Contagion Influence on Trade and Investment Policy: A Network Perspective
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On
Influence
Policy:
A
Network
Trade
and
Perspective BalajiR. Kokae UNIVERSITYOF PITTSBURGH
JohnE. Prescott** UNIVERSITYOF PITTSBURGH
RavindranathMadhavan*** UNIVERSITYOF ILLINOISAT URBANA-CHAMPAIGN
Adopting a network perspective, we demonstrate that two different, yet complementary, forces influence the formation of trade and investment policy. On the one hand, nations that are trading partners develop similar policies through a process of close and enduring interaction. On the other Understanding the tradeand investment policy frameworkof a country is a complex, yet necessary, component of international business (Murtha and
hand, nations that compete for trading opportunities adopt comparable policies through a process of establishing similar types of relations with other nations, even though they may not have direct ties to each other. Implications for managers of multinational enterprises are developed. Lenway, 1994). Competing in an environment of increasing globalization and interdependency, managers of multinational enterprises (MNEs) need to take
R. Koka is a doctoral candidate in Strategic Management at the Katz School, University of Pittsburgh. His research focuses on understanding the effect of strategic alliances, inter-firm networks and the institutional context on firm performance.
*Balaji
* * John E. Prescott is professor of Business Administration
at the Katz School, University of Pittsburgh. His research focuses on the dynamics of networks and competitive intelligence. Currently, he is the editor of The Competitive Intelligence Review.
Ravindranath ("Ravi") Madhavan is Assistant Professor in the Department of Business Administration at the University of Illinois, Urbana-Champaign. He received his Ph.D. in Strategic Management from the University of Pittsburgh in 1996. His research seeks to understand the effect of inter-firm networks on three key elements of competitive advantage - strategic focus (particularly focused organizational knowledge), flexibility, and foresight (strategic thinking in managers and firms). We acknowledge helpful comments from Professor David Makhija, three anonymous reviewers for this journal, as well Planning and Policy workshop at the University of Pittsburgh, the University of Illinois at Urbana-Champaign. We also thank supplementary data collection and analysis. JOURNAL OF INTERNATIONALBUSINESS STUDIES,
30, 1
Krackhardt, Professor Mona as participants in the Strategic and the Strategy Proseminar at Qingjiu Tao for assistance with
(FIRST QUARTER
1999): 12 7-148.
127
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CONTAGION INFLUENCE ON TRADE AND INVESTMENT POLICY
into account the trade policies of multiple host countries. There are three key reasons for adopting such a multi-country perspective of trade policy. First, tradepolicies evolve over time as a result of a variety of factors,including the host country's relationships with existi
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