Syed Zulfiqar Ali Shah

Determinants of foreign direct investment in OECD member countries

Purpose - The aim of this paper is to get an insight into the potential determinants of foreign direct investment (FDI) for a panel of ten OECD member countries over the period of 1985-2009. Design/methodology/approach - Granger causality tests have been implemented in the study to identify causalities, both in the short- and long-run, between FDI and the variables that emerge as significant determinants of FDI during the regression analysis. Findings - The fixed effects estimation indicates that market size, labor cost and quality of infrastructure yield significant coefficients in relation to FDI for the panel of countries under study. A bi-directional short-run relationship is established between market size and labor costs in the short-run; whereas quality of infrastructure causes market size and labor costs in the short-run. For the long-run deviation of FDI from equilibrium, market size, labor costs and quality of infrastructure all bear the joint burden in the short-run to re-establish the equilibrium. Practical implications - The research findings have a number of policy implications for the OECD countries in specific and other developed economies in general. Labor costs seem to affect the FDI decision on the part of investors; therefore, the countries with low labor costs are preferred by investors in order to reduce the cost of their business and products. Policies should be devised to reduce the labor costs and improve the equality of infrastructure in the country in order to attract more FDI into the economy and for quick adjustment purposes in case of shock to the system. Originality/value - This paper investigates the relationship and significance of nine potential determinants of FDI in ten OECD member nations using panel data methods. The practices that are undertaken in developed and established economies are of vast significance to the economies that are in transition stages. The paper uncovers some important factors influencing FDI in the ten countries under study and provide a guide-map for other developed countries.

The Role of Press Freedom in Economic Development: A Global Perspective

In this study, the authors explore the role of press freedom in the development of an economy, both in terms of economic growth and foreign direct investment. The relationship between press freedom, foreign direct investment, and economic growth is analyzed using a balanced panel of 115 countries. The existence of a bidirectional relationship between press freedom and economic growth is established using the generalized method of moments technique. We also find a bidirectional relationship between foreign direct investment and economic growth using the analysis. Our results are not contradicted by similar indices produced by Reporters Sans Frontières and Freedom House.

Managerial Networking and Business Model Innovation: Empirical Study of New Ventures in an Emerging Economy

More than 50% of newly established ventures fail in the initial stage across the globe due to fairly well-known reasons: liability of newness, lack of resources and smallness. One way to overcome these issues is to build connections with external bodies that may help in exchange of knowledge and resources. While networking is a useful ally, it cannot save a venture from failure entirely on its own. New firms also need an effective business model innovation which is considered a key factor in the success of Small and Medium Enterprises (SMEs) in the current era. This article examines the importance of networking in building effective business model innovation. Data were collected through structured questionnaires using a sample size of 311 young SMEs operating in the emerging economy, Pakistan. Hypotheses were tested through Structural Equation Modeling (SEM) in analysis of a Moment Structures (AMOS).21. The results indicate that financial networking, business networking and political networking significantly and positively contribute to business model innovation. Owners and managers of young medium-sized firms are advised to focus on building relationship with external partners, financial institutions and government officials to create an effective business model innovation in order to survive in a turbulent market. Implications for practice are also discussed in detail. Keywords: networking; business model innovation; new ventures; emerging market Plus de 50% des entreprises nouvellement créées échouent dès leur première année pour des raisons clairement établies: le handicap dû à leur jeunesse, le manque de ressources et le handicap de la taille. Un des moyens pour surmonter ces difficultés est de construire des partenariats avec dautres structures qui apporteraient des ressources et savoirs. Bien que nécessaire, le réseau daffaires ou networking ne peut à lui seul prévenir une entreprise dechouer par son propre chef. Les nouvelles entreprises ont besoin dun business modèle innovant qui constitue actuellement le facteur clé de succès des Petites et moyennes entreprises (PME). Le présent article examine limportance du réseau daffaires ou networking dans la définition dun business model innovant. A partir dun questionnaire, nous avons mené une étude sur un échantillon de 311 nouvelles PME du Pakistan exerçant dans le secteur de léconomie émergeante. En utilisant des modèles structurés dequations dans AMOS. 21, nous avons testé nos hypothèses. Il en résulte que le partenariat financier, le partenariat daffaires et le partenariat politique influencent significativement et positivement la mise en place dun modèle daffaires innovant. Les actionnaires et les gestionnaires des jeunes PME sont conseillés de construire des relations avec des partenaires extérieurs, des instutions financières et des acteurs gouvernementaux afin de créer un modèle daffaires innovant qui garantisse leur pérennité sur un marché instable. Les implications pratiques sont aussi détaillées dans le présent article.

