International Business Faculty Papers

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    Enterprise social networks : application to oil industry
    (Journal of Global Commerce Research, 2009) Samii, Massood; Manus, Alexandru; Frutos, Dinorah
    We believe that Enterprise Social Networks (ESNs) will help improve communication among stakeholders within the created "virtual" communities and improve overall operational efficiency of the industry. Such a model requires the creation of "network externalities" through a large number of participants in the network. It is postulated, that the larger the membership in the community the greater the advantages of membership. The paper demonstrates how ESN would work for the oil industry and explains how various members could benefit from their participation in the network. The value chain of the oil industry and its various participants as well as the interaction and business value creation for each enterprise group are discussed.
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    Comparative performance of IPO in Japan and United States
    (Southern New Hampshire University, 2001) Takei, Hideki; Samii, Massood
    The increase in the initial public offerings (IPOs) in recent years has created a considerable interest in the study of their behavior. The price performance of post IPO has been studied extensively. However, these studies have focused on the US market and there is very little systematic analysis on the comparative performance of IPOs in various international markets. In this paper we evaluate post IPO performance of stocks in the US and in Japan. The major conclusion is that while the over all pattern of price performance is the same in both markets, there are differences that distinguish the two markets.
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    Global shock transmission to emerging markets
    (Southern New Hampshire University, 2003-07) Dasari, Usha; Dhakar, Tej S.; Samii, Massood
    The process of global integration has intensified the competition in world markets during the 1990s. In the new environment, many developing countries are increasingly relying upon greater trade integration for upgrading their international competitiveness and promoting their dynamic comparative advantage. In view of growing global integration, this paper attempts to analyze whether Indian, Hungarian and Polish economies have become more internationalized as a result of economic reforms embraced by each of these countries in early 1990s and hence vulnerable to global economic cycles: the integration hypothesis. The paper applies variance decompositions derived from vector auto regression to assess the degree of economic integration of the three economies with U.S. economy. The study concludes that, in the pre-liberalization period U.S. economy did not influence the Indian, Hungarian and Polish economies. Shocks from U.S. had no impact on their aggregates. In the post liberalization period, however, the results are mixed. Hungarian aggregates show very low degree of integration with US followed by Poland, and India. Although, all the three countries have shown varying degrees of integration in the post-liberalization period, none of the economies are found to be overly vulnerable to international shocks. It can be argued that despite opening of economy and transition towards integration with the global economy, the degree of integration across countries still remains significantly low.
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    Trade balances, economic growth and linkages to multinational foreign direct investment to Asia
    (Southern New Hampshire University, 2001) Hassan, Mahboubul; Samii, Massood
    This research has investigated whether trade balance is an indicator of foreign direct investments by a multinational corporation. It addresses two principal research questions. First, what are the determinants of foreign direct investment (FDI) in Asia? Second, is trade balance an indicator of FDI? If so, is there any lag effect on FDI for a specific Asian country? Based on annualized time series data for 8 sampled countries in Asia, the results indicate for majority of sampled Asian countries significant statistical correlation exists between the four explanatory variables (GDP growth rate, trade balance, percentage change in real wages, and the average tax rate) and the monetary size of FDI. For majority of sampled Asian countries the coefficient of trade balance is statistically significant, and for only 2 sampled Asian countries, the study indicate significant statistical correlation exists between one period lag monetary size of FDI and the current period FDI. Based on the empirical findings, an MNC, by investing (FDI) in either exportable or import substitutable products of countries that are facing trade balance problems, will be in a stronger position to negotiate better incentives from the host country which in turn will enhance the MNCs value. This research has also shown that an MNC, which is looking for a location of its FDI, will be better off by investing in the sampled Asian countries that are facing trade balance problems and simultaneously are the recipient of FDI.
