Political institutions and electric utility investment: A cross-nation analysis

California Management Review

Volumn , Issue 2, 1998, Pages 18-35

  Bergara, Mario E ^a   Henisz, Witold J ^a   Spiller, Pablo T ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0032393929     PISSN: 00081256     EISSN: None     Source Type: Journal    
DOI: 10.2307/41165931     Document Type: Article

References (52)

1. United Nations, World Investment Report (New York, NY: United Nations, 1996).
2. D. North, Institutions, Institutional Change, and Economic Performance (New York, NY: Cambridge University Press, 1990).
3. D. North, "Institutions," Journal of Economic Perspectives, 5/1 (1991).
4. See, among others, North (1990), op. cit.; O. Williamson, "The Logic of Economic Organization," Journal of Law, Economics and Organization, 4 (1988); V. Goldberg, "Regulations and Administered Contracts," Bell Journal of Economics, 7 (1976); Y. Barzel, Economic Analysis of Property Rights (New York, NY: Cambridge University Press, 1989); P.T. Spiller, "Institutions and Regulatory Commitment in Utilities Privatization," Industrial and Corporate Change, 2/3 (1993); B. Levy and P.T. Spiller, "The Institutional Foundations of Regulatory Commitment: A Comparative Analysis of Five Country Studies of Telecommunications Regulation," Journal of Law, Economics and Organization, 10/2 (1994)
5. See, among others, North (1990), op. cit.; O. Williamson, "The Logic of Economic Organization," Journal of Law, Economics and Organization, 4 (1988); V. Goldberg, "Regulations and Administered Contracts," Bell Journal of Economics, 7 (1976); Y. Barzel, Economic Analysis of Property Rights (New York, NY: Cambridge University Press, 1989); P.T. Spiller, "Institutions and Regulatory Commitment in Utilities Privatization," Industrial and Corporate Change, 2/3 (1993); B. Levy and P.T. Spiller, "The Institutional Foundations of Regulatory Commitment: A Comparative Analysis of Five Country Studies of Telecommunications Regulation," Journal of Law, Economics and Organization, 10/2 (1994)
6. See, among others, North (1990), op. cit.; O. Williamson, "The Logic of Economic Organization," Journal of Law, Economics and Organization, 4 (1988); V. Goldberg, "Regulations and Administered Contracts," Bell Journal of Economics, 7 (1976); Y. Barzel, Economic Analysis of Property Rights (New York, NY: Cambridge University Press, 1989); P.T. Spiller, "Institutions and Regulatory Commitment in Utilities Privatization," Industrial and Corporate Change, 2/3 (1993); B. Levy and P.T. Spiller, "The Institutional Foundations of Regulatory Commitment: A Comparative Analysis of Five Country Studies of Telecommunications Regulation," Journal of Law, Economics and Organization, 10/2 (1994)
7. See, among others, North (1990), op. cit.; O. Williamson, "The Logic of Economic Organization," Journal of Law, Economics and Organization, 4 (1988); V. Goldberg, "Regulations and Administered Contracts," Bell Journal of Economics, 7 (1976); Y. Barzel, Economic Analysis of Property Rights (New York, NY: Cambridge University Press, 1989); P.T. Spiller, "Institutions and Regulatory Commitment in Utilities Privatization," Industrial and Corporate Change, 2/3 (1993); B. Levy and P.T. Spiller, "The Institutional Foundations of Regulatory Commitment: A Comparative Analysis of Five Country Studies of Telecommunications Regulation," Journal of Law, Economics and Organization, 10/2 (1994)
8. See, among others, North (1990), op. cit.; O. Williamson, "The Logic of Economic Organization," Journal of Law, Economics and Organization, 4 (1988); V. Goldberg, "Regulations and Administered Contracts," Bell Journal of Economics, 7 (1976); Y. Barzel, Economic Analysis of Property Rights (New York, NY: Cambridge University Press, 1989); P.T. Spiller, "Institutions and Regulatory Commitment in Utilities Privatization," Industrial and Corporate Change, 2/3 (1993); B. Levy and P.T. Spiller, "The Institutional Foundations of Regulatory Commitment: A Comparative Analysis of Five Country Studies of Telecommunications Regulation," Journal of Law, Economics and Organization, 10/2 (1994)
9. See, among others, North (1990), op. cit.; O. Williamson, "The Logic of Economic Organization," Journal of Law, Economics and Organization, 4 (1988); V. Goldberg, "Regulations and Administered Contracts," Bell Journal of Economics, 7 (1976); Y. Barzel, Economic Analysis of Property Rights (New York, NY: Cambridge University Press, 1989); P.T. Spiller, "Institutions and Regulatory Commitment in Utilities Privatization," Industrial and Corporate Change, 2/3 (1993); B. Levy and P.T. Spiller, "The Institutional Foundations of Regulatory Commitment: A Comparative Analysis of Five Country Studies of Telecommunications Regulation," Journal of Law, Economics and Organization, 10/2 (1994)
10. Specific or sunk investments are those that, once undertaken, have productive value in alternative uses substantially below their investment cost.
