Journal of International Management

Published by Elsevier
Print ISSN: 1075-4253
We expand the eclectic paradigm into a model of global strategic management and apply the latter to the analysis of the impact of the Sep. 11th terrorist attacks on the MNEs' performance to investigate the effect of exogenous shocks on the global strategies of firms. First, we integrate MNE resources and capabilities, strategy, and structure with the eclectic paradigm. Then we focus specifically on location attractiveness to examine how MNEs adjust internal factors with the exogenous distortions caused by an extreme environmental shock. We suggest that this adjustment is carried out at four levels: resources and capabilities, strategy, structure, and choice of location which jointly determine MNEs' performance. Although we restrict the application of this model of global strategic management to the post-Sep. 11th, our model may be applied to other extreme events that change, at least partly, the worldwide, or regional, economic order.
Measures of culture included in the reviewed instruments.
After examining 121 instruments for measuring culture, we provide a historical overview and analyze how culture has been operationalized over the last half a century. Our study focuses on the topics of culture definition, dimensionality of culture models, collection and analysis of data for measuring culture, levels of culture measurement, issues of cross-cultural survey equivalence and the reliability and validity of culture measures. For each of these topics, we provide a review of existing approaches, discuss the challenges, and suggest best practices. Based on our analysis, we identify gaps in the field of culture measurement and offer directions for future research.
Micro and macro level impacts of offshore outsourcing are far from clear. Thus there are some well-founded rationales for and against offshore outsourcing as well as a number of misinformed and ill guided viewpoints. Using institutional theory as a lens, this paper analyzes the drivers of offshore business process and information technology outsourcing. We examine the mechanisms by which regulative rules, social rules, culturally supported habits and subconsciously accepted rules and customs influence assessment, selection as well as continuation of outsourcing projects. Managerial and policy implications are discussed and directions for future research have been suggested.
Does an acquirer with extensive acquisition experience outperform an acquirer with little or no acquisition experience? Does an acquirer with varied growth mode experience (i.e. a company undertaking not only acquisitions but also joint ventures) outperform a company that has very homogeneous experience (i.e. a company growing exclusively through acquisitions)? The main purpose of our article is to examine these two questions in-depth and to attempt to provide some answers. The questions led us to analyze the valuation effect of the acquirer's experience for 291 French acquisitions in the United States. The results were mixed with regard to the relationship between acquisition performance, acquisition experience and heterogeneous experience. On the one hand we found no relationship between the acquisition performance and heterogeneous experience of French acquirers, which is not consistent with the literature on stock market valuation of homogeneous "experience trajectories" [Singh, H., Zollo, M., 1998. The impact of knowledge codification, experience trajectories and integration strategies on the performance of corporate acquisitions. Working Paper INSEAD, 98,62,SM.]. On the other hand, our findings indicate that the relationship between the acquisition performance and acquisition experience of French acquirers follows a curvilinear (inverted U-shaped) distribution.
There has been a marked growth in recent years in outward direct investment (ODI) by developing countries, and in particular, by China. Previous studies have examined the impact on developing countries productivity of foreign direct investment (FDI) from developed countries. This paper looks at the effects of China's outward direct investment on growth in its own productivity, and at two specific reasons for this growth: technology sourcing and improvements in efficiency. These are examined using data from China's ODI in eight developed countries during the period 1991 to 2007. It appears that Chinese outward direct investment has had beneficial spill-over effects in improving total factor productivity growth over the period of the study, and that gains in efficiency have been the chief reason for this. Our vector auto regression (VAR) decomposition analysis also suggests that domestic R&D capital stocks are the most important source of productivity growth with greater contribution to technological progress. China is likely to continue to expand its ODI and it will be interesting to see whether the productivity gains continue at the same rate, and whether other developing countries also increase their ODI and reap the same benefits.
Our review of corporate responsibility (CR) research in International Management journals during the past decade identified 321 articles of interest. We categorized and bibliographically referenced these articles to provide a foundation for future research in this arena. Our categorization scheme consisted of categorizing articles into one of the four major CR themes: corporate social responsibility, environmental responsibility, ethics, and governance. We also categorized according to orientation (theoretical and empirical), and empirical studies were further categorized according to methodology and internationalization (countries included in the study). We provide a detailed analysis of the prevalence of CR research in International Management journals, the prominence of the major CR themes, the degree of emphasis placed on empirical versus theoretical research, and the breath of international coverage in these articles.
