Globalization and Corporate Restructuring

Projects

Anticipation Effects of a Gender Quota Law in the Board Room

Policymakers in Europe have recently begun to focus on the relative underrepresentation of women on corporate boards, and numerous countries are considering the implementation of gender quotas. In 2002, Swedish Deputy Prime Minister Margareta Winberg, supported by Prime Minister Göran Persson, threatened to impose a mandatory law if considerable improvements in board room representation were not achieved in the listed companies within two years. Our main contribution is that we estimate a pure anticipation effect of a gender quota law and that the effects are large in magnitude. Interestingly, the threat increased both the share of female directors and firm performance, a result which differs from other quasi-experimental studies evaluating gender quotas laws.

Project Manager: Björn Tyrefors Hinnerich

Born Global Firms

Competition in the domestic market has become more intense through globalization, and policymakers in many countries have become acutely aware of the increased importance of exports as a source of growth. There is a particular interest in so-called “Born Global” firms that quickly expand into multiple export markets and generate a large proportion of their revenues from foreign sales.

This project proposes a research agenda to identify, measure and gain insight on Swedish Born Global firms. We will study impacts at the level of individual firms, which allow us to study highly detailed firm dynamics and heterogeneity. The results will shed light on the underlying characteristics that lead to the rise and sustained success of Born Global firms.

Project Manager: Shon Ferguson

Digitalization and Globalization

The primary goal of this research project is to develop a better understanding of how globalization affects labor market outcomes. The project will also analyze how recent changes in digitalization and automation put pressures on firms and workers and how this is related to globalization. We will analyze the effects of globalization and digitalization in a Swedish context, which should provide insights with clear relevance for Swedish policy makers. We also believe our project has a broad scientific relevance and that results are of interest to researchers active in international economics and in labor economics.

Despite the very large public and academic debate on the effects of digitalization and automation, empirical evidence is scarce. Our analysis will be based on detailed matched employer-employee data for the period 1996-2013. There are a variety of important issues that we will explore in this project. More generally, our research will shed light on a number of critical issues such as: the identification of the individual characteristics of those who gain and lose from globalization and digitalization, the effects of globalization on the organization of firms and corporations and its implications for labor market outcomes, the impact of globalization and digitalization on wage inequality and job insecurity, what is the role played by firms in how new technologies are being implemented, to what extent are unemployment risks due to increased digitalization related to wages and educational levels for individual occupations, the interplay between digitalization, globalization and labor market outcomes, how is the internationalization of firms linked to digitalization, and do internationalized firms have a mix of employees with occupations that are systematically different from e.g. local firms in terms of automatization and digitalization of jobs.

Project Manager: Fredrik Heyman

Financial Integration and Global Imbalances

Financial integration facilitates more efficient capital allocation and can affect the relationship between consumption and wealth by relaxing the liquidity constraints of consumers. There are also adverse effects of financial integration, such as the build-up of larger imbalances, increased risks of financial contagion and sudden capital flow stops. This project studies how international financial integration affects macroeconomic and -financial outcomes. More specifically, we study how financial integration affects international consumption risk sharing, local financial market development and the relationship between consumption and wealth, and how global imbalances affect the exchange rate sensitivity to global financial market uncertainty.

Project manager: Malin Gardberg

Globalization, Employment and Wages

This project aims to empirically evaluate labor market effects of increased international integration. The project departs from new economic theory on heterogeneous firms and workforces. Traditional trade theory assumes full flexibility in the labor market which would imply full employment. New theory on the other hand, stresses that wages are sticky and that the matching process between employers and employees can give rise to long term unemployment. Furthermore, these jobs imply that the effect on a certain type of labor force, for example in terms of wage changes, can differ depending on the type of firm. Increased globalization can for example lead to increased wages for the type of laborer whose qualifications best match the company profile. These newer theories result in a number of hypotheses on internationalization and labor market effects which we aim to empirically investigate using Swedish data. The empirical analysis is based on a large collection of data on the Swedish labor force which can be matched with data on Swedish firms. For instance, we investigate wage and employment effects of increased internationalization for different types of labor and in different types of firms. The project is a collaboration between Swedish empirical researchers and prominent theoretically-oriented American researchers.     

Project Manager: Fredrik Heyman

Globalization, Increased Competition and the Development of Firms

Firms both in Sweden and abroad have been exposed to increased competition in many forms. The development of globalization forces domestic firms to adapt to a tougher business climate, while trade reforms also bring new import and export possibilities. This project primarily consists of empirical studies which evaluate the effects of different types of increased competition, such as trade reforms, import-based competition and higher electricity prices during the 21th century. The studies explore the effects of these phenomena on firms’ choice of technology, trade patterns, size and productivity. One purpose with this project is to contribute to the understanding for how competition affects firms’ technological development and employment, which in turn may provide beneficial knowledge for future economic reforms.

Project Manager: Shon Ferguson

International Investment Agreements

State-to-state investment treaties protect foreign investment against host country policy measures that significantly reduce the value of the investment. They typically allow investors to litigate against host countries regarding violations of the agreements (“ISDS mechanisms”). Tese undertakings have been at the core of the critique against EU-Canada CETA agreement, and the proposed TTIP between the EU and the US.  This debate raises a number of issues: What type measures should be compensable? Do the agreements cause “regulatory chill”? Who benefits and who loses from the agreements? The economic literature hardly sheds any light on these issues. The purpose of the agreement is to contribute to filling this void.

