Abstract

     Trade in digital goods and services have witnessed increasing growth in recent years, accompanied by a corresponding increase in data flows across national boundaries. At the same time, governments around the world have enacted data policies that restrict such cross border data flows in their effort to claim sovereignty over data generated from within their countries. However, scholars have long proclaimed that any restrictions to the Internet and associated digital trade will have serious economic consequences. Given this context, we analyze the impact of data policies that impose restrictions on digital trade, specifically on cross border data flows. We construct Market Data Restrictions Index (MDRI), that measures the data restrictions faced by an exporting country from their trade partners. We use a variation of random effect model on a panel data set consisting of 60 countries that contribute to more than 50 percent of IT services export during the period 2006–2017. The results indicate that apart from variables such as Foreign Direct Investment, and Service Value Added, the MDRI of partner countries has a moderate negative effect on IT services export. If countries move from liberal policies to stringent data restrictions, the economies of the country that exports its ICT services to these partner countries is affected substantially. Hence government regulators shall be cautious in imposing stringent data restrictions as it affects global digital trade.

Introduction

     Global flows of goods and services that contribute to international trade have reached US$25 trillion as of 2019 (UNCTAD, 2020). Over the last two decades, financial flows including Foreign Direct Investment (FDI) have become significant across countries (UNCTAD, 2020). Recently there is a growing interest amongst researchers to look at digital information flows as another factor of importance in international trade and consequently on growth of the economies (MGI, 2014; MGI, 2016). Between 2004 and 2014, it is estimated that digital trade increased world GDP by more than 10 per cent, equivalent to US$7.8 trillion (Meltzer & Lovelock, 2018). International digital trade that comprises of import and export of digital goods and services, involves significant data flows across national borders.

     Most of the data flows of the last decade were primarily attributable to Information and Communication Technology (ICT) services.IT outsourcing firms, especially in countries such as India, benefitted due to free flow of cross border data, thereby providing ICT services to business customers located mainly in the U.S. and Europe. For example, India – one of the world’s leading ICT outsourcing destinations, witnessed exports of ICT services worth US$105 billion in 2019, with an annual compounded growth rate of about 10.23 percent since 2010. Ubiquitous Internet connectivity, digitization of business processes, and large availability of skilled technical manpower has contributed to the growth of ICT outsourcing services in India and has established the country firmly in the global digital supply chain (Carmel & Tjia, 2005; Edwards & Sridhar, 2005).

Conclusions and future research directions

     This paper makes two unique contributions to the literature on impact of data related policies on trade, more specifically digital services exports. One, the paper has constructed an index to measure the data policy restrictions a country faces in the market using the restrictions on data cluster of the existing DTRI index. Two, the paper then estimates the impact of such restrictions on the digital services exports of a country along with the traditional variables that have been used in prior literature. The results indicate a negative impact of data policy restrictions on digital services exports.

     Since DTRI as a measure of restrictions on digital trade that is time invariant, further research into the impact of a time varying measure of data policy restrictions would add more rigor to the understanding the impact of data restrictions on trade. Furthermore, trade being a bilateral process, regulations imposed by both the trading partners have a bearing on the volume of trade. As such it would be valuable to understand such interactions.

Abstract

     It is important to unearth the role of structural change factors for sustainable growth in developed economies. Economic complexity, export product quality, and institutional indicators represent the overall structural change and transformation in an economy. This paper probed the influence of export product quality and economics of complexity on economic growth for 28 OECD (Organization for Economic Co-operation and Development) countries using the data from 1990 to 2019. In doing so, the study employs three-panel data econometric models to investigate the role of economic complexity, export quality, and institutional quality on economic development. The paper performs the empirical tests, including the cross-sectional related dependency methods and cointegration techniques. As per the results emerging from fully modified OLS (FMOLS) and dynamic OLS (DOLS) estimation, export quality and financial development positively and significantly strongly impact growth in the long run. The empirical conclusions report detailed discussion on sustainable growth and discuss novel implications concerning product quality and institutional performance. The conclusions stress the practical implications for sustainable economic growth of OECD economies.