Globalization and e-commerce pose new challenges and provide new competitive opportunities, especially for small- and medium-sized enterprises (SMEs) seeking to broaden their involvement into new international markets. Yet, SMEs are only beginning to embrace these new opportunities. The authors derive a model describing the use of e-commerce by internationalizing SMEs, developed by integrating findings from case studies of 12 Canadian SMEs exporting to Japan with a broad range of management theories. The cases represent two very different sectors: hospitality/tourism and high tech. The research first describes how the firms use e-commerce internationally, by examining resource commitment, web function and cultural adaptation. It then explains why the firms use e-commerce, by relating two types of environmental variables — market changes and industry norms — and three firm factors — technical capability, cultural capability and firm size — to the firms' adoption of e-commerce. Implications for SME managers are discussed and nine propositions are put forth to guide and focus future research.
This study explores the properties of intra-cultural variation in an attempt to legitimize it as a cultural construct. Reanalyzing data from the World Value Survey showed that intra-cultural variations explain cultural differences as much as, if not more than, cultural means. Factor analysis on a sample of intra-cultural variations reveals that their factor structures are different from those of cultural means.
Drawing from research on alliance learning, we develop a model of technology learning by integrating technological capabilities and alliance knowledge in a framework of absorptive capacity. We also differentiate between absolute and relative components of absorptive capacity. Our study of the chemical-pharmaceutical industry found that technology learning was higher when firms were quick to adopt new technologies and when they have accumulated experience via alliances. Among alliances, cross-border R&D alliances have the strongest effect on technology learning. Overall, the findings show the pronounced effect of absolute absorptive capacity on technology learning.
This paper is a response to calls for more research into the regional-as opposed to global-level of international business operations (Rugman and Verbeke, 2004). Focusing on a key issue in international management, the standardization decision, this paper presents a systematic review of top journal articles published over the last five decades on the subject of advertising standardization at the regional level. The results of this review demonstrate that in the last decade studies have frequently taken a regional rather than international focus of analysis, suggesting a shift in research in line with regionalization theory. However, this study also shows that research on regional standardization has lacked consistency in relation to how the phenomenon should be defined and measured. We present a conceptualization of measurement approaches to international advertising standardization, propose a typology of approaches and discuss their implications for knowledge advancement in the area.
We examine the acceptance of a foreign newcomer into a local workgroup. Using Social Identity and Acculturation theories, we try to identify factors that help a foreign newcomer gain acceptance of a host group. We test the model using a group-level policy-capturing technique. Our results indicated that a workgroup's attitude towards a foreign newcomer was influenced by socially attractive behaviors of the newcomer, the apparent sincerity of such behaviors, the group's culture on the individualism dimension, cultural similarity between the newcomer and the group, and cultural intelligence of the newcomer as reflected in the individual's reputation of establishing a relationship with his/her host culture.
The trend towards globalization recently has been further strengthened by the attempts of multinational corporations (MNCs) to outsource technology-based jobs to developing countries. This trend raises questions regarding appropriate performance control options available to MNCs. The current paper proposes that electronic performance monitoring (EPM) may be an effective tool in ensuring production quality standards in distant operations. EPM is widely used in many industrialized countries. However, the use of EPM on a global scale may lead to an array of questions regarding appropriateness and effectiveness of this procedure in different cultural contexts. We propose a model that describes the interaction of major EPM characteristics and national culture dimensions, and suggest possible implications of this interaction on creating culture-sensitive EPM designs. The effects of culture on perceptions of acceptability and fairness of EPM and relevant individual and organizational outcomes are discussed.
The objective of this editorial article is twofold: (1) to develop a conceptual foundation that defines corporate governance and accountability in MNEs and (2) to present issues for future research on the ground of this conceptual foundation. Despite recent attention and greater efforts to understand MNE corporate governance and accountability using multiple disciplines, a cohesive and integrated foundation to define them and their interrelationships is still lacking. Even among submissions to this special issue, there is no one article that conceptualizes all of these issues. To fill this void, this article explains what constitutes corporate governance and accountability in an MNE; we address what elements the concepts entail, how they differ from domestic firms and in what ways governance and accountability are mutually facilitative. This article also discusses several major research issues that have strong implications for MNE governance and accountability design.