11. Observe that this incentive exists vis-à-vis public and private companies.
12. P.T. Spiller, "A Positive Political Theory of Regulatory Instruments: Contracts, Administrative Law or Regulatory Specificity," Southern California Law Review, 69/2 (1996).
13. Salant and Woroch, Salant, and Gilbert and Newbery have observed that concerns for future gains from cooperation can outweigh the short-run temptations of opportunism. This conclusion, which draws from the literature on repeated games, rests on the premise that firms and regulatory commissions have infinite horizons. D. Salant and G. Woroch, "Trigger Price Regulation," Rand Journal of Economics, 23 (1992); D. Salant, "Behind the Revolving Door: A New View of Public Utility Regulation," Rand Journal of Economics, 26/3 (1995); R. Gilbert and D. Newbery, "Regulation Games," Center for Economic Policy Discussion Paper No. 267, University of California, Berkeley, 1988.
14. Salant and Woroch, Salant, and Gilbert and Newbery have observed that concerns for future gains from cooperation can outweigh the short-run temptations of opportunism. This conclusion, which draws from the literature on repeated games, rests on the premise that firms and regulatory commissions have infinite horizons. D. Salant and G. Woroch, "Trigger Price Regulation," Rand Journal of Economics, 23 (1992); D. Salant, "Behind the Revolving Door: A New View of Public Utility Regulation," Rand Journal of Economics, 26/3 (1995); R. Gilbert and D. Newbery, "Regulation Games," Center for Economic Policy Discussion Paper No. 267, University of California, Berkeley, 1988.
15. Salant and Woroch, Salant, and Gilbert and Newbery have observed that concerns for future gains from cooperation can outweigh the short-run temptations of opportunism. This conclusion, which draws from the literature on repeated games, rests on the premise that firms and regulatory commissions have infinite horizons. D. Salant and G. Woroch, "Trigger Price Regulation," Rand Journal of Economics, 23 (1992); D. Salant, "Behind the Revolving Door: A New View of Public Utility Regulation," Rand Journal of Economics, 26/3 (1995); R. Gilbert and D. Newbery, "Regulation Games," Center for Economic Policy Discussion Paper No. 267, University of California, Berkeley, 1988.
16. B. Zelner, "The Effects of the Institutional Environment and Organizational Capabilities on Technology Adoption in the U.S. Electric Utility Industry, 1973-1996," Dissertation manuscript, Haas School of Business, University of California, Berkeley, 1998.
17. W. Henisz, "The Institutional Environment for International Investment," Dissertation manuscript, Haas School of Business, University of California, Berkeley, 1998.
18. One exception is Vogel's analysis of environmental policies in Great Britain and the United States. He attributes political institutions an important role in explaining different "national styles of regulation." D. Vogel, National Styles of Regulation: Environmental Policy in Great Britain and the United States (Ithaca, NY: Cornell University Press, 1986).
19. See, for example, B. Levy and P.T. Spiller, eds., Regulations, Institutions, and Commitment (New York, NY: Cambridge University Press, 1996); R. Gilbert and E. Kahn, International Comparisons of Electricity Regulation (New York, NY: Cambridge University Press, 1996); R. Ramamurti, ed., Privatizing Monopolies (Baltimore, MD: Johns Hopkins University Press, 1996).