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    A cultural analysis of management styles : the United States with a new generation of managers in India and China
    (Journal of Current Research in Global Business, 2008) Samii, Massood; Schragle-Law, Susan; Yan, Chang
    In this study, the outcome of our research represented an interesting difference with both Hofstede’s and GLOBE’s results. Our focus is on well educated, highly trained managers from the US, India and China. The participants were upwardly mobile, some MBA educated, many trained in the Western style of management - essentially a new generation of managers. Questionnaires were given to managers working in multinationals in each of these countries and/or individuals with advanced education. This study extends the findings of Hofstede, the GLOBE and Level 5 Leadership by focusing on the management styles of the modern sector of emerging economies. The research suggests that there are significant and rapid changes on how to manage and how to compete in the new global economy.
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    Mitigating risks in internationalization decisions : the choice of the optimal entry mode
    (Southern New Hampshire University, 2008-04) Samii, Massood; Aliouche, E. Hachemi; Wright, Roxana
    In this paper we propose an innovative prescriptive model for internationalization strategy based on decision analysis theory that allows for optimal decision making regarding the choice under uncertainty between alternative international entry and/or expansion modes. Based on a case study of McDonalds’ expansion in a developed market and in an emerging market, we discuss the decision making implications by emphasizing the inclusion of risk and uncertainty and the importance of sensitivity analysis on the evaluation of the model results. The analysis compares the internationalization choices of franchising and foreign direct investment, as two distinct levels of foreign commitment. The findings suggest that in relatively stable environments it is relatively easier to mitigate the risks through tactics such as cost control, so that a higher level of commitment is justified under favorable macro-environment conditions. In less stable or unfamiliar countries, the risks of day-to-day operation may be too high to be mitigated, such that a lower risk alternative is always optimal, and discrete improvements of the political and economic climate are irrelevant.
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    Financial liberalization, financial deepening and efficiency implications in the emerging markets : preliminary evidence from Turkey
    (Elsevier, 1998) Aybar, C. Bulent
    The chapter investigates the implications of financial liberalization and financial deepening on the intertemporal behavior of stock returns in the Turkish equity markets. The objective of the study is to test return predictability and the changes in this behavior in two qualitatively different time periods. The empirical findings indicate that return behavior does not change as the financial markets deepen in Turkey. Return characteristics qualitatively remain unchanged and return predictability continues. The adverse implications of this finding are rather severe and they are addressed in the conclusions.
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    Foreign direct investment under uncertainty : an options pricing strategy
    (Southern New Hampshire University, 1999-10-19) Broaden, Charlotte
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    Foundations of foreign direct investment
    (Southern New Hampshire University, 1999-09-29) Broaden, Charlotte
    To adequately understand foreign direct investment, one must trace the origins of international trade beginning with comparative advantage theory, which views trade from the standpoint of perfect competition, to the new classical theories that focus on imperfect markets. The debates that are raised in these theories touch on many issues, however, central to the underlying theme in all of these theories are the issues of efficiency and equity as they impact both the home and host countries. Understanding the theories in and of themselves is not enough to explain the concept of foreign direct investment. We need an instrument to tie the two together and that instrument or more preferably, institution, is the multinational corporation (MNC). The literature is inconclusive in providing a precise definition of the MNC. A generally accepted theorem is that MNC’s are composed of a corporate structure where operations are in two or more countries on such a scale that growth and success depend on more than one nation, and where decisions are made on the basis of global alternatives (Parry 1973). For the basis of this paper, we shall also accept this premise. This paper will examine how international trade theory impacts foreign direct investment decisions. We will investigate the idea of a MNC moving from the notion of perfect competition to the concept of dealing with market imperfections as well as follow the evolution to the "new paradigm" of international trade.
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    Measuring the impact of globalization : an analysis of the risk and return of multinational firms
    (Southern New Hampshire University, 2001-02-28) Broaden, Charlotte; Samii, Massood
    There have been several debates in the literature over the issue of multinational firms and their impact on profitability and risk. Previous literature suggests that multinational firms decrease their systematic risk owing to the diversification benefit of having cash flows in different countries. More recent empirical evidence has surfaced suggesting the contrary in that multinationals may increase their risk due to an increase in the standard deviation of cash flows from such additional risk factors as political risk, exchange rate risk, and information asymmetry. In conjunction with lower risk, it has been posited that firms have higher leverage. Empirical studies on profitability have shown similar rates of return for both domestic and international firms. Through the use of pooled regression analysis this paper finds support for the hypothesis that multinational firms experience lower debt, and lower profitability.