This paper addresses how the global activities undertaken by multinational enterprises (MNEs) in international settings impact corporate governance mechanisms and accountability systems. International corporate governance and accountability research, whether from a political science, economics, finance, or accounting perspective, has thus far predominantly focused on the comparison of corporate governance schemes in different countries and on the investigation of institutional parameters that determine these schemes. Straying from this line of inquiry, this article discusses how globalization at the firm level affects governance and accountability systems at parent- and subsidiary-levels. It emphasizes how an MNE's globalization attributes such as globalization scale, foreign adaptation, global competition, and international experience influence the design of governance mechanisms such as board size, board composition, executive compensation, market discipline, interlocking directorate, ownership concentration, duality and inbreeding, as well as the design of accountability systems such as accounting information, auditing standards, and financial and non-financial disclosures. This article bases its conjectures on information processing and agency theories.
Adapting well-established organization theories to international joint ventures (IJVs), this paper develops an overarching theoretical model of the determinants and effects of parent control of IJVs from an interpartner bargaining power perspective. Drawing upon power dependence, transaction costs, and agency theories, we argue that the relative bargaining power between IJV partners serves as the key determinant of control structure, and that control exerts a direct effect on the venture's performance. In addition, government influence and interpartner working relationship are critical factors that complicate the linkage between control and performance but may help to explain past conflicting results. Propositions regarding these relationships are formed for future empirical test, and implications and directions for future research are provided.
This paper examines the issue of cross-border acquisitions by companies from emerging economies in industrialised countries: an important phenomenon that has recently found increasing emphasis in international business research. In analysing Chinese acquisitions of German firms in the machinery and equipment industry, the paper addresses the question of why firms from industrialised countries are sold to companies from emerging economies. Several real and imagined reasons may induce the German side not to sell; nevertheless, this type of acquisition occurs with increasing frequency. Using case study evidence and interview data, the study finds explanations for the decision to sell to a Chinese company. The results show that German firms can gain substantially from the global ambitions of the Chinese firms for advancement of their own business objectives. This is due to complementarities in the motivations for engaging in the deals, as well as the underlying strategic needs of both firms. In addition, the specific nature of the cooperation between both firms instils in the German managers a sense of control and security--either real or merely perceived--creating conditions that are favourable to the selling decision. Most importantly, in the context of emerging economy enterprises acquiring advanced economy firms, motivations on both sides of the acquisitions appear to go beyond the commonly known goals such as capital transfer and additional market access, as the acquisitions provide the companies involved with conditions favourable to expansion into previously inaccessible market segments. The findings of this study provide useful guidance for the development of future strategic relationships between firms from industrialised and emerging economies.
This research empirically examines the technology strategies of multinational firms operating in the US market. The findings suggest that external reliance on product and process technologies has a negative impact on firm success. Furthermore, geographic distance between key activities moderates the role of technology strategy on international firm success. Also, the complementary assets, dominance of the product design, and the degree of appropriability have a direct impact on firm performance.
Resource-based learning capacity (RBLC) is an organization's specific resources - both human and tangible - that can be organized to enhance learning processes. This study develops and tests a model that examines the relationship between the learning efforts of focal firms from their international business affiliates (IBAs) - organizations located outside the focal firm's domestic market with whom the focal firm has a relationship - and the focal firms' RBLC. This learning process refers to the transfer of knowledge from the IBA to the focal firm. Results indicate that while learning effectiveness positively influences the RBLC of the focal firm, learning efficiency has a negative impact on RBLC. The IBA's home country network centrality and the tie strength between the focal organization and the IBA are found to influence learning effectiveness positively. Tie strength also enhances learning efficiency. Finally, the findings indicate that the IBA's home country network centrality enhances the strength of the ties between the focal organization and its IBA.
This paper reviews the empirical literature on the determinants of the choice by multinational enterprises between entering foreign countries through greenfields or acquisitions. We discuss and compare the main theoretical perspectives used, provide a detailed overview of the empirical findings, examine why these findings have often been inconsistent, and offer theoretical and methodological suggestions to guide future research.