Introduction

     Over the last decade, there has been rising research in describing and analyzing countries’ productive structures. New measures of the economic complexity index have been developed to determine the sophisticating nature of the procedure of production making and gains from trade. According to Hidalgo and Hausmann (2009), the economic complexity helps to analyze countries’ productive capacities and the product quality of exports. Since they are more effective in estimating economic growth than traditional predictors, like GDP per capita, they are now widely used (Hausmann et al., 2014). Economic complexity occurs in a country if it can produce diversified products and export products have a more complex production structure. More specifically, economic complexity is the expanse of productive knowledge a country possesses that impacts economic performance. According to Lapatinas et al. (2019), it has been observed empirically that countries with higher complexity tend to gain additionally from trade and have a high degree of trade openness. Countries with advanced levels of economic-based complexity have higher economic capabilities since they utilize more intensive technology and high skilled labor (Hartmann et al., 2017).

Concluding remarks and implications

     International trade and industrial activities are conducive to the economic development of emerging and developed economies. However, the bolster economic objectives come with the repercussions of environmental externalities and structural transformation challenges. The on-hand research study is an effort to examine the heterogeneous impacts of structural change and institutional quality on economic growth. In doing so, the current study draws novel conclusions and implications regarding the sustainable development goals and sustainable growth in developed economies. This research attempted to explore the nexus among economic growth, economic complexity, export quality, financial development, human capital, renewable energy, and institutional quality for 28 OECD economies. In doing so, the study employed the annual data from 1990 to 2019 and tested three model specifications using extensive empirical analysis such as cross-sectional dependency tests by Pesaran (2015), Westerlund cointegration tests, and Pedroni cointegration tests, FMOLS, and DOLS.

     The empirical results highlight that greener and renewable energy have an important role to play for industrial activities, economic development and it can act as an alternative to achieve sustainable economic growth. Export quality leads to strengthening the trade by improving the quality of products, ultimately it can lead towards the economic progress of countries. Further, it can be interpreted that overall economic complexity encompasses financial development and product complexity, both of which are conducive for the growth of the economy.

Abstract

This thesis investigates twenty-first century economic growth through a distanceto- frontier (technology-gap) lens where growth in a country’s knowledge stock is determined by knowledge creation and knowledge imitation. The creation term is assumed to be a function of research and development, technology-intensive export performance, and human capital, while the imitation term is a function of the technology gap, technology-intensive export performance, and human capital. Over the period 1997-2018, two samples of countries are analyzed in a panel setting, and two growth models are estimated in total—one for each sample. While research and development has been extensively analyzed in the economic growth context, many studies are limited to small samples of countries. In this paper, the growth model pertaining the large sample of countries (n = 57) utilizes total R&D expenditure data. The smaller sample (n = 41) considers a growth model wherein government-funded and business-enterprise-funded R&D expenditure are considered as separate knowledge determinants. Until recently, technology-intensive export data were sparse, making variable construction difficult for large-sample analysis. While a traditional approach might utilize information and communications technology measures in the growth model, I take advantage of modern data availability and introduce a measure of technologyintensive export performance to the conceptual and empirical models. To investigate the factors shaping knowledge over time, unconditional β-convergence tests are conducted on the proposed determinants of knowledge. The results of these tests indicate convergence in technology-intensive export performance, human capital, and government-funded research and development expenditure across nations—suggesting that less-developed nations are “catching up” to the leaders in terms of knowledge (technology). The growth models are estimated utilizing various generalized method of moments estimators. Of the three research and development variables, results indicate that only government-funded research and development expenditure has a positive effect on growth. Technology-intensive export performance, and human capital are shown to have positive and significant growth effects for all models and samples considered. Overall, these results suggest that policymakers should give great consideration to technology-intensive export performance and human capital when drafting growth policies.

This paper measures the impact of a widespread trade subsidy program on the exporting sectors in which Chile faces comparative disadvantages (i.e., small exporting sectors). More specifically, I analyze the effect of export subsidies on the changes in exports experienced by these sectors in Chile between 2002 and 2013. My regression analysis utilizes data on Chilean exports from Chile’s National Customs Service. It also uses information on the eligibility requirements for receiving the aforementioned subsidies — which are worth three percent of the value of an export — from the Chilean government. This information is provided by annual legal documents that are sourced from Chile’s Library of Congress. My results suggest that the low values of subsidies provided by this program in Chile are not large enough to allow small exporting sectors to overcome the comparative disadvantages faced by Chile. Overall, the results of this study imply that the impact of a widespread subsidy program on an exporting sector depends on both subsidy size and whether the country has a comparative disadvantage in that sector.

