. The simulations contain results for a particular operational corrected LSDV estimation procedure which in many situations proves to be (much) more efficient than various instrumental variable type estimators.
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We use panel data on ISO 9000 quality certification in 85 countries between 1993 and 1998 to better understand the cross-national diffusion of an organizational practice. Following neoinstitutional theory, we focus on the coercive, normative, and mimetic effects that result from the exposure of firms in a given country to a powerful source of critical resources, a common pool of relevant technical knowledge, and the experiences of firms located in other countries. We use social network theory to develop a systematic conceptual understanding of how firms located in different countries influence each other's rates of adoption as a result of cohesive and equivalent network relationships. Regression results provide support for our predictions that states and foreign multinationals are the key actors responsible for coercive isomorphism, cohesive trade relationships between countries generate coercive and normative effects, and role-equivalent trade relationships result in learning-based and competitive imitation.
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Systems of private regulation based on certification have recently emerged to address environmental issues in the forest products industry and labor issues in the apparel industry. To explain why the same regulatory form has emerged across these fields, the author uses a historical and comparative case study approach, closely examining early moments and paying attention to “roads not taken.” Two types of factors led to the initial emergence of private certification: (1) social movement campaigns targeting companies and (2) a neo-liberal institutional context. The analysis shows specific ways in which these factors led states, nongovernmental organizations, and companies to build or support certification associations.
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This paper relates quality and uncertainty. The existence of goods of many grades poses interesting and important problems for the theory of markets. On the one hand, the interaction of quality differences and uncertainty may explain important institutions of the labor market. On the other hand, this paper presents a struggling attempt to give structure to the statement: “Business in under-developed countries is difficult”; in particular, a structure is given for determining the economic costs of dishonesty. Additional applications of the theory include comments on the structure of money markets, on the notion of “insurability,” on the liquidity of durables, and on brand-name goods.
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List of tables and figures Preface 1. Introduction 2. Politics, policy and performance 3. Market integration and domestic politics 4. Economic policy 5. Economic performance 6. The 1990s and beyond Notes References Index.
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ABSTRACT ,,This paper demonstrates that the conditional negative binomial model for panel data, proposed by Hausman, Hall and Griliches (1984), is not a true fixed-effects method. This method—which has been implemented in both Stata and LIMDEP—does not, in fact, control for all stable covariates. Three alternative methods,are explored. A negative multinomial model yields the same estimator as the conditional Poisson estimator and, hence, does not provide any additional leverage for dealing with overdispersion. On the other hand, a simulation study yields good results from applying an unconditionalnegative binomial regression estimator with dummy variables to represent the fixed effects. There is no evidence for any incidental parameters bias in the coefficients, and downward bias in the standard error estimates can be easily and effectively corrected using the deviance statistic. Finally, an approximate conditional method is found to perform at about the same level as the unconditional estimator. 3
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This article examines the proposition that MNCs from a particular country are likely to exhibit profile similarities that are distinct from those of MNCs emanating from another country due to differences in home country factors. We call this “country of origin effect” (COE). A generalized framework is presented briefly explaining the nature of relationships among various COE elements that influence MNC strategy. A number of research propositions are offered that postulate the presumed effect of COE elements on MNC strategy and competitive behavior. Finally, suggestions are made as to the implications of this avenue of enquiry for further research as well as guide for management action.
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Globalization critics argue that international trade spurs a race to the bottom among national environmental standards. ISO 14001 is the most widely adopted voluntary environmental regulation which encourages firms to take environmental action beyond what domestic government regulations require. Drawing on a panel study of 108 countries over seven years, we investigate conditions under which trade linkages can encourage ISO 14001 adoption, thereby countering environmental races to the bottom. We find that trade linkages encourage ISO 14001 adoption if countries' major export markets have adopted this voluntary regulation.
Book
introduction to social networks, interesting the centrality chapter.
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Two classes of network models are used to reanalyze a sociological classic often cited as evidence of social contagion in the diffusion of technological innovation: Medical Innovation. Debate between the cohesion and structural equivalence models poses the following question for study: Did the physicians resolve the uncertainty of adopting the new drug through conversations with colleagues (cohesion) or through their perception of the action proper for an occupant of their position in the social structure of colleagues (structural equivalence)? The alternative models are defined, compared, and tested. Four conclusions are drawn: (a) Contagion was not the dominant factor driving tetracyclene's diffusion. Where there is evidence of contagion, there is evidence of personal preferences at work.
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The view that nations compete against each other like big corporations has become pervasive among Western elites--many of whom are in the Clinton administration. As a practical matter, however, the doctrine of "competitiveness" is flatly wrong. The world's leading nations are not, to any important degree, in economic competition with each other. Nor can their major economic woes be attributed to "losing" on world markets. This is particularly true in the case of the United States. Yet Clinton's theorists of competitiveness--from Laura D'Andrea Tyson to Robert Reich to Ira Magaziner--make seemingly sophisticated arguments, most of which are supported by careless arithmetic and sloppy research. Competitiveness is a seductive idea, promising easy answers to complex problems. But the result of this obsession is misallocated resources, trade frictions and bad domestic economic policies.