Cross-border mergers and acquisitions (M&As) have gained in popularity over the last decade. However, research on this type of diversification strategy has not kept pace with this trend. While there is considerable research in the area, it is unfortunately fragmented, leaving gaps that need to be addressed. Herein, we examine the theoretical perspectives and research findings on cross-border M&As from three perspectives: cross-border M&As as a (1) mode of entry in a foreign market, (2) dynamic learning process from a foreign culture, and (3) value-creating strategy. Current empirical research on this topic is also tabulated and grouped by theoretical stream to indicate major findings. Most importantly, we identify gaps in the literature and highlight five important research issues that provide directions for future research.
This study examined top management team departures in U.S. manufacturing firms acquired by a foreign multinational during the six-year period following acquisition. Results indicated that greater cultural distance between the United States and the home country of the foreign multinational, higher levels of international integration in the target industry, and poor preacquisition performance in the U.S. target company were related to greater postacquisition top management departures. These effects were moderated significantly by the foreign acquirer’s international business and U.S. acquisition experience and showed different patterns over the short-term, intermediate-term, and long-term. Implications for future research on top management teams involved in cross-border acquisitions are discussed.
Perceptions of which facets of organizational culture are related to leadership and personal effectiveness were examined using archival data from Canada, Hong Kong, New Zealand, South Africa, the United Kingdom, and the United States. Organizational culture was strongly perceived as being related to both leadership effectiveness (explaining 40% of the variance) and personal effectiveness (24% of the variance). Aspects of organizational culture that promote employee fulfillment and satisfaction were uniformly viewed as positively related to leadership and personal effectiveness. The perceived relationship across samples was stronger between organizational culture and leadership effectiveness than between organizational culture and personal effectiveness. The implications of these findings for managers are discussed.
This paper examines the subnational, regional, aspects of the multinational corporations' (MNCs) increasingly global innovative networks in the chemical and pharmaceutical industry. Using patents granted in the US to the largest industrial firms, attention is restricted to the main European MNCs and their research activities established in German, British and Belgian regions. The position of national groups of firms in a geographical hierarchy has been argued to affect the technological strategy and specialisation of those groups in foreign countries [Res. Policy 28 (1999) 119.]. This paper extends the argument at the regional level, allowing for a hierarchy of regional host centres and investigating where and how MNCs of different nationality organise their networks for innovation in those regions. The main proposal is that the technological specialisation of foreign-owned affiliates in each region will become more closely related to the regional indigenous specialisation pattern the higher the position of their parent firms' country of origin in the national hierarchy is, and the lower the position of the regional host location in the regional hierarchy is. Conversely, when MNCs originating from a lower-order country locate research facilities in a higher-order country and regional centre, their affiliates are expected to show a tendency to replicate their domestic established lines of specialisation. This paper highlights the potential impact of the dynamic interactions between MNCs and their home and host locations on the technological performance of both the firm and its local environment.
This paper studies the sequence of value-added activities in the multinationalization of firms from developing countries. Analysis of twenty Latin American multinational firms, or Multilatinas, reveals three alternative sequences: start multinationalizing with marketing subsidiaries in all countries, start multinationalizing with production subsidies in all countries, or start multinationalizing with marketing subsidiaries in some countries and production subsidiaries in others. These alternative sequences are explained through the integration and extension of arguments from the incremental model of internationalization and its discussion of difficulties, and the eclectic paradigm of foreign production and its discussion of advantages. I argue that firms that benefit from a location advantage in the country of origin are more likely to start multinationalizing using marketing subsidiaries, firms that benefit from a location advantage in the host country are more likely to start multinationalizing using production subsidiaries, and firms that face difficulties in the transfer of products across countries are more likely to start multinationalizing using production subsidiaries.
This paper examines the relative attractiveness of the Italian, German and UK regions for the siting of foreign-owned corporate technological development, controlling for the geographical distribution of the equivalent innovative efforts of established indigenous firms in each country. The data used are patents granted in the US to the world's largest firms from 1969 to 1995, identifying the ultimate nationality of ownership and the location of the research facility responsible for each patent. Through econometric models based on count data techniques, it is shown that the relative attraction of a location for foreign-owned research depends positively upon the local market size, the local scientific and educational infrastructure and the potential for intra- and interindustry spillovers.