20. See, for example, B. Levy and P.T. Spiller, eds., Regulations, Institutions, and Commitment (New York, NY: Cambridge University Press, 1996); R. Gilbert and E. Kahn, International Comparisons of Electricity Regulation (New York, NY: Cambridge University Press, 1996); R. Ramamurti, ed., Privatizing Monopolies (Baltimore, MD: Johns Hopkins University Press, 1996).
21. See, for example, B. Levy and P.T. Spiller, eds., Regulations, Institutions, and Commitment (New York, NY: Cambridge University Press, 1996); R. Gilbert and E. Kahn, International Comparisons of Electricity Regulation (New York, NY: Cambridge University Press, 1996); R. Ramamurti, ed., Privatizing Monopolies (Baltimore, MD: Johns Hopkins University Press, 1996).
22. Levy and Spiller (1994), op. cit.
23. Issues like regulatory uncertainty, costly disputes between regulators and firms, and poor systems of arbitration are also discussed in M. Bishop, J. Kay, and C. Mayer, The Regulatory Challenge (New York, NY: Oxford University Press, 1995).
24. Analyses on bureaucratic discretion, congressional influence, commitment, and the interaction among politicians, interest groups and regulators can be found in B. Weingast and M. Moran, "Bureaucratic Discretion or Congressional Control? Regulatory Policymaking by the Federal Trade Commission," Journal of Political Economy, 91/5 (1983); J. Ferejohn and C. Shipan, "Congressional Influence on Bureaucracy," Journal of Law, Economics and Organization, 6 (1990), D. Spulber and D. Besanko, "Delegation, Commitment, and the Regulatory Mandate," Journal of Law, Economics and Organization, 8/1 (1992); P.T. Spiller, "Politicians, Interest Groups, and Regulators: A Multiple-Principals Agency Theory of Regulation, or 'Let Them Be Bribed'," Journal of Law and Economics, 33 (1990).
25. Analyses on bureaucratic discretion, congressional influence, commitment, and the interaction among politicians, interest groups and regulators can be found in B. Weingast and M. Moran, "Bureaucratic Discretion or Congressional Control? Regulatory Policymaking by the Federal Trade Commission," Journal of Political Economy, 91/5 (1983); J. Ferejohn and C. Shipan, "Congressional Influence on Bureaucracy," Journal of Law, Economics and Organization, 6 (1990), D. Spulber and D. Besanko, "Delegation, Commitment, and the Regulatory Mandate," Journal of Law, Economics and Organization, 8/1 (1992); P.T. Spiller, "Politicians, Interest Groups, and Regulators: A Multiple-Principals Agency Theory of Regulation, or 'Let Them Be Bribed'," Journal of Law and Economics, 33 (1990).
26. Analyses on bureaucratic discretion, congressional influence, commitment, and the interaction among politicians, interest groups and regulators can be found in B. Weingast and M. Moran, "Bureaucratic Discretion or Congressional Control? Regulatory Policymaking by the Federal Trade Commission," Journal of Political Economy, 91/5 (1983); J. Ferejohn and C. Shipan, "Congressional Influence on Bureaucracy," Journal of Law, Economics and Organization, 6 (1990), D. Spulber and D. Besanko, "Delegation, Commitment, and the Regulatory Mandate," Journal of Law, Economics and Organization, 8/1 (1992); P.T. Spiller, "Politicians, Interest Groups, and Regulators: A Multiple-Principals Agency Theory of Regulation, or 'Let Them Be Bribed'," Journal of Law and Economics, 33 (1990).
27. Analyses on bureaucratic discretion, congressional influence, commitment, and the interaction among politicians, interest groups and regulators can be found in B. Weingast and M. Moran, "Bureaucratic Discretion or Congressional Control? Regulatory Policymaking by the Federal Trade Commission," Journal of Political Economy, 91/5 (1983); J. Ferejohn and C. Shipan, "Congressional Influence on Bureaucracy," Journal of Law, Economics and Organization, 6 (1990), D. Spulber and D. Besanko, "Delegation, Commitment, and the Regulatory Mandate," Journal of Law, Economics and Organization, 8/1 (1992); P.T. Spiller, "Politicians, Interest Groups, and Regulators: A Multiple-Principals Agency Theory of Regulation, or 'Let Them Be Bribed'," Journal of Law and Economics, 33 (1990).
