A commentary on the gravity equation in international business research
Abstract
Purpose
This commentary aims to discuss methodological issues and practical concerns of international business scholars who apply the gravity equation in their research.
Design/methodology/approach
The paper summarizes and compares theories and several advanced empirical specifications in the gravity equation.
Findings
The paper proposes a relatively low‐cost specification and estimation to implement such correction, which is robust in the presence of various endogeneity effects and non‐stationary variables. In the presence of zero‐values in the dataset, however, the multilateral specification is best estimated with a Poisson maximum likelihood.
Originality/value
The most important message of the commentary is that this equation should correct for multilateral resistance factors.
Keywords
Citation
Fratianni, M.U., Marchionne, F. and Hoon Oh, C. (2011), "A commentary on the gravity equation in international business research", Multinational Business Review, Vol. 19 No. 1, pp. 36-46. https://doi.org/10.1108/15253831111126730
Publisher
:Emerald Group Publishing Limited
Copyright © 2011, Emerald Group Publishing Limited