Economic liberalization leads to higher competitive intensity that spurs strategic changes in LDC domestic firms. I apply the dynamic capabilities lens to post-liberalization adaptation of LDC domestic firms. Based upon the logic of fit, I argue that initial resource conditions, strategic paths, and requisite dynamic capabilities must match to enhance evolutionary fitness of firms. I propose that LDC firms with strong core and complementary capabilities will adopt strategies of increasing scale and scope, along with cultivating an acquisition dynamic capability to enhance fitness. LDC firms with weak core but strong complementary capabilities could enhance fitness by forming rent-creating alliances with Multinational Enterprises (MNE), and building relational dynamic capabilities. Finally, LDC firms with weak core and complementary capabilities can gain benefits towards fitness by enacting political strategies supported by political dynamic capabilities.
This paper focuses on subsidiary role development in terms of changes in the market, product and value-added scope of foreign subsidiaries within multinational corporations (MNC). In its theoretical part, it identifies three interrelated reasons to explain such role changes: (1) subsidiary capabilities, (2) host-country localization advantages and (3) headquarters' realized strategies--that is, headquarters' intended strategies and the outcomes of micro-political headquarter-subsidiary negotiations. Based on the results of interviews with 65 managers in 11 German headquarters and their 13 Hungarian subsidiaries, the paper reveals the interrelated effects of the three factors on subsidiary role development and shows that headquarters' intended strategies are decisive to explain role development in peripheral host countries, though micro-political headquarter-subsidiary negotiations being an integral part of subsidiary role development.
Social interaction has been demonstrated to be a main predictor of expatriate adjustment. However, the impact of social interaction on expatriate adjustment may vary for those in different cultures. Contextual factors, such as geographic proximity and cultural differences between the home country and the host country, may have a significant impact on the expatriate adjustment process. The current paper singles out the above contextual factors by comparing European expatriates in China and in Turkey. European expatriates in China (n = 61) and Turkey (n = 69) were surveyed to explore the different patterns of social interactions (personal network and support), and the impact of these on the psychological well-being of the two groups. The empirical evidence gathered by the current study will delineate these differences and similarities and their impacts on the expatriates' psychological well-being in these two host countries.
The purpose of this study was to examine the mediating effects of relations-oriented managerial behaviors on the relationship between two modes of expatriate adjustment--role innovation and personal change--and contextual performance. Using data from 194 expatriates and 505 of their subordinates, we found evidence of full mediation for the role innovation-performance relationship. For ratings of expatriate effectiveness, recognizing and team building behaviors appear to fully mediate the role innovation-performance relationship. For ratings of supervisor satisfaction, inspiring, supporting, and team building appear to fully mediate the role innovation-performance relationship. No significant results were found for the personal change-performance relationship. The results provide insights for extending current models of the expatriate adjustment process, and understanding the means by which expatriates fulfill their responsibilities.
Drawing upon institutional and self-categorization theories, this manuscript argues that the institutional distance between home country and host country groups exerts influence over expatriate adjustment. In addition, the individual difference of other orientation plays both a direct role on the adjustment process as well as a moderating role on the relationship between institutional distance and adjustment. Propositions regarding these relationships are formed for future empirical test, and implications and directions for future research are provided.
Based on longitudinal case studies of offshoring of advanced IT and engineering services from Danish firms to Indian firms, this paper explores organizational learning that occurs over time in both home and host firms and uses learning as a measure of the firm impact of advanced services offshoring. The findings are consistent with the theoretical view that advanced services offshoring must be understood as an antecedent for strategic business development and organizational change in both home and host firms. The study shows that when offshoring partnerships mature and firms gain experience, learning in both home and host firms evolves over time and differs in many cases from their initial objectives and expectations. In some of the Danish firms engaging in offshoring even ignites a process of strategic transformation. Both Danish and Indian firms use the input from their offshoring partnership to upgrade their organizations and business processes.
