Why do different industrial democracies employ different processes in determining trade policy and different models of capitalism? Two variables account for the nature of the decision-making process for trade policy. First, the level of inter-industry factor mobility determines if class or sectoral coalitions predominate. Second, the size of policy coalitions depends on which branch of government dominates trade policy. Legislatures favor minimum winning coalitions, while executives favor maximal coalitions. These two variables condition different patterns of coalition making: partisan, pluralist, corporatist, and interventionist. I illustrate this theory analyzing the development of policymaking concerning trade in France and Sweden.

Compensation hypothesis, which has established a link between trade openness of countries and levels of government spending, has been widely accepted in the literature on trade policy and international globalization. However, the nature of the distribution effects produced by trade is likely to determine the existence of more or less redistribution demands from the median voter, and therefore government growth. In this paper I hypothesize that the effects of trade openness on redistribution demands are not homogeneous between countries, and I argue that they depend both on the type-of-factor endowment of the economy and the size of the sectors more likely to be affected by trade. I test this hypothesis with ISSP data for 23 countries, both with a country level and an individual level analysis. The results show that redistribution demands issued from trade openness of the median voter of a country are largely conditional on GDP per capita and size of potential loser sectors such as manufacturing: while trade has a negative effect on pro-redistribution preferences in “poor” and/or in “low manufacturing” countries; it positively affects pro-redistribution preferences in “rich” and/or in “high manufacturing” countries. Additionally, I empirically observe that the size of the loser sector plays a more important mediating role than the type-of-factor endowment of the economy.

Despite extensive research on political activity on the part of corporations, clear and consistent findings remain elusive. We identify three reasons for this failure. First, most of the empirical literature on corporate political activity simply studies the wrong phenomena by examining political action committees rather than lobbying more generally. Second, the literature studies an excessively narrow sample of organizations that might engage in lobbying, focusing almost always on extremely large corporations, which inevitably attenuates variance on many of the variables hypothesized to influence engagement in political activity. And third, prior work is rarely attentive to the diversity of corporate activities, narrowly conceptualizing vital aspects of the business context that might influence decisions to engage in political activity. Based on this critique, we develop and test new models of corporate political activity, finding that the diversity of the economic context within which firms work and firm size matter a great deal, if in ways somewhat different from those reported in prior work.

In the last decade, few countries have figured prominently as cases of late-late developers that achieved worldwide success with their Information Technology (IT) industries. This paper focuses on the Israeli case and argues that uniquely in that group, and in contradiction to the model proposed by late development theories, Israel's competitive advantage in the IT industries, is in Research and Development (R&D). The paper's main arguments are that (a) the declared aim of Israel's industrial policy has been to develop a “science-based” industrial system similar to what we see in Israel today; (b) however, these policies, focused on diffusion and not on creation of capabilities, were successful only because of the existence of an already sophisticated and extensive R&D capability in the universities – markedly different from other Newly Industrialized Countries. Looking at the present the paper concludes that the same operational model that led Israel's IT industry to success might now be undermining its future growth.

Why do some countries institutionalize a social program compensating the unemployed while others do not? My main argument is that the choice to have an unemployment insurance program is a function of 1) the distribution of unemployment risks within a country and 2) political processes through which demands for insurance are realized. The distribution of industrial-specific risks and workers' employment status are the driving force in shaping workers' demands. In developing countries, these demands are more likely to be realized under democratic regimes. An event history model for 102 developing countries from 1946 to 2000 is used to test the arguments.

This study examines the relationships between deregulation, business strategy (low cost, differentiation, and scope), size, and firm performance in the U.S. airline industry based on archival data for the Major, National, and Large Regional air carriers in the U.S. from 1972 to 1995. Cross-sectional time series regression analysis shows that deregulation had a significant impact on the strategic choices made by airlines. Results also support a significant relationship between business strategy and firm performance. Further, the study found that firm size moderates the environment-business strategy relationship and the business strategy-firm performance relationship, thereby supporting the salience of firm size as a contingency variable in strategy studies.

We know from observation that some democracies intervene deeply in their domestic economies while others adopt a more laissez faire approach. Can we explain these differences solely with ideology, or are other political influences also at work? I argue in this paper that elected leaders sometimes opt for hefty economic regulation purely to generate sources of patronage that can be used to maintain their political positions. Leaders are most tempted to take this approach, I contend, when their political parties are not stably linked to sources of electoral support. Unstably linked governing parties will tend to have very short time horizons, focusing on the immediate objective of avoiding massive vote losses in the next election. As a result, they will be less concerned with the potential future damage that a patronage-based policy may inflict on the national economy. I find support for this argument with a close examination of Indian economic policy under Indira Gandhi. Prime Minister Gandhi, I contend, increased the Indian state's control over trade, industrial production, and credit allocation just as the Congress Party's linkages to the electorate were destabilizing.