1- Introduction

2- Model

3- Mechanism

4- Quantitative analysis

5- Financial frictions, balance-sheet effects, and reallocation

6- Conclusion

References

Abstract

We study the role of financial frictions and balance-sheet effects in accounting for the dynamics of aggregate exports in large devaluations. We investigate a small open economy with heterogeneous firms and endogenous export decisions in which firms face financing constraints and debt can be denominated in foreign units. Despite the negative impact of these channels on capital accumulation and output at the firm-level, we find that they only explain a modest fraction of the gradual increase of exports observed in these episodes. Exports increase since financially-constrained exporters are able to reallocate sales across markets. We show analytically the role of this mechanism on exports adjustment and document its importance using plant-level data.

Introduction

Understanding the response of exports to aggregate shocks is key for determining the role of trade in driving the recovery from economic downturns. While a large class of open economy models imply that large devaluations are associated with a sharp contemporaneous increase of aggregate exports, Alessandria et al. (2015) and others show that aggregate exports increase gradually after large devaluations. Fig. 1 illustrates this observation for a sample of large devaluations over the period 1980 to 2013. A potential explanation for the slow response of exports in large devaluations are balance sheet effects due to the prevalence of foreign-denominated debt in emerging economies. Given limited access to finance in these economies, large devaluations increase the domestic value of firms’ debt burden, weakening their balance sheets and leading them to decrease investment and output. Moreover, recent studies also document the importance of these channels for the decisions of exporters at the firm-level.

This study addresses the effects of the firm’s level of engagement with trade associations located at the company’s export market on export performance. It analyzes firm-level data from a South American emerging economy, Chile. Results show that a stronger engagement with trade associations located at the company’s export market has a positive effect on export performance. Environmental uncertainty on customer needs is confirmed as an export performance barrier, but unexpectedly, this obstacle only diminishes in a negligible factor as the level of engagement with trade associations located at the firm’s export market increases. This study contributes to the international management literature by investigating the direct and moderating effects of overseas trade associations on the firm’s export performance, and by scrutinizing on the distinctions among the cooperation determinants of local networks and networks situated at the firm’s export market. Practical implications are discussed.

Introduction

Export performance of small and medium sized firms (SMEs’) remain a relevant research area in a global environment with increasing technological change, lower trade barriers and a growing interest in country and firm-level export developing strategies (Ngo, Janssen, Leonidou, & Christodoulides, 2016; Cieślik, Kaciak, & Thongpapanl, 2015), despite the fact of emerging new global trends on de-globalization (Ghemawat, 2017). The understanding and modeling of export performance is typically grounded on the Resource Based View (RBV). The resource-based theory posits that firm´s internal tangible and intangible resources result in competitive advantage and export performance (Barney, 1991; Zou & Stan, 1998). On the contrary, the contingency approach suggests that the interdependence of firm external and internal factors determines firm´s export performance (Cavusgil & Zou, 1994; Yeoh & Jeong, 1995; Sousa, Martínez-López, & Coelho, 2008). This study approaches export performance from the contingency perspective. Institutional networks need more attention in the study of export performance, especially within SMEs (Chetty & Agndal, 2007). At the same time, external networks and horizontal relationships, such as engaging with trade associations are factors that require further study (Boehe, 2013; Guimón & Paraskevopoulou, 2017). This is because external networks may facilitate access to resources that are essential for internationalization. These resources might include, for instance, information benefits or access to pooled resources oriented at international operations (Lavie, 2006; Yiu, Lau, & Bruton, 2007), as well as collective action in the creation of crucial public goods (Porter, 1998). In addition, the peculiar conditions on the export market environment are also relevant factors impacting the firm´s export performance within the contingency approach. These circumstances include the management´s perceived environmental uncertainty on customer´s needs (Lee, Yeung, & Cheng, 2009; Phua, 2007). Nevertheless, very few studies that surpass national borders have addressed the relationship between environmental uncertainty on customer needs and inter-organizational collaborations (Matanda & Freeman, 2009). The evidence on the effect of such relationships is scarce when emerging markets are the context of study. In particular, Kiss, Danis, and Cavusgil (2012), emphasize the necessity to comprehend the connection between firms and international networks in the context of emerging economies. For emerging markets, the predominance of networks is a mechanism to replace formal institutions, which are declining when the latter are strengthened and improved. They ask for a deeper understanding on how firms manage the complexity of resource acquisition while engaging with international networks (Kiss & Danis, 2008; Kiss et al., 2012).

