From Italianization to Germanization: Division of Labor, Economic Rents, and Anti-german Attitudes in South Tyrol

Abstract : Do frictions in the labor market prompt salience in the ethnic conflict and induce a shift in voting towards extremist political platforms in a privileged minority group? We address this question by exploiting a natural experiment of history that occurred in the late 1960s in South Tyrol, a northernmost and predominantly German-speaking region of Italy. During the 1930s, the region underwent a massive process of Italianization that strengthened markedly entry barriers into public offices for the German- relative to the Italian-speaking population. The resulting ethnic division of labour was brought back to question by a new reform package that aimed at redistributing jobs in the public administration sector proportionally to the numerosity of each language group. Following the announcement of the reform, we document: (i) an increase in the vote share of the post-fascist party in the general elections; (ii) a higher support for the post-fascist party in those municipalities where Italians were fewer; and (iii) an even higher support for the post-fascist party in those municipalities where Italians were more specialized as public officers. We interpret this result as evidence of the salience of ethnic conflict when institutional changes induce competition between ethnic groups and put at risk historical-established economic rents of a privileged group.

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Opportunism and Internal Affairs

Abstract : The internal affairs doctrine is the sine qua non of modern corporate law. It assigns to a corporation’s chartering state sole authority to govern relations among constituents “inside” the firm—its stockholders, directors, and officers—while leaving to territorial law the relations between “outside” constituents and the firm. But why law should cleave an enterprise in this way is a puzzle. Economic theories of the firm can’t explain it, and the academic literature is short on answers. This article offers an account of the internal affairs doctrine that simultaneously explains the doctrine’s contours, accords with its historical emergence, and defends its status as one of the economy’s central organizing principles. It argues that the internal affairs rule is best understood as the law’s adaptive response to a collective-action problem distinctive (historically) to stockholders. Because selling shares across state borders is cheap, shares would, absent the rule, tend to flow into jurisdictions that provide stockholders with robust capital withdrawal and control rights, even where such rights, in the aggregate, would undermine the corporate form’s signal virtues. The internal affairs doctrine forestalls opportunistic trading and so facilitates capital formation. Moreover, as this article shows, the doctrine in fact emerged in the years following economic and legal changes that made such trading a threat for the first time. The prospect of opportunism, then, rather than anything inherent in the idea of the firm, defines the corporate boundary.

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Multinational Enterprises As Institutional Entrepreneurs: Directed and Diffused Institutional Entrepreneurship

Abstract : Co-evolutionary theory in institutional approaches to international business posits that, contrary to traditional institutional theory, multinational enterprises (MNEs) can and do alter the institutional environments of host countries where they operate. MNEs therefore can act as institutional entrepreneurs. This paper complements co-evolutionary theory by arguing that MNE’s engage in institutional entrepreneurship with local institutions in two overarching ways: directed and diffused. Directed institutional entrepreneurship is when the MNE targets one specific local institution and actively engages with it to foster change. In contrast, diffused institutional entrepreneurship is widespread and the MNE’s institutional entrepreneurship can be seen throughout several institutional interfaces. Using case studies based on a mining multinational, Vale S.A., and its investments in the Global North (Canada) and the Global South (Mozambique), this paper explores the differences between directed and diffused institutional entrepreneurship.

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