An expanded and holistic conceptualization of the liability of foreignness (LOF) is presented that goes beyond the traditional foreign subsidiary–local firm dyad in the host country. Taking the strategy process perspective, we contend that this liability is the aggregated effect of the firm's interaction with all elements of the international business environment (IBE), not merely in the initial entry mode decisions but throughout its foreign operations. Viewing the antecedents and consequences of this liability holistically, we argue that accurate reading of the complex and volatile IBE, formulation of a compatible strategy and its effective implementation together contribute to good performance. As the resource-based perspective suggests the degree to which firms develop such tacit skills, differentially affects their performance. Firms that excel in these environment-reading skills and are agile enough to quickly adapt to its changes can transform this liability into a competitive advantage.
U.S. banks have long faced restrictions imposed by the Glass-Steagall Act of 1933. This act erected barriers between commercial and investment banking. Although the barriers have been eroding recently, the U.S. banking system is still considered restrictive compared with countries that permit banks to perform a broad range of financial services (i.e., universal banking). As banking becomes increasingly global, this regulatory difference faced by U.S. banks becomes more important in that it selectively handicaps U.S. banks and forces them to become more competitive so that they can continue to deliver a comprehensive package of financial products to their corporate customers. In their efforts to become more competitive, coordination and structuring of foreign operations are key strategic tools. For example, foreign branches and subsidiaries have different capabilities and costs. So the choice of organizational form preferences (branches versus subsidiaries) in host countries can affect the global reach and competitiveness of U.S. banks.In this study, therefore, we examined how U.S. banks structure their foreign operations. Specifically, we tested the influence of host countries' banking (financial) system development and regulations on U.S. banks' organizational form preferences (the combination of branches and subsidiaries established by a bank in a host country). We found that a bank's size, globalization, product diversity, and charter value influence organizational form preferences within and across different host-country banking environments. Our results are consistent with the concept of natural adaptation and flexibility, or in this case, “banking environment” flexibility.
Although the impact of internationalization on firm performance is still controversial, we find that internationalization does not have an ongoing positive performance effect. The international expansion of MNEs needs to be managed carefully, especially after a certain level of international involvement is surpassed. One theoretically highly accepted, but empirically neglected, driver of the success of international business is the establishment of an appropriate international organizational structure. This paper is the first to empirically address the question of how international organizational structure decisions affect performance by means of a new analysis technique — a causal analysis based on neural networks. Referring to UNCTAD's 100 most international corporations, the key finding of this study is that successful high internationalization involves a transnational structure in which elements of centralization and decentralization are well balanced.
This article examines the aerospace defense sector and the national export control regime within which U.S. corporations operate. While the U.S. federal government plays many roles in this industry, the focus here is on its role as regulator of defense exports from the United States. From this vantage point, ten case studies illustrate the difficulties faced by companies in this challenging environment, and highlight factors that lead to noncompliance with U.S. government regulations. Firm performance effects are investigated, including impacts on profits, share price, and reputation. The paper concludes with implications for international management practice and international business research that reflect realities in the aerospace defense sector.
This paper frames the issue of homeland security and its relationship to the international competitiveness of U.S. firms in general. This is largely a conceptual statement, identifying the areas of national security (homeland security) that are key to business, and exploring the management concerns of business to the new threats and opportunities that have arisen. We establish the point that homeland security is a purposeful, conscious, and rational response to terrorist events that is an emergent and evolving systems phenomenon. This systems approach is an especially useful way to look at the implications of homeland security in its relation to business. We then look specifically at the kinds of costs and risks that are generated for U.S. international business (exports, imports, incoming and outgoing investments) as a result of this phenomenon. Management strategies for dealing with these costs and risks are explored for U.S. firms. Our conclusion is to demonstrate the scope of analysis that is needed to understand and to managerially cope with the homeland security problem. We show the value of using theory from various disciplines for analyzing a multi-dimensional problem like this. And finally we are able to recommend some policy dimensions for both companies and the U.S. Government toward mitigating the negative impacts of the homeland security problem.
International business research has considered how ethical values and practices vary across cultural boundaries. But how does the degree of internationalization of a firm affect the way multinational corporations (MNCs) and their executives approach ethics? We use primary and secondary data from American MNCs to test this question. The data indicate that internationalization is related to the amount of concern executives display toward ethical issues, but is not related to the creation of formal ethics structures and policies.