28. On judicial review and regulator's discretion, see P.T. Spiller, "Agency Discretion Under Judicial Review," Mathl. Comput. Modelling, 16/8-9. (1992).
29. For an excellent treatment of legislative and executive institutions, see M. Shugart and J. Carey, Presidents and Assemblies: Constitutional Design and Electoral Dynamics (New York, NY: Cambridge University Press. (1992).
30. See B. Weingast, "The Economic Role of Political Institutions: Market Preserving Federalism and Economic Development," Journal of Law, Economics and Organization, 7/1 (April 1995): 1-31.
31. Levy and Spiller (1994), op. cit.
32. For a similar treatment of the problem as applied to inflation and fiscal deficits, see S. Edwards and G. Tabellini, "Political Instability, Political Weakness and Inflation: An Empirical Analysis," NBER Working Paper, 1991;
33. S. Edwards and G. Tabellini, "The Political Economy of Fiscal Policy and Inflation in Developing Countries: An Empirical Analysis," World Bank, Mimeo, 1991.
34. Levy and Spiller (1994), op. cit.
35. Despite recent improvements in the institutional environment of the Philippines, investors are still wary of investing in easily expropriable power plants. Their solution has been to place the plants on floating barges which can be moved from one region to another or, potentially, even leave the country if the political environment turns sour. "Napocor Eyes Solution to Power Blackouts," The Philippine Reporter, August 31, 1996.
36. POL = (LAW + 1/7 (FED + DUAL + BICAM + LEGEFF + MILIT + REL + PART) + 1/3 (BUREAU + CORRUP + TENS)) POL2 = (JUDTEN + 1/7 (FED + DUAL + BICAM + LEGEFF + MILIT + REL + PART) + 1/3 (BUREAU + CORRUP + TENS))
37. Law and order, bureaucratic quality, government corruption, contract repudiation, and government expropriation. International Country Risk Guide, Political and Financial Risk Tables, several issues.
38. R. Gastil, Freedom in the World: Political and Civil Liberties (New York, NY: Greenwood Press, several years).
39. This sample is not substantially different from the larger sample as is evidenced by the summary statistics in Appendix Table 3 and the replication of the regressions presented in Table 1 for the smaller sample presented in Appendix Table 4.
40. K. Jaggers and T.R. Gurr, "Polity III: Regime Change and Political Authority, 1800-1994," computer file, Interuniversity Consortium for Political and Social Research, Ann Arbor, MI, 1996.
41. I. Gorvin, Elections Since 1945: A Worldwide Reference Compendium (Chicago, IL: St. James Press, 1989).
42. J.D. Derbyshire and I. Derbyshire, Political Systems of the World (New York, NY: St. Martin's Press, 1996).
43. Note that recent similar empirical work in macroeconomic growth and international business has focussed on measures of economic outcomes such as government expropriation of private sector assets, repudiation of contracts by government, manager's perception of political risk and patent protection. The measures developed here differ in that they explicitly examine the role of political institutions as determinants of economic outcomes. For macroeconomic growth, see S. Knack and P. Keefer, "Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economic and Politics, 7/3 (1995); P. Mauro, "Corruption, Country Risk and Growth," Quarterly Journal of Economics (1995); R. Barro, "Democracy and Growth," Journal of Economic Growth, 1/1 (1996); S. Borner, A. Brunetti, and B. Weder, Political Credibility and Economic Development (New York, NY: St. Martins Press, 1995); N. Campos and J. Nugent, "Institutions and Economic Growth in Latin America: An Econometric Study," unpublished manuscript, 1996; R. La Porta et al., "Legal Determinants of External Finance," National Bureau of Economic Research, Working Paper No. 5879, 1997. For international business, see S. Agarwal, and S. Ramaswami, "Choice of Foreign Market Entry Mode: Impact of Ownership, Location and Internalization Factors," Journal of International Business Studies, 23/1 (1992); K. Brouthers, "The Influence of International Risk on Entry Mode Strategy in the Computer Software Industry," Management International Review, 35/1 (1995); J. Oxley, "International Hybrids: Transaction Cost Treatment and Empirical Study," Dissertation manuscript, Haas School of Business, University of California, Berkeley, 1995.