چکیده

این مقاله به بررسی اثرهای سطح تعامل یک موسسه بازرگانی با انجمن های تجاری در بازار صادرات شرکت، بر روی عملکرد صادرات می پردازد. به این منظور این مطالعه داده های موسسه های بازرگانی از یک اقتصاد نو ظهور از یک کشور آمریکای جنوبی، یعنی شیلی، را مورد تجزیه و تحلیل قرار می دهد. نتایج نشان می دهد که تعامل قوی تر با انجمن های تجاری در بازار صادرات، اثری مثبت بر روی عملکرد صادرات دارد. نبود اطمینان محیطی در زمینه نیازهای مشتری به عنوان یک مانع در عملکرد صادرات به اثبات رسیده است اما، به طور غیر منتظره ای، با افزایش سطح تعامل با انجمن های تجاری در بازار صادرات شرکت، این مانع تنها به یک عامل ناچیز تنزل پیدا می کند.

مقدمه

عملکرد صادراتی در شرکت های کوچک و متوسط (SMEs ) با افزایش تغییرات فنی ، موانع تجاری کمتر و علاقه رو به رشد در استراتژی های توسعه ی صادرات در سطح شرکت و کشور برخلاف تمایلات جدید جهان در زمینه تجزیه و جدا شدن، یک منطقه تحقیقاتی مرتبط را در یک سطح جهانی به وجود می آورد. درک و مدلسازی عملکرد صادراتی بر اساس نظریات مبتنی بر منابع پایه گذاری شده است (RBV) نظریه مبتنی بر منابع فرض می کند که منابع داخلی ملموس و غیر ملموس شرکت باعث برتری رقابتی و عملکرد صادراتی می شود برعکس عملکرد احتمالی اشاره به این موضوع دارد که وابستگی متقابل فاکتورهای داخلی و خارجی شرکت عملکرد صادراتی شرکت را تعیین می کند . این مقاله به عملکرد صادراتی از دیدگاه احتمالی نزدیکتر است .

Introduction

Literature review

Methodology

The variables

The empirical model

Conclusions

References

Abstract

The paper analyzes the determinants of new products innovation in the SMEs sector. The study focused on types of innovation funding and sources of innovation funding. Five-hundred and fifty (550) SME owners were randomly selected for the study. Information was sourced through the use of questionnaires. Tobit model was used for the analysis. Sales value of new products was used a proxy for new products innovation. The determinants were grouped into two types thus innovation expenditure and sources of innovation expenditure. Sources of innovation expenditure have significant influence on new products innovation. From the finding foreign capital, government tax credit, and subsidies had significantly influence on new products innovation. SMEs specific attributes such as patent and having overseas partners influence new product innovation. Policies and programs geared towards government tax credit, subsidies, patent rights and inflow of foreign capital into SME sector should be encouraged since they have the potential of promoting product innovation in the sector.

Introduction

SMEs play a focal role in the economic development of countries especially in the emerging economies. As a result, governments have formulated policies and programs that are geared towards small and medium-scale enterprises (SME). However, this agenda is not without its own challenges. Studies on the difficulties small and medium-scale (SME) enterprise owners face are pointing to a general decry by SMEs on the lack of access to finance and the cost involved in obtaining such funds when they are available (Abor and Quartey, 2010). There have been calls from various stakeholders on the government to direct more funds to the SMEs sector to make it more attractive and competitive in the global market. The growth in the SMEs sector will help in transforming lives at the households and macroeconomic levels. The very nature of SMEs makes their operation so challenging since they are unable to access finance for their activities. Most SMEs owners are not able to provide collaterals required in granting of formal banking sector loans (Agbola and Ankrah, 2013). To help SMEs survive, governments often offer subsidies and tax credit to promote the growth of SMEs (Zhu et al., 2012).

1- Introduction

2- Financing of SME export activities

3- Sample selection and variable definitions

4- Descriptive statistics and univariate tests

5- Multivariate analysis

6- Robustness checks

7- Conclusions

References

Abstract

Using detailed financial and exporting data from Belgian small and medium-sized enterprises (SMEs) between 1998 and 2013, we find that exporters have to finance relatively more working capital than their nonexporting peers and that they resolve this financing need by carrying more short-term financial debt. In addition, while controlling for working capital needs, we find that the positive association between pledgeable short-term assets and short-term debt financing is more pronounced for exporters. In particular, we show that the linkage between pledgeable short-term assets and short-term debt financing is stronger for export-intensive firms and firms that serve distant and risky export destinations.

