The Multinationals in Latin-America: Case Studies invites authors to contribute with company cases that deal with strategies, structures and decision-making processes of MNCs in Latin America; cross-border activities of enterprises such as intra-company trade, investments, finance, technology transfer, people management and innovation; interactions between MNC enterprises and other relevant actors in Latin-America: organizations, institutions, markets, governments, and indigenous stakeholders.The casebook also deals with cases about the impact of, and interaction between, the different Latin American cultural, economic, legal, and political settings on activities, strategies, structures and decision-making processes of MNCs. Other topics of interest in the AIB-LAT Casebook are cases that focus on business processes, settings and organizational behavior in Latin America and the development of strategic export alliances, and mergers and acquisitions in the Latin American context.

Governments typically build and maintain public infrastructure, which they fund through taxes. But in the past twenty-five years, many developing and advanced economies have introduced public-private partnerships (PPPs), which bundle finance, construction, and operation into a long-term contract with a private firm. In this book, the authors provide a summary of what, they believe, are the main lessons learned from the interplay of experience and the academic literature on PPPs, addressing such key issues as, when governments should choose a PPP instead of a conventional provision, how PPPs should be implemented, and the appropriate governance structures for PPPs. The authors argue that the fiscal impact of PPPs is similar to that of conventional provisions and that they do not liberate public funds. The case for PPPs rests on efficiency gains and service improvements, which often prove elusive. Indeed, pervasive renegotiations, faulty fiscal accounting, and poor governance threaten the PPP model.

Public-private partnerships (PPPs) are increasingly used to provide infrastructure services. Even though PPPs have the potential to increase efficiency and improve resource allocation, contract renegotiations have been pervasive.
We show that existing accounting standards allow governments to renegotiate PPP contracts and elude spending limits. Our model of renegotiations leads to observable predictions: (i) in a competitive market, firms lowball their offers, expecting to break even through renegotiation, (ii) renegotiations compensate lowballing and pay for additional expenditure, (iii) governments use renegotiation to increase spending and shift the burden of payments to future administrations, and (iv) there are significant renegotiations in the early stages of the contract, e.g. during construction. We use data on Chilean renegotiations of PPP contracts to examine these predictions and find that the evidence is consistent with the predictions of our model. Finally, we show that if PPP investments are counted as current government spending, the incentives to renegotiate contracts to increase spending disappear.

The project proposes the evaluation of the Bicentenario Schools Program; this is, to determine whether these schools are successful or not in raising the test scores of their students compared to other schools not in the program.
The evaluation is complicated by several confounding factors, explained in detail below. Because of this, the most traditional or popular methods have difficulty isolating the true causal effect of school participation on student achievement. Therefore, critics of this program argue that the higher test scores observed for these schools may be explained almost entirely by the higher ability or better background of their students.
This project proposes an evaluation that relies on economic theory and the estimation and analysis of structural models of behavior. Using a model of student and teacher behavior, it is possible to separate the confounding factors from the effects of school productivity. This will provide an estimation of the effect of selective schools on student achievement.
The model will be estimated using a Simulated Maximum Likelihood algorithm, and data from Chile´s SIMCE (Education Quality Measurement System), both for 8th grade and 10th grade.
Two main results are expected from this project. First, the evaluation will provide information on the success of the implementation of the Bicentenario Schools program. Second, the project also has theoretical value, because it will provide an alternative framework for program evaluation that places fewer requirements on the data than the traditional methods. This framework may also be applied to other contexts where only administrative data is available.