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We examine some issues in the estimation of time-series cross-section models, calling into question the conclusions of many published studies, particularly in the field of comparative political economy. We show that the generalized least squares approach of Parks produces standard errors that lead to extreme overconfidence, often underestimating variability by 50% or more. We also provide an alternative estimator of the standard errors that is correct when the error structures show complications found in this type of model. Monte Carlo analysis shows that these "panel-corrected standard errors" perform well. The utility of our approach is demonstrated via a reanalysis of one "social democratic corporatist" model.
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This article reports results from a network analysis of international trade from 1965 through 2000. It addresses the impact of changes associated with globalization and the "new international division of labor" (NIDL) on structural inequality in the world economy. To assess this impact, I ask three specific questions. (1) Do patterns of international trade conform to a core/periphery structure through time? (2) Does the structure exhibit inequality with regard to industrial sophistication? (3) Have globalization and the NIDL encouraged upward mobility for historically poor countries, or have they reproduced a stable set of structural positions? The findings support the view that the NIDL and globalization have benefited a few exceptional countries while at the same time producing structural inequality.
Article
Interdependence is ubiquitous, and often central, across comparative politics. In comparative political economy, for example, globalization and rising capital mobility imply tax competition that suggests the fiscal policies of one country must depend crucially upon those of other countries with which it competes for capital. This paper shows this theoretically and, more generally, how any situation involving externalities from one unit's actions on others' implies interdependence. Positive/negative externalities induce negative/positive interdependence, which spurs competitive-races/free-riding, with corresponding early/late-mover advantages, and so strategic rush-to-act/delay-and-inaction. We show next how to model such interdependent processes empirically, that not doing so risks severe omitted-variable biases that erroneously favor domestic and exogenous-external accounts over interdependence but that doing so naïvely risks simultaneity biases with the opposite substantive implications. Then we discuss how to estimate properly specified interdependence models with spatial lags by maximum likelihood and, finally, how to interpret and present the resulting estimated spatio-temporally dynamic effects, response paths, and long-run steady-states, with their associated standard errors. We illustrate all this by replicating a noteworthy earlier, non-spatial, study of capital-tax competition. Web appendices contain further technical details, literature survey, data, statistical-software code, and spreadsheet templates for conducting all estimation and calculation procedures.
Article
In this article we examine how information problems can cause agency slippages and lead to governance failures in nonprofit organizations. Drawing on the principal–agent literature, we provide a theoretical account of an institutional mechanism, namely, voluntary regulation programs, to mitigate such slippages. These programs seek to impose obligations on their participants regarding internal governance and use of resources. By joining these programs, nonprofit organizations seek to differentiate themselves from nonparticipants and signal to their principals that they are deploying resources as per the organizational mandate. If principals are assured that agency slippages are lower in program participants, they might be more likely to provide the participants with resources to deliver goods and services to their target populations. However, regulatory programs for nonprofit organizations are of variable quality and, in some cases, could be designed to obscure rather than reveal information. We outline an analytical framework to differentiate the credible clubs from the “charity washes.” A focus on the institutional architecture of these programs can help to predict their efficacy in reducing agency problems.
Article
Regulatory transparency-mandatory disclosure of information by private or public institutions with a regulatory intent-has become an important frontier of government innovation. This paper assesses the effectiveness of such transparency systems by examining the design and impact of financial disclosure, nutritional labeling, workplace hazard communication, and five other diverse systems in the United States. We argue that transparency policies are effective only when the information they produce becomes “embedded” in the everyday decision-making routines of information users and information disclosers. This double-sided embeddedness is the most important condition for transparency systems' effectiveness. Based on detailed case analyses, we evaluate the user and discloser embeddedness of the eight major transparency policies. We then draw on a comprehensive inventory of prior studies of regulatory effectiveness to assess whether predictions about effectiveness based on characteristics of embeddedness are consistent with those evaluations. © 2006 by the Association for Public Policy Analysis and Management
Article
Competition to attract foreign direct investment (FDI) creates opportunities for multinational enterprises (MNEs) to diffuse corporate management practices from their countries-of-origin (home countries) to countries hosting their foreign operations. We examine conditions under which MNEs transfer corporate environmental practices from home countries to host countries. Our focus is on ISO 14001, the most widely adopted voluntary environmental program in the world. We examine inward FDI stocks and ISO 14001 adoption levels for a panel of 98 countries, and a subset of 74 developing countries, for the period 1996–2002. We find support for the country-of-origin argument in that inward FDI stocks are associated with higher levels of ISO 14001 adoption in host countries only when FDI originates from home countries that themselves have high levels of ISO 14001 adoption. Countries’ ISO adoption levels are associated not with how much FDI host countries receive overall but from whom they receive it. Three implications emerge from this study: (1) FDI can become an instrument to perpetuate divergence in corporate practices across the world; (2) economic integration via FDI can create incentives for firms to ratchet up their environmental practices beyond the legal requirements of their host countries; (3) instead of racing down to match the less stringent corporate practices prevalent in developing countries, developed countries can employ FDI outflows to ratchet up corporate practices abroad given that developing countries are net recipients of developed countries’ FDI outflows.