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    Patterns of corporate ownership and privatization in Visegrad countries : 1989-1996
    (Routledge, 2000) Aybar, C. Bulent; Khambata, Dara; Milman, Claudio
    The article analyzes merger and acquisition activities in Visegrad Countries (the Czech Republic, Poland, Hungary and Slovakia). The analysis established linkages among the FDI, Privatization and M&A activities and reports the characteristics of transactions in the region in a comparative spirit. The findings indicate that majority of activities in the region involved foreign investors from Western Europe and USA. The M&A activities were concentrated in manufacturing segments such as automobiles, food processing, glass and clay, service segments such as telecom, utilities and financial services. The study also revealed some pre and post transaction ownership patterns in respective countries as well as methods of acquisition.
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    The long run performance of privatization related ADR issues
    (Southern New Hampshire University, 2000-11) Aybar, C. Bulent
    American Depository Receipts (ADRs) have been increasingly used in the Share Issue Privatization process (SIP) by privatizing governments both in developed and developing countries. In this study long-term performance of 143 privatization related ADR programs were analyzed. The ADR programs covered in the study were initiated between 1984 and 1999, and included a diverse mix of companies from 29 different industries across 31 developed an emerging markets. The analysis of the long run performance of these programs revealed interesting patterns. In all cases, average cumulative returns and average cumulative abnormal returns of developed country privatization related ADRs exceeded emerging market privatization returns. Same conclusion was reached by using an alternative return calculation methodology. While sample companies generally outperformed their respective country indices and FT World index, they under performed the S&P500 Index.
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    Privatization and regulation in Turkish telecommunications
    (Southern New Hampshire University, 2001-03) Aybar, C. Bulent; Guney, E. Serhat; Suel, Hasan
    The importance of efficient workings of network industries and the markets in which they operate has long been recognized in the literature. In a parallel fashion, policy makers around the world initiated various restructuring efforts focusing on these sectors. However, the issues of privatization and much needed subsequent regulatory framework face considerable challenges in developing countries. Both political opposition and difficulties encountered in the process of privatization caused major delays in overall privatization and restructuring efforts of these countries. This paper focuses on the telecommunications sector and the Turk Telekom case, in particular, assessing the prospects for its much-debated divestiture, evaluating the company specifics and subsequent regulatory agenda. In doing that, it emphasizes the current "telecom meltdown" in international markets, and compares telecommunications privatizations of various nations. Additionally, the study reviews major regulatory methods and draws on some recommendations for policy makers in the light of the U.S experience in this sector.
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    System dynamics approach to the analysis of interaction of foreign direct investment and employment in Thailand
    (Taiwan Institute of Business Administration, 2010-01) Samii, Massood; Teekasap, Pard
    This research studies the effect of FDI policy on the wages and employment in Thailand. A system dynamics model that simulates the interaction between labor market and foreign direct investment in Thailand is used. The results show that having an FDI policy results in higher FDI in the short term but lower FDI in the long term. The effect of the policy on unemployment in the short term is not significant but the unemployment ratio is higher than it would be without such policy in the long term. Regarding the salary, having an FDI policy results in having higher average salary in both the short-term and the long term.
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    Energy policy and oil prices : system dynamics approach to modeling oil market
    (Global Commerce Forum, 2010) Samii, Massood; Teekasap, Pard
    The pattern of global oil demand, real oil price, and world economy in the future is studied through system dynamics modeling. Based on the simulation, the oil demand will drop and then gradually recover while the real oil price will be stable and then drop mimicking a sigmoid curve. The economy will continuously increase. If an economic stimulus policy is implemented, the oil demand is expected to have a shallower drop. Thus, the real oil price is likely to be an S-shaped curve with a higher value, and the economy is expected to grow faster as compared to the case when there is no stimulus policy.