We analyze the role of toeholds (non-controlling but significant equity stakes) as a source of information for a bidder. A toehold provides an opportunity to interact with the target and its management and in the process get a better sense of the possible synergies from a merger or takeover. A bidder considering taking over a target will take a toehold beforehand if the informational benefits are large. Our model makes the following predictions: (i) a toehold is more beneficial if a target is opaque, i.e., if it is generally harder to value potential synergies with the target; (ii) a toehold is incrementally more beneficial if a bidder initially finds it harder than others to assess the value of potential synergies; (iii) that incremental benefit is less important, however, if the target is opaque; and (iv) the benefits from having a toehold are smaller if the number of potential rival bidders is higher. We test these predictions using a large sample of majority acquisitions of private and public companies for which we have information regarding whether the acquirer had a toehold in the target company prior to the majority acquisition. We find evidence consistent with our hypotheses, and thus with the idea that potential acquirers of a target use toeholds to improve their information about possible synergies with the target.

Although the use of a paternalistic style of management is widespread in the non-Western context, it has only recently received attention from Western scholars. in this study, we compare the presence of a paternalistic style of management and delegation practices across two culturally different organizational contexts, namely Chile and the Us. We also examine the effects of these management practices on job satisfaction and organizational commitment in both contexts. Results suggest that delegation of authority was more common in the Us than in Chile, whereas paternalism was higher in Chile than in the Us. Furthermore, delegation and paternalism were positively related to job satisfaction and organizational commitment in both countries. Unexpectedly, delegation had a stronger effect on job satisfaction and organizational commitment than a paternalistic style of management in the Chilean context, whereas the opposite was found in the Us sample. More over, the effect of a paternalistic management style on both job satisfaction and organizational commitment seemed to be fully mediated by delegation in Chile. We discuss both the theoretical and practical implications of these findings.

College men’s basketball players have alleged that the National Collegiate Athletic Association’s (NCAA) cap on athletic scholarships is illegal and leads to lower scholarships than would prevail in a free market. Recently, the NCAA increased the limit on athletic scholarships. The authors compare the marginal revenue product (MRP) of men’s basketball players to athletic scholarship caps. The authors estimate MRPs using players’ playing statistics; information on the distribution of pro salaries; and players’ future draft status. The authors find that players’ MRPs are greater than the athletic scholarship caps for about 60% of men’s basketball players, not just the star players.

Este trabajo investiga el impacto en la gestión del sector salud de los altos directivos públicos seleccionados a través del Sistema de Alta Dirección Pública (SADP) en Chile. El estudio se centró en los directores de los servicios de salud y su impacto sobre la gestión hospitalaria medida a través de los siguientes indicadores relevantes: días de estada promedio de los pacientes en los hospitales, rotación de pacientes, tasa de utilización de pabellones e índice de letalidad hospitalaria. Se utilizó un panel de datos mensuales para 27 servicios de salud durante el periodo enero 2003 a diciembre 2010. Se obtuvo que los directores de los servicios
de salud provistos a través del SADP generaron una mejora en cada uno de los índices de gestión hospitalaria estudiados.

La presente investigación busca participar de la discusión contemporánea que ha presentado la necesidad de fundamentar la ciencia administrativa y la teoría de las organizaciones a partir del concepto de phronesis en Aristóteles. De modo específico, el objetivo del artículo es desarrollar un argumento que, siguiendo dicha discusión, introduzca la interpretación tomista de la prudencia. En efecto, el concepto de racionalidad práctica que aporta Tomás de Aquino permitiría concebir una teoría de la prudencia empresarial que no sólo explique la estructura de la acción directiva, sino también todas las tareas que se desarrollan en la empresa.

We analyze the interaction of firm product quality and pricing decisions with financial distress and bankruptcy in the airline industry. We consider an airline’s choices of quality and price as dynamic decisions that trade off current cash flows for future revenue. We examine how airline mishandled baggage, on-time performance, and pricing are related to financial distress and bankruptcy, controlling for the endogeneity of financial distress and bankruptcy. We find that an airline’s quality decisions are differentially affected by financial distress and bankruptcy. Product quality decreases when airlines are in financial distress, consistent with financial distress reducing a firm’s incentive to invest in quality. In contrast, in bankruptcy product quality increases relative to financial distress. In addition, we find that firms price more aggressively when in financial distress consistent with firms trying to increase short-term market share and revenues.