This paper explores the East-West dichotomy of outsourcing in the European Union in the context of its 2004 eastward enlargement. The purpose of the study is to shed light on the connection between outsourcing and the causal logic of regional integration. The conventional view is that the transfer of business operations from Western Europe to low-cost locations to the east represents a process of outsourcing West-European jobs which deprives the EU core of growth opportunities to the exclusive benefit of the new members from Eastern Europe. This analysis posits the systemic functions of EU outsourcing as a mechanism of economic homogenization in the regional market along its three principal dimensions: investment, commodity trade, and labor mobility. At the macro-level, outsourcing complements capital movements and trade, and acts as a substitute for labor mobility. Keeping labor mobility “down” is the main value added of EU outsourcing. Empirically, its relevance to the regional market is established in an input-output framework of relationships with indicators of economic convergence (homogenization effects) and labor mobility (substitution effects) in the EU. Positive correlations with indices of business synchronization and weak negative correlations with measures of labor supply and wages suggest that outsourcing fits well both with strategies fostering market integration and those counterbalancing the politically sensitive labor mobility in the EU. There is no significant evidence to suggest that, at the aggregate level, outsourcing has independent substitution effects with regard to unemployment rates and wages in Western Europe. The geographic expansion of EU integration, therefore, is not a proxy for losses of social welfare in the West. The paper concludes that as the cost efficiency and resource allocation functions of outsourcing facilitate the homogenizing dynamics of regional integration, it is likely to become increasingly subsumed under EU-level regulation and monitoring in a trade-off between the regional interest and domestic sectoral concerns.

This paper examines the motivation and impact of corporate diversification in Chinese listed firms. We find that in local government owned-firms there is a non-linear relationship between the level of firm diversification and state ownership. As state ownership increases from zero, the level of diversification decreases. After state ownership reaches a certain level, the level of diversification increases as state ownership increases. There is no evidence that ownership is related to corporate diversification in non-state-owned firms or central government-owned firms. We also document that diversification is negatively related to firm performance in local government-owned firms. However, there is no evidence that diversification is negatively related to the firm performance in non-state-owned firms or central government-owned firms. Our findings suggest that agency problems are responsible for local government owned-firms taking value-reducing diversification strategies.

Democratic consolidation was the top priority of re-democratized Argentina and Brazil. Regional integration was also part of this goal from two perspectives: from the outside, through a treaty that diminished the scope for political manoeuvring by the military and increased international support for the incumbent administrations, and; from within, through encouragement of a proactive role for business in integration that would give it democratic legitimacy, while, at the same time, exercising democratic practices. Argentine and Brazilian political classes expected to combine these two aspects but soon had to face business reluctance. Government-business relations in the construction of Mercosur reflected government attempts to balance the trade-off between the approaches from without and from within. Although business was largely excluded from the strategic formulation of integration, in a democratic context, governments have to accommodate societal interests. This occurred through a significant overlap between powerful business interests and the executive's plans. The achievement of integration helped consolidate democracy and the choices made by political elites drove forward the democratic process.

In the study of corporate political activity in the United States, scholars have consistently relied on samples comprised entirely or principally of large firms. While scholars have raised the issue of bias in these samples, there have been no systematic examinations of the consequences for causal inference. We address this issue directly by comparing the results of comprehensive models that examine corporate lobbying using both large-firm and randomly-generated samples. We find that while there are some notable differences, they are certainly not so large as to lead us to question fundamentally the results of decades of scholarship. In short, the results generated using a random sample lead to causal inferences largely consistent with those in the theoretical and empirical literature. In particular, firms' resources and interactions with government condition both their decisions to lobby and the level of their activity.

In recent years, International Political Economy literature on “politics beyond state” has emphasized the role of non-governmental organizations (NGOs) in broader policy processes, both national and international. In addition to their impact on states, NGOs influence the policies of non-state actors such as firms via public and private politics. Dissatisfied with the progress firms have made in response to public regulation, NGOs have sponsored private authority regimes in several issue areas and pushed firms to participate in them. Across the world, the contest between NGOs and firms has provoked substantial behavioral and programmatic change'including widespread participation in these private authority regimes'among firms seeking to escape NGO pressures. Using firm-level data, this paper examines why direct targeting has not led firms in the U.S. forest products sector to participate in an NGO-sponsored private authority regime, the Forest Stewardship Council. This global regime has been adopted widely in Europe, but U.S.-based forestry firms have tended to favor a domestic industry-sponsored regime, the Sustainable Forestry Initiative. Our analysis suggests that the desire of firms to maintain control over their institutional environment in light of hostile relations with NGOs has led US-based firms to favor the Sustainable Forestry Initiative.