44. Note that recent similar empirical work in macroeconomic growth and international business has focussed on measures of economic outcomes such as government expropriation of private sector assets, repudiation of contracts by government, manager's perception of political risk and patent protection. The measures developed here differ in that they explicitly examine the role of political institutions as determinants of economic outcomes. For macroeconomic growth, see S. Knack and P. Keefer, "Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economic and Politics, 7/3 (1995); P. Mauro, "Corruption, Country Risk and Growth," Quarterly Journal of Economics (1995); R. Barro, "Democracy and Growth," Journal of Economic Growth, 1/1 (1996); S. Borner, A. Brunetti, and B. Weder, Political Credibility and Economic Development (New York, NY: St. Martins Press, 1995); N. Campos and J. Nugent, "Institutions and Economic Growth in Latin America: An Econometric Study," unpublished manuscript, 1996; R. La Porta et al., "Legal Determinants of External Finance," National Bureau of Economic Research, Working Paper No. 5879, 1997. For international business, see S. Agarwal, and S. Ramaswami, "Choice of Foreign Market Entry Mode: Impact of Ownership, Location and Internalization Factors," Journal of International Business Studies, 23/1 (1992); K. Brouthers, "The Influence of International Risk on Entry Mode Strategy in the Computer Software Industry," Management International Review, 35/1 (1995); J. Oxley, "International Hybrids: Transaction Cost Treatment and Empirical Study," Dissertation manuscript, Haas School of Business, University of California, Berkeley, 1995.
45. Note that recent similar empirical work in macroeconomic growth and international business has focussed on measures of economic outcomes such as government expropriation of private sector assets, repudiation of contracts by government, manager's perception of political risk and patent protection. The measures developed here differ in that they explicitly examine the role of political institutions as determinants of economic outcomes. For macroeconomic growth, see S. Knack and P. Keefer, "Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economic and Politics, 7/3 (1995); P. Mauro, "Corruption, Country Risk and Growth," Quarterly Journal of Economics (1995); R. Barro, "Democracy and Growth," Journal of Economic Growth, 1/1 (1996); S. Borner, A. Brunetti, and B. Weder, Political Credibility and Economic Development (New York, NY: St. Martins Press, 1995); N. Campos and J. Nugent, "Institutions and Economic Growth in Latin America: An Econometric Study," unpublished manuscript, 1996; R. La Porta et al., "Legal Determinants of External Finance," National Bureau of Economic Research, Working Paper No. 5879, 1997. For international business, see S. Agarwal, and S. Ramaswami, "Choice of Foreign Market Entry Mode: Impact of Ownership, Location and Internalization Factors," Journal of International Business Studies, 23/1 (1992); K. Brouthers, "The Influence of International Risk on Entry Mode Strategy in the Computer Software Industry," Management International Review, 35/1 (1995); J. Oxley, "International Hybrids: Transaction Cost Treatment and Empirical Study," Dissertation manuscript, Haas School of Business, University of California, Berkeley, 1995.
46. Note that recent similar empirical work in macroeconomic growth and international business has focussed on measures of economic outcomes such as government expropriation of private sector assets, repudiation of contracts by government, manager's perception of political risk and patent protection. The measures developed here differ in that they explicitly examine the role of political institutions as determinants of economic outcomes. For macroeconomic growth, see S. Knack and P. Keefer, "Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economic and Politics, 7/3 (1995); P. Mauro, "Corruption, Country Risk and Growth," Quarterly Journal of Economics (1995); R. Barro, "Democracy and Growth," Journal of Economic Growth, 1/1 (1996); S. Borner, A. Brunetti, and B. Weder, Political Credibility and Economic Development (New York, NY: St. Martins Press, 1995); N. Campos and J. Nugent, "Institutions and Economic Growth in Latin America: An Econometric Study," unpublished manuscript, 1996; R. La Porta et al., "Legal Determinants of External Finance," National Bureau of Economic Research, Working Paper No. 5879, 1997. For international business, see S. Agarwal, and S. Ramaswami, "Choice of Foreign Market Entry Mode: Impact of Ownership, Location and Internalization Factors," Journal of International Business Studies, 23/1 (1992); K. Brouthers, "The Influence of International Risk on Entry Mode Strategy in the Computer Software Industry," Management International Review, 35/1 (1995); J. Oxley, "International Hybrids: Transaction Cost Treatment and Empirical Study," Dissertation manuscript, Haas School of Business, University of California, Berkeley, 1995.
