Global Diversity Management: Towards a Conceptual Framework

[Excerpt] Compared to research on cross-national differences in diversity management, more research has been conducted within the second key area of global diversity management – that on the effective management of culturally diverse teams and organizations, and on the development of global competence among employees. Indeed, research on multicultural teams (e.g. Earley and Gibson, 2002), global competence (e.g. Chang and Tharenou, 2004; Earley and Peterson, 2004), and conflict management in multicultural groups (e.g. Barkema et al., 2003) has been emerging in the last decade; it simply has not been labelled a part of global diversity management per se. However, to date, there are no unifying frameworks for studying global diversity, with the exception of one by Mor Barak (2000), which focuses on the connection between subsidiaries and the larger communities in which they are embedded. While we agree that this is an important issue, many leaders of global firms first want to know how to manage global diversity within the confines of their organization. Thus, one of our goals in introducing this special issue on global diversity is to propose one such framework, to serve two primary aims: (a) to provide a framework within which to situate the papers that appear in this special issue; and (b) to stimulate future research in the area. In what follows, we briefly describe this framework, and then we introduce the papers for the special issue

Political instability, public investment and macroeconomic performance

This paper attempts to provide a framework to explain both the lower share of current spending in large fiscal adjustments and the potential expansionary effects of fiscal contractions. We distinguish between current spending and productivity enhancing public investments and analyze the potential determinants of the policy maker's choice for the composition of overall public spending. Using this framework, we also link the overall macroeconomic performance to the public spending decisions. Our results suggest that raising current spending at the expense of public investment is associated with less favourable performance in terms of not only inflation and output but also, interestingly, future ‘current'' spending.composition of public spending

Effects of Exchange Rate Volatility on the Volume and Volatility of Bilateral Exports

We present an empirical investigation of a recently suggested but untested proposition that exchange rate volatility can have an impact on both the volume and variability of trade flows, considering a broad set of countries' bilateral real trade flows over the period 1980-1998. We generate proxies for the volatility of real trade flows and real exchange rates after carefully scrutinizing these variables' time series properties. Similar to the findings of earlier theoretical and empirical research, our first set of results show that the impact of exchange rate uncertainty on trade flows is indeterminate. Our second set of results provide new and novel findings that exchange rate volatility has a consistent positive and significant effect on the volatility of bilateral trade flows.exchange rates, volatility, fractional integration, trade flows

The second moments matter: The response of bank lending behavior to macroeconomic uncertainty

In this paper we investigate whether macroeconomic uncertainty could distort banks’ allocation of loanable funds. To provide a road- map for our empirical investigation, we present a simple framework which demonstrates that lower uncertainty about the return from lending should lead to a more unequal distribution of lending across banks as managers take advantage of more precise knowledge of different lending opportunities. When bank-specific differences in lending opportunities are harder to predict, we should observe less cross-sectional variation in loan-to-asset ratios. Using a comprehensive U.S. commercial bank data set, we receive support for our hypothesis.Bank lending, financial intermediation, credit, macroeconomic, uncertainty, panel data, ARCH.

The Banking Sector, Government Bonds and Financial Intermediation: The Case of Emerging Market Countries

This paper develops an analytical framework to explore how financial sector characteristics shape domestic debt dynamics in emerging market economies. Our analysis suggests that the more competitive the banking sector and the more liquid and deeper the deposit market, the better would be the conditions in the public securities market. Our results also reveal that the lower the financial depth, the greater the scale of private sector credits that are crowded-out by public borrowing. To the extent that credit availability is associated with improved productivity and better output performance, the lack of financial depth in emerging market countries implies that extensive domestic borrowing in these countries may have consequences far beyond the concern with fiscal sustainability. As such, our results higlight the importance of developing domestic debt markets for financial and macroeconomic stability.Financial sector; public debt; cost of borrowing.

The second moments matter: The response of bank lending behaviour to macroeconomic uncertainty

This paper investigates whether variations in macroeconomic uncertainty distort banks' allocation of loanable funds by affecting the predictability of banks' returns from lending. Low levels of macroeconomic uncertainty will allow bankers to base their lending decisions on more accurate evaluations of different lending opportunities, leading to a more unequal distribution of lending across banks. Contrarily, increased macroeconomic uncertainty will hinder bankers ability to identify and channel funds towards the best opportunities, including more similar lending behaviour across banks. Our empirical analysis provides support for the hypothesis that macroeconomic uncertainty adversely affects the efficient allocation of loanable banks.

The Impact of Macroeconomic Uncertainty on Bank Lending Behavior

bank lending, macroeconomic uncertainty, panel data, ARCH