Article
Although spatial econometrics is being used more frequently in political science, most applications are still based on geographic notions of distance. Here we argue that it is often more fruitful to consider political economy notions of distance, such as relative trade or common dyad membership. We also argue that the spatially autoregressive model usually (but not always) should be preferred to the spatially lagged error model. Finally, we consider the role of spatial econometrics in analyzing time-series–cross-section data, and show that a plausible (and testable) assumption allows for the simple introduction of space (however defined) into such analyses. We present examples of spatial analyses involving trade and democracy.
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This paper studies policy changes in capital taxation by focusing on policy interdependence induced by network dynamics at the international level. The empirical findings indicate that the competition mechanism induced by network position similarity in the network of portfolio investment and that of exports causes policy diffusion in corporate taxation; the socialization mechanism (policy learning and emulation) induced by network position proximity in the IGO networks also drives policy changes, and the evidence is much stronger in the IGO networks that facilitate policy learning than in those that facilitate emulation. The paper also discusses explicitly empirical challenges to incorporate network characteristics into connectivity matrices in spatial lag models often used to study policy diffusion. It suggests that students of policy diffusion should discuss as explicitly as possible the assumptions and procedures to construct connectivity matrices and present results from alternative specifications: our conclusion on the strength of policy diffusion is often sensitive to the choice of connectivity matrices.
Article
An implicit assumption of most policy analysts and some academics is that globalization leads to a convergence of traditionally national policies governing environmental regulation, consumer health and safety, the regulation of labor, and the ability to tax capital. Some claim that globalization leads to a race to the bottom, where concerns about the regulatory standards are sacrificed on the altar of commerce. Others argue that the growth of transnational governance structures leads to a negotiated convergence of ample regulation. This essay reviews the arguments and evidence for how globalization affects the convergence of regulatory policies, in particular the setting of labor and environmental standards. It argues that the theories of policy convergence, which rely on structural factors to induce policy convergence, are largely unsupported by the empirical evidence. Theories that grant agents autonomous decisionmaking power perform better but remain underspecified. Ironically, the realist paradigm, which has generally denigrated the globalization phenomenon, could prove a fruitful source for theories of improved policy convergence.
Book
What is the impact of foreign direct investment (FDI) on development? The answer is important for the lives of millions--if not billions--of workers, families, and communities in the developing world. The answer is crucial for policymakers in developing and developed countries, and in multilateral agencies. This volume gathers together the cutting edge of new research on FDI and host country economic performance and presents the most sophisticated critiques of current and past inquiries. It probes the limits of what can be determined from available evidence and from innovative investigative techniques. In addition, the book presents new results, concludes with an analysis of the implications for contemporary policy debates, and proposeds new avenues for future research.
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This article examines the proposition that MNCs from a particular country are likely to exhibit profile similarities that are distinct from those of MNCs emanating from another country due to differences in home country factors. We call this "country of origin effect" (COE). A generalized framework is presented briefly explaining the nature of relationships among various COE elements that influence MNC strategy. A number of research propositions are offered that postulate the presumed effect of COE elements on MNC strategy and competitive behavior. Finally, suggestions are made as to the implications of this avenue of enquiry for further research as well as guide for management action.
Book
This second edition of Hilbe's Negative Binomial Regression is a substantial enhancement to the popular first edition. The only text devoted entirely to the negative binomial model and its many variations, nearly every model discussed in the literature is addressed. The theoretical and distributional background of each model is discussed, together with examples of their construction, application, interpretation and evaluation. Complete Stata and R codes are provided throughout the text, with additional code (plus SAS), derivations and data provided on the book's website. Written for the practising researcher, the text begins with an examination of risk and rate ratios, and of the estimating algorithms used to model count data. The book then gives an in-depth analysis of Poisson regression and an evaluation of the meaning and nature of overdispersion, followed by a comprehensive analysis of the negative binomial distribution and of its parameterizations into various models for evaluating count data.
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The ISO 9000 series of quality management systems standards is widely diffused, with over 560,000 sites certified in 152 countries (as of December 2003). Anecdotal evidence suggests that global supply chains contributed to this diffusion, in the following sense. Firms in Europe were the first to seek ISO 9000 certification in large numbers. They then required their suppliers to do likewise, including those abroad. Once the standard had thus entered other countries, it spread beyond those firms immediately exporting to Europe to be adopted by many other firms in those same countries. This paper empirically examines the validity of this view of the role of supply chains in global diffusion of ISO 9000. To do so, we decompose the statement that “supply chains contributed to the global diffusion of ISO 9000” into a series of four requirements that must be met in order for the original statement to be supported. We then use firm-level data from a global survey of over 5,000 firms in nine countries to test the hypotheses that correspond to these requirements. Our findings are consistent with the view that ISO 9000 did diffuse upstream through global supply chains. In short, this means that firms that export goods or services to a particular country may simultaneously be importing that country’s management practices. We conclude by suggesting how these findings might form the basis for future research on the environmental management systems standard ISO 14000. Key words: ISO 9000; ISO 14000; quality management; supply chains; diffusion; global; empirical; survey.