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    Can country continuously compete on cheap labor cost? A system dynamics approach to FDI policy analysis
    (Southern New Hampshire University, 2010-06-28) Samii, Massood; Teekasap, Pard
    This paper studies the interaction of FDI, wages and employment of workers under different policies in countries that use cheap labor cost strategies such as Thailand. The interactions are analyzed by using system dynamics modeling. The model simulation shows that FDI drives salaries up when the demand for workers reaches the limit of the working population. A higher salary, in turn, causes low labor cost seeking FDI to withdraw their investment. Government policies aimed to sustain cheap labor cost seeking FDI are examined. Policies to subsidize foreign operation such as providing tax breaks and reducing the time to set up a new firm can stimulate FDI in the short term but in the long term the foreign firms still withdraw their investments due to high salaries. An increase in the working population or a reduction in firm hiring process time, on the other hand, does not affect the volume of FDI. Thus, the country cannot rely on a low labor cost strategy on the long term.
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    CAFTA-DR effects on FDI inflows, growth and distribution of the workforce : a system dynamics approach
    (Southern New Hampshire University, 2010-06-29) Teekasap, Pard; Frutos, Dinorah; Samii, Massood
    As regional trading arrangements have spread over the last decades, the study of the relation between trade agreements and foreign direct investment still presents difficulties due to the multi-dimensional character of such relationship. This paper presents a system dynamics model that attempts to shed new light on how some of the Central American Free Trade Agreement (CAFTA-DR). Specifically we look at how the growth and distribution of the workforce in the non-agricultural (or industrial) and agricultural sector in six CAFTADR country members. The model results indicate that the provisions we considered tend to industrialize member countries as well as expand the agricultural sector in some countries in the long run. In addition, the model indicates that the treaty provisions drive up the GDP per capita for all member countries.
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    CAFTA-DR effects on FDI inflows, growth and distribution of the workforce in Costa Rica : a system dynamics approach
    (Routledge, 2010-10) Frutos, Dinorah; Teekasap, Pard; Samii, Massood
    As regional trading arrangements have spread, enlarged and deepened over the last decades, the study of the relation between trade agreements and foreign direct investment still presents difficulties due to the multi-dimensional character of such relationship. This paper attempts to shed new light on how some of the Central American Free Trade (CAFTA) policies will impact FDI inflows on the manufacturing and agricultural sectors in Costa Rica. Specifically we look at how the growth and distribution of the workforce is affected by the treaty. The results show that the agreement provisions will have a positive effect on foreign direct investment. From these results it is possible to estimate that in the long run, the implementation of CAFTA has a higher probability of generating the intended benefits. System dynamics modelling is used in this paper.
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    Euro pricing of crude oil : an OPEC's perspective
    (Middle East Economic Association and Loyola University, 2004-09) Samii, Massood; Thirunavukkarasu, Arul; Rajamanickam, Mohana
    In the late 1970s and the early part of the 1980s, a debate emerged within the Long Term Strategy Committee of the Organization of Petroleum Exporting Countries (OPEC) whether to continue the pricing of crude oil in United States dollars or to shift to an alternative currency. This debate was rooted in the persistent decline in the value of the United States dollar relative to other global currencies. The choice of currencies available to price crude oil was limited for OPEC because of the inadequate liquidity of most other currencies. With the recent emergence of the euro, the issue of choice of currency for pricing crude oil has emerged once again for policy discussion. The current paper is focused on the implications of a shift in the pricing of crude oil from United States dollar to euro on OPEC members. Winners and losers are identified based on economic gains and losses. It is concluded that while such a policy would incrementally benefit OPEC en bloc, it would result in a disadvantage for the countries whose major trading partner is the United States and, therefore, would not be a Pareto optimal solution.
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    Comparative analysis of the Mexican and Turkish currency crises
    (Routledge, 2000) Aybar, C. Bulent; Ajami, Riad A.; Bear, Marca M.
    The study aims to explore characteristics of currency crises in emerging markets. Two recent experiences in Mexico and Turkey respectively analyzed carefully to identify common elements in the development and eruption of the crises. Results of the study suggest that there are several background factors and triggers that were consistent in both cases. Finally a discussion of the policy implications of the findings concludes the study.
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