Project Manager: Henrik Horn

Measuring the Gains from Globalization

The purpose of this project is to measure the gains from globalization and economic integration. In the first three subprojects we will explicitly test some of the major assumptions that researchers employ when measuring the gains from international trade due to growth in product variety and growth in firm productivity. In the last two subprojects we turn our attention to the relationship between trade and the environment and explore how import competition affects firms’ emissions and how investment in environmental abatement affects firms’ productivity. The results of these studies will help policymakers to more accurately quantify the costs and benefits of globalization in its many forms.

Project Manager: Per Hjertstrand

Privatizations and Labor Market Effects

The world is in the midst of the fourth privatization wave, with record dollar amounts raised globally. So far the academic literature has provided ample empirical evidence that privatizations tends to improve firm performance. But little is known on how workers fare privatizations. In this project we will study how workers fare if they are employed in a state owned enterprise that is being privatized. By focusing on workers’ unemployment risk as well as their labor earnings the project will shed new light on the individual welfare consequences of privatizations and try to understand who wins and who lose in privatizations.

Project manager: Martin Olsson

Structural Change and Digitalization

Technology and digitalization are challenging established structures in society. This research focuses on increasing knowledge about how digitalization affects productivity growth, labor market development and different social dimensions (such as income mobility and distribution). How can institutional differences between countries mitigate this development without hampering innovation and productivity growth? What factors are important to cope with growing differences between city and sparsely populated areas?

Project Manager: Mårten Blix

The allocation of talent in the Swedish economy

Research shows that societies allocating talent in an efficient way have greater growth. From the societal point of view, a technologically gifted energetic person may be in more productive use as an entrepreneur of a fast-growing technological company than, say, as a mid-level manager in a company operating in a declining industry. Similarly, an exceptionally talented manager is likely to be more productive as a manager of a large company than a small company. This project investigates empirically the allocation of talent in the Swedish economy and the effects this talent allocation has on the growth, profitability, and survival of Swedish companies.

Project Manager: Joacim Tåg

The Economics of Corporate Ownership

Issues related to ownership and changes in ownership are central in understanding how the globalization process affects firms and society. The goal of this project is to study the economics of corporate ownership, i.e. how the real economy is affected by different corporate ownership forms. This includes studies on the decision to become a business owner, venture capital investments, listing/delisting decisions, private equity buyouts, and M&As. We also study how corporate ownership forms and changes in ownership affects the careers of executives and employees in firms.

Project Manager: Joacim Tåg

The Effects of Globalization on Capital

This project studies capital ownership. “The Swedish Ownership model”, which until just recently dominated the stock market, is characterized by ownership limited to one or two owners. Usually, but not always, these owners have been Swedish families. The concentration of control was made possible through a growing divergence between control rights (vote shares) and dividends rights (capital shares) for the dominating owners. Another common feature has been that a family or group of owners through investment firms and box-in-box ownership has dominating influence in several firms. Sweden is currently in the middle of a structural change where the Swedish ownership model is clearly in decline, because it is at least in part being replaced by other models of corporate management. An important driving factor behind this development is the globalization of ownership. This project’s aim is twofold. First, the purpose is to increase our understanding of how the Swedish ownership- and control model is affected by globalization. Second, it aims to study which institutional changes in the legal framework could facilitate efficient management of firms with a dispersed ownership structure.

Project Manager: Magnus Henrekson

The Social Value of the Public Company

The legal burdens for firms that buy and sell stocks have increased significantly lately. This is also true for firms that have wished to list themselves on a public market. Partly for this reason, but also for many others, there has in the last 15 years been a decline in interest from firms  in letting their stocks be traded on regulated markets. The purpose of this project is to summarize the literature as well as study this development by constructing a framework for better understanding how public stock trading can contribute to stronger political support for business sector friendly economic policies. Moreover, we aim to study the effects of stock market enlistment in Sweden on the composition of employees in enlisted firms.

Project Manager: Joacim Tåg

Unilateral competition policy and standard-essential patents

Industry standards often use patented technologies. For instance, telecom standards such as 3G and 4G rely on a large number of such ”standard-essential” patents. The owners of these potentially have considerable market power, since they can block access to the standards. The main regulatory response comes from national competition authorities, which seek to prevent this power from being exploited. The purpose of this project is to highlight how principles for international jurisdiction can be used to prevent international conflicts of interest in this area.

Project Manager: Henrik Horn

Venture Capital and Business Ethics

With the growing importance of ethicality in investment decisions, a natural question becomes whether the ethicality of business proposals influence entrepreneurs chances of securing financing for their ventures. While it is considered that the fundamentals of the business proposal and entrepreneurial experience are key factors in investors' investment decisions, it is starting to emerge that other factors also influence whether entrepreneurs are able to secure financing. In this project, we aim to study the interaction between in-group bias and ethicality, focusing on the interaction between the ethicality/unethicality of business ventures proposed by entrepreneurs and in-group bias shown by investors towards entrepreneurs of the same in-group.

Project Manager: Nikita Koptyug

International cooperation

Visiting researchers

Collaborating with others is essential for IFN as a research institute. Our researchers co-author articles with colleagues from other institutes, and many also teach at various universities and colleges.

As part of our extensive program of guest researchers, leading international researchers visit the institute. The visitors present and pursue their research as well as interact and cooperate with researchers at IFN.

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