Economic Integration and Stock Market Comovement: An Empirical Study Pairing Pakistan’s Stock Exchange with 21 other Markets

Using daily stock returns from 2004 to 2014 for 21 countries paired with Pakistan, and using the Geweke methodology, the paper investigates the degree to which these stock markets are integrated with the Pakistani stock market. The paper also explores the factors that have an effect on the level of economic integration by applying fixed effect model. The result demonstrates statistically significant and high percentage of contemporaneous association between the 21 economies of the world and Pakistan. Greater comovement was observed between the equity markets during the period when Pakistani capital market and economy experience performance but less comovement was noted when Pakistan Stock Markets were under crises.

Jeopardies of Aversive Leadership: A Conservation of Resources Theory Approach

The research on the dark side of leadership is still in its infancy. We have contributed to this line of research by proposing that work alienation acts as an underlying mechanism through which aversive leadership results in reduced job performance. We further propose that psychological capital (PsyCap) acts as an important personal resource that reduces the negative effects of aversive leadership in the form of work alienation. The proposed model gets its support from the conversation of resources theory given by Hobfoll (1989) which suggests that stressful situation like an aversive leadership results in the loss of employee resources as a result of that he/she indulges in work alienation and shows poor job performance to retain back the lost resources. People with better personal resources in the form of PsyCap are better able to cope-up with the aversive leader behavior and make them able to avoid work alienation. It is a time-lagged study. The data for the current study was collected from 321 employees working in the service sector organizations, particularly universities, banks and telecom organizations, through personally administered questionnaires. The results supported the mediation and moderation hypothesis. Limitations and future research along with theoretical and practical implications are given at the end.

Heuristic biases in investment decision-making and perceived market efficiency: A survey at the Pakistan stock exchange

Purpose n n n n nThis paper aims to clarify the mechanism by which heuristics influences the investment decisions of individual investors, actively trading on the Pakistan Stock Exchange (PSX), and the perceived efficiency of the market. Most studies focus on well-developed financial markets and very little is known about investors’ behaviour in less developed financial markets or emerging markets. The present study contributes to filling this gap in the literature. n n n n nDesign/methodology/approach n n n n nInvestors’ heuristic biases have been measured using a questionnaire, containing numerous items, including indicators of speculators, investment decisions and perceived market efficiency variables. The sample consists of 143 investors trading on the PSX. A convenient, purposively sampling technique was used for data collection. To examine the relationship between heuristic biases, investment decisions and perceived market efficiency, hypotheses were tested by using correlation and regression analysis. n n n n nFindings n n n n nThe paper provides empirical insights into the relationship of heuristic biases, investment decisions and perceived market efficiency. The results suggest that heuristic biases (overconfidence, representativeness, availability and anchoring) have a markedly negative impact on investment decisions made by individual investors actively trading on the PSX and on perceived market efficiency. n n n n nResearch limitations/implications n n n n nThe primary limitation of the empirical review is the tiny size of the sample. A larger sample would have given more trustworthy results and could have empowered a more extensive scope of investigation. n n n n nPractical implications n n n n nThe paper encourages investors to avoid relying on heuristics or their feelings when making investments. It provides awareness and understanding of heuristic biases in investment management, which could be very useful for decision makers and professionals in financial institutions, such as portfolio managers and traders in commercial banks, investment banks and mutual funds. This paper helps investors to select better investment tools and avoid repeating expensive errors, which occur due to heuristic biases. They can improve their performance by recognizing their biases and errors of judgment, to which we are all prone, resulting in a more efficient market. So, it is necessary to focus on a specific investment strategy to control “mental mistakes” by investors, due to heuristic biases. n n n n nOriginality/value n n n n nThe current study is the first of its kind, focusing on the link between heuristics, individual investment decisions and perceived market efficiency within the specific context of Pakistan.

Investor protection and external financing: Empirical evidence from non-financial sector of Pakistan

This study aims to investigate the impact of investor protection on external financing. In developing economies like Pakistan, companies having foreign ownership have more access towards external finance as compared to companies having domestic ownership. Data extracted from 70 non-financial sector companies for the period 2003–2013, was analyzed by using fixed effect model. The findings showed that investor protection has significant impact on external financing, which means companies having strong investor protection are more inclined towards investor protection. Therefore, we can say that good policies and proper rules and regulation may attract the foreign investors.