Introduction

Over the past decades, considerable effort has been devoted to enhancing our understanding of the complexity of corporate financing decisions. To date, studies on corporate capital structure and debt maturity choices have mainly focused on firm characteristics and industry determinants (De Jong, Kabir, & Nguyen, 2008; Titman & Wessels, 1988), as well as on the influence of the national culture, legislation and other country characteristics (Demirgüç-Kunt & Maksimovic, 1999; Fan, Titman, & Twite, 2012). Studies investigating the relationship between internationalization and corporate financing policy, however, are much more limited and are mostly confined to large, stock exchange quoted firms. One of the main insights of this literature is that multinational corporations (MNCs) have lower longterm debt ratios and higher short-term debt ratios than those of comparable domestic corporations (DCs) (Burgman, 1996; Doukas & Pantzalis, 2003; Fatemi, 1988). This leverage differential between MNCs and DCs is explained by the fact that the positive effect of geographic sales diversification on long-term debt financing is offset by the increased risk stemming from exchange rate exposure and unforeseen political events. Furthermore, due to their operational complexity, MNCs are more informationally opaque, which increases the agency costs of debt. To mitigate the problems associated with a riskier borrower profile and agency conflicts, loan maturities are shortened (Barclay & Smith, 1995; Myers, 1977). Building on these studies, the aim of this article is to advance the current literature by empirically investigating the impact of exporting on the corporate financing decisions of another important class of exporters, viz., small and mediumsized enterprises (SMEs). Since SMEs cannot substitute short-term and long-term debt financing as easily as large companies – due to difficulties in obtaining long-term debt financing from financial institutions (Ortiz-Molina & Penas, 2008) – the mechanism through which export activities affect SME financing policies may very well be different from what is demonstrated in the MNC literature. According to the World Trade Organization (WTO), access to financial resources to support export activities is a key concern for SMEs since, besides the one-time upfront sunk costs (e.g., costs related to compliance with foreign market regulations and preparatory market research), exporting requires substantial ongoing investment in working capital, as export activities considerably lengthen the cash conversion cycle of the firm (e.g., through longer shipment periods and the administrative burden associated with trading internationally) (WTO, 2016). Hence, understanding how exporting SMEs cope with these financing needs may yield useful insights for exporters, banks and policy makers.

1- Introduction

2- Theoretical development and hypotheses

3- Mixed-methods approach

4- Discussion, conclusion, and future research

References

Abstract

Escalation of commitment, defined as the continuation in a failing course of action, is a persistent problem for decision makers in business markets, especially those involved in new product development (NPD). To address this issue, we use Anticipated Regret Theory to develop a model and then empirically test it to demonstrate how forward-looking emotions can lead decision makers to continue failing NPD projects in business-to-business (B2B) markets. We recognize that there are two countervailing types of anticipated regret (i.e., keep regret and drop regret) and test both in our model by adopting a mixed-methods empirical approach. In a quantitative study, a total of 280 subjects completed a NPD decision-making exercise in which various antecedents of persistence with a losing new, business-to-business NPD project were examined. The results suggest that anticipated drop regret plays a significant role in commitment to a failing course of action, whereas anticipated keep regret actually reduces commitment. In a second, qualitative study, twenty experienced NPD professionals operating in high-technology, B2B markets were interviewed either in-person or by telephone. The results suggest that anticipated drop regret is a more serious problem than anticipated keep regret, supporting the quantitative study.