47. Note that recent similar empirical work in macroeconomic growth and international business has focussed on measures of economic outcomes such as government expropriation of private sector assets, repudiation of contracts by government, manager's perception of political risk and patent protection. The measures developed here differ in that they explicitly examine the role of political institutions as determinants of economic outcomes. For macroeconomic growth, see S. Knack and P. Keefer, "Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economic and Politics, 7/3 (1995); P. Mauro, "Corruption, Country Risk and Growth," Quarterly Journal of Economics (1995); R. Barro, "Democracy and Growth," Journal of Economic Growth, 1/1 (1996); S. Borner, A. Brunetti, and B. Weder, Political Credibility and Economic Development (New York, NY: St. Martins Press, 1995); N. Campos and J. Nugent, "Institutions and Economic Growth in Latin America: An Econometric Study," unpublished manuscript, 1996; R. La Porta et al., "Legal Determinants of External Finance," National Bureau of Economic Research, Working Paper No. 5879, 1997. For international business, see S. Agarwal, and S. Ramaswami, "Choice of Foreign Market Entry Mode: Impact of Ownership, Location and Internalization Factors," Journal of International Business Studies, 23/1 (1992); K. Brouthers, "The Influence of International Risk on Entry Mode Strategy in the Computer Software Industry," Management International Review, 35/1 (1995); J. Oxley, "International Hybrids: Transaction Cost Treatment and Empirical Study," Dissertation manuscript, Haas School of Business, University of California, Berkeley, 1995.
48. Note that recent similar empirical work in macroeconomic growth and international business has focussed on measures of economic outcomes such as government expropriation of private sector assets, repudiation of contracts by government, manager's perception of political risk and patent protection. The measures developed here differ in that they explicitly examine the role of political institutions as determinants of economic outcomes. For macroeconomic growth, see S. Knack and P. Keefer, "Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economic and Politics, 7/3 (1995); P. Mauro, "Corruption, Country Risk and Growth," Quarterly Journal of Economics (1995); R. Barro, "Democracy and Growth," Journal of Economic Growth, 1/1 (1996); S. Borner, A. Brunetti, and B. Weder, Political Credibility and Economic Development (New York, NY: St. Martins Press, 1995); N. Campos and J. Nugent, "Institutions and Economic Growth in Latin America: An Econometric Study," unpublished manuscript, 1996; R. La Porta et al., "Legal Determinants of External Finance," National Bureau of Economic Research, Working Paper No. 5879, 1997. For international business, see S. Agarwal, and S. Ramaswami, "Choice of Foreign Market Entry Mode: Impact of Ownership, Location and Internalization Factors," Journal of International Business Studies, 23/1 (1992); K. Brouthers, "The Influence of International Risk on Entry Mode Strategy in the Computer Software Industry," Management International Review, 35/1 (1995); J. Oxley, "International Hybrids: Transaction Cost Treatment and Empirical Study," Dissertation manuscript, Haas School of Business, University of California, Berkeley, 1995.