Introduction

Business markets have been characterized by a rapid pace of technological and market change and widespread turbulence due to everchanging customer needs and intense competition (Langerak and Commandeur, 1997; Liang, Sudhir, and Cherian, 2014). A key source of competitive advantage in such markets is new product development (NPD) which has been found to be crucial to the long-term success of business-to-business (B2B) firms (Nijssen and Frambach, 2000). In fact, empirical evidence reveals that higher performing B2B firms derive almost half of their sales and profits from new products they introduced within the last five years (Hutt and Speh 2013). However, NPD is expensive and time-consuming and also suffers from a high failure rate which can have a debilitating impact on organizations (Schmidt et al. 2009). Research shows that about 40% of all new products fail in the market causing significant losses to firms, and ony about one-in-five new products meet annual profit objectives (Cooper 2012). Amidst several determinants of new product failure such as flawed products, incorrect market research, poor screening, and commercialization issues, a significant contributor to new product failure in business markets is escalation of commitment (Boulding et al. 1995; Liang, Sudhir, and Cherian, 2014; Schmidt and Calantone 1998). An escalation of commitment (hereafter escalation) situation has certain defining characteristics: (1) an initial investment of resources such as money, time, and effort into a course of action; (2) negative feedback about the future prospects of that course of action; (3) the possibility to withdraw or continue the chosen course with further investment of resources; (4) uncertainty about the consequences of these actions (Lehenkari 2012). Escalation is typically exhibited through the decision to ignore or distory negative information (Lee, Wong, and Ellick, 2015). Escalation can lead to substantial losses in resources, time, and opportunities and can be particularly disastrous for firms in B2B markets that require fast reactions and quick adaptability (Biyalogorsky et al. 2006).

Introduction

The Legal and Ethical Problems of MLMs and Existing Measures to Deal with them

Illegal Pyramid Schemes

Misrepresenting the Business Opportunity

Harming Customers

(Mis-)using Trust in Private Social Relations

Total Institutions: Colonizing Every Aspect of Distributors’ Lives

Understanding how MLMs Operate: A ‘Prevailing’ and an ‘Extended’ Model

The ‘Prevailing Model’ of MLMs

An Extended Model of MLMs

Why Legal and Ethical Problems Persist, Despite Exiting Countermeasures

Illegal Pyramid Schemes

Misrepresenting the Business Opportunity

Harming Customers

(Mis-)using Trust in Private Social Relations

Total Institutions: Colonizing Every Aspect of Members’ Lives

Summary of why Legal and Ethical Problems Persist, Despite Existing Countermeasures

Reflecting on Additional Countermeasures

Conclusion

References

Abstract

Multi-level marketing companies (MLMs) such as Amway, Herbalife, or Tupperware differ from most other companies. They market their products and services by means of self-employed distributors who typically work from home, sell products to end consumers, and recruit, motivate, and educate new distributors to do the same. Although the industry’s growth seems to illustrate the attractiveness of MLMs, the industry has been facing several legal and ethical problems. In this paper, we focus on these problems and argue that an extended MLM model may help us to understand why such problems continue to occur, despite the countermeasures that have been implemented. By explicating how problems relate to a specific but often overlooked characteristic of MLMs, i.e., the socalled distributor network, we provide an extended understanding of (a) MLMs’ mode of operation, (b) the sources of their legal and ethical problems, and (c) the reason that currently implemented and suggested countermeasures may not suffice. Moreover, based on our extended understanding of MLMs and their problems, we propose additional countermeasures.

Introduction

Multi-level marketing companies (MLMs) such as Avon, Amway, Herbalife, Mary Kay Cosmetics, Tupperware, and Vemma represent a growing industry worldwide (WFDSA 2016). In 2015, more than 103.3 million people around the world worked for MLMs, creating a retail turnover of approximately 183.7 bn US Dollars (for worldwide as well as regional numbers see WFDSA 2016). Typically, selfemployed, unsalaried, and independent MLM distributors are entitled to earn money in two ways (Brodie et al. 2004). First, by selling company products ‘directly’ to consumers, i.e., on a ‘face-to-face [basis] … away from a fixed retail location’ (Peterson and Wotruba 1996, p. 2). Typical products and services sold to non-members (‘ultimate consumers’) are, for example, cosmetics, energy supply, food storage products, insurances, jewelry, loans, nutritional supplements, phone contracts, and wine (DSN 2012). Making money this way is characteristic for so-called ‘direct selling organizations’—to which MLMs belong. A second way for MLM distributors to earn money is by recruiting, training, and motivating new distributors, and building a so-called ‘downline’ of members (Brodie et al. 2002). When downline members buy products from the company or recruit new members to do the same, the recruiters (the ‘upline’) earn override commissions on the product purchases of their downline. This results in a ‘hierarchy of recruiters/sellers’ which is distinctive of MLMs. Almost all direct selling organizations employ this ‘multi-level marketing’ structure (DSN 2012), which means that almost all direct selling organizations are also MLMs.