49. Note that recent similar empirical work in macroeconomic growth and international business has focussed on measures of economic outcomes such as government expropriation of private sector assets, repudiation of contracts by government, manager's perception of political risk and patent protection. The measures developed here differ in that they explicitly examine the role of political institutions as determinants of economic outcomes. For macroeconomic growth, see S. Knack and P. Keefer, "Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economic and Politics, 7/3 (1995); P. Mauro, "Corruption, Country Risk and Growth," Quarterly Journal of Economics (1995); R. Barro, "Democracy and Growth," Journal of Economic Growth, 1/1 (1996); S. Borner, A. Brunetti, and B. Weder, Political Credibility and Economic Development (New York, NY: St. Martins Press, 1995); N. Campos and J. Nugent, "Institutions and Economic Growth in Latin America: An Econometric Study," unpublished manuscript, 1996; R. La Porta et al., "Legal Determinants of External Finance," National Bureau of Economic Research, Working Paper No. 5879, 1997. For international business, see S. Agarwal, and S. Ramaswami, "Choice of Foreign Market Entry Mode: Impact of Ownership, Location and Internalization Factors," Journal of International Business Studies, 23/1 (1992); K. Brouthers, "The Influence of International Risk on Entry Mode Strategy in the Computer Software Industry," Management International Review, 35/1 (1995); J. Oxley, "International Hybrids: Transaction Cost Treatment and Empirical Study," Dissertation manuscript, Haas School of Business, University of California, Berkeley, 1995.
50. Note that recent similar empirical work in macroeconomic growth and international business has focussed on measures of economic outcomes such as government expropriation of private sector assets, repudiation of contracts by government, manager's perception of political risk and patent protection. The measures developed here differ in that they explicitly examine the role of political institutions as determinants of economic outcomes. For macroeconomic growth, see S. Knack and P. Keefer, "Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economic and Politics, 7/3 (1995); P. Mauro, "Corruption, Country Risk and Growth," Quarterly Journal of Economics (1995); R. Barro, "Democracy and Growth," Journal of Economic Growth, 1/1 (1996); S. Borner, A. Brunetti, and B. Weder, Political Credibility and Economic Development (New York, NY: St. Martins Press, 1995); N. Campos and J. Nugent, "Institutions and Economic Growth in Latin America: An Econometric Study," unpublished manuscript, 1996; R. La Porta et al., "Legal Determinants of External Finance," National Bureau of Economic Research, Working Paper No. 5879, 1997. For international business, see S. Agarwal, and S. Ramaswami, "Choice of Foreign Market Entry Mode: Impact of Ownership, Location and Internalization Factors," Journal of International Business Studies, 23/1 (1992); K. Brouthers, "The Influence of International Risk on Entry Mode Strategy in the Computer Software Industry," Management International Review, 35/1 (1995); J. Oxley, "International Hybrids: Transaction Cost Treatment and Empirical Study," Dissertation manuscript, Haas School of Business, University of California, Berkeley, 1995.
51. Note that recent similar empirical work in macroeconomic growth and international business has focussed on measures of economic outcomes such as government expropriation of private sector assets, repudiation of contracts by government, manager's perception of political risk and patent protection. The measures developed here differ in that they explicitly examine the role of political institutions as determinants of economic outcomes. For macroeconomic growth, see S. Knack and P. Keefer, "Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economic and Politics, 7/3 (1995); P. Mauro, "Corruption, Country Risk and Growth," Quarterly Journal of Economics (1995); R. Barro, "Democracy and Growth," Journal of Economic Growth, 1/1 (1996); S. Borner, A. Brunetti, and B. Weder, Political Credibility and Economic Development (New York, NY: St. Martins Press, 1995); N. Campos and J. Nugent, "Institutions and Economic Growth in Latin America: An Econometric Study," unpublished manuscript, 1996; R. La Porta et al., "Legal Determinants of External Finance," National Bureau of Economic Research, Working Paper No. 5879, 1997. For international business, see S. Agarwal, and S. Ramaswami, "Choice of Foreign Market Entry Mode: Impact of Ownership, Location and Internalization Factors," Journal of International Business Studies, 23/1 (1992); K. Brouthers, "The Influence of International Risk on Entry Mode Strategy in the Computer Software Industry," Management International Review, 35/1 (1995); J. Oxley, "International Hybrids: Transaction Cost Treatment and Empirical Study," Dissertation manuscript, Haas School of Business, University of California, Berkeley, 1995.
52. Note that similar results were obtained using the measure of effectiveness of the legal system from Mauro [op. cit.] and are available from the author upon request.