Drawing on both a resource-based view of the firm and an in-depth case study, we develop a novel conceptual model that explains under what conditions a service firm may use its international affiliate network to build a differentiation-based competitive advantage in its domestic market. The bank we studied implemented a differentiation strategy by positioning itself as a "South American Bank" and by offering a set of foreign trade services to its domestic clients that were unique at the time of their introduction. Our conceptual model fills a gap in the literature on difficulties in internationalization by explaining under what conditions internationalizing firms may opt for a strategy that seeks to domestically exploit resources and capabilities that have been developed in the course of internationalization.
Using data collected through personal interviews with senior managers at U.S. multinational headquarters and their U.K., Thai, Malaysian, and Singaporean affiliates, this study examines whether U.S. multinationals adjust the amount of control they use over their culturally different overseas affiliates. Results showed no overall difference in the amount of control that U.S. multinationals exercise over their U.K. and Southeast Asian affiliates. However, differences emerged between these two cultural groups when industry and affiliate top manager type were taken into account. In particular, U.K. locally run affiliates were given significantly more autonomy than their Southeast Asian counterparts. Locally run affiliates in both countries were also given significantly greater autonomy than were expatriate-run ones. Consumer goods affiliates in Southeast Asia enjoyed more autonomy than the industrial affiliates did.
In this study we discuss and empirically test the assertion that over the last two decades multinational enterprises' (MNEs') configuration of value-adding activities has shifted from a sparse and simple (host–home) international division of labor among the foreign affiliates to a more specialized and ‘advanced’ global value chain configuration in which MNEs locate fine-sliced parts of the value chain at the most efficient locations. Using data on trade flows of U.S. affiliates in 56 host countries between 1983 and 2003 we find some indications of a trend in the direction of global value chain specialization. In particular among US affiliates in developing countries the proportion of host–host, intra-firm trade has increased significantly during the observed period of time. Conversely, the proportion of host–home and inter-firm trade has diminished. We interpret this as indicating both value chain disaggregation (vertical specialization) and MNEs' systematic exploitation of factor cost differentials across countries. We also find that the absolute levels of all types of trade flows have increased. Hence, it is the relative, and not the absolute, changes in the trade flow patterns of US affiliates that gives credibility to the global value chain assertion.
We investigate the survival rates of the foreign subsidiaries of multinational firms from India to test if affiliation to a business group affects a subsidiary's survival chances. Business group affiliation is an important organizational attribute of firms in emerging economies. Business groups are complex organizations with heterogeneous resources that evolve along with changes in the institutional environment of a firm's home country. We examine how business group affiliation and the development stage of the host country jointly influence the survival chances of foreign subsidiaries. Our results show that business group affiliation does not have an independent influence on a subsidiary's survival rates, but it does have a contingent effect, where the contingency emerges from the development stage of the host country. Our findings thus have implications for the theory of TMNCs, and business group strategy in emerging economies.
This study examines the competitive strategic choices of international joint ventures (IJVs) and their performance implications in a low-income emerging economy in Sub-Saharan Africa -- Ghana. Using the resource-based view of the firm, it is argued that IJVs with partners from emerging economies are more likely to pursue an efficiency-oriented business strategy to strengthen their strategic positioning, competitiveness and performance. Conversely, IJVs with partners from advanced industrialized economies would be more likely to pursue a market effectiveness-oriented strategy to strengthen their strategic positioning, competitiveness and performance. The findings from 76 IJVs offer support for the hypothesized relationships. IJVs with partners from emerging economies implementing an efficiency-oriented strategy of cost leadership outperform those with partners from advanced industrialized economies implementing the same strategy. In contrast, IJVs with partners from advanced industrialized economies implementing a differentiation strategy outperform those with partners from emerging economies implementing a differentiation strategy.
The global strategies of three major South African MNEs are examined with a view to understanding the applicability of existing theories to developing country firms and their emergence as global industry leaders.Emerging market MNEs are motivated by both defensive and offensive considerations. At the same time, home market domination allows potential contenders to develop competitive firm-specific advantages that are non-location based.We propose that successful emerging market MNEs start to build their global positions on the back of asset exploitation, but soon follow with asset seeking behavior. When country specific advantages are less important, contenders can accelerate their development of non-location based FSAs rapidly. Finally, leadership and domestic dominance may be more important than country specific advantages in explaining the success of emerging market MNEs.
Firm internationalisation has for long been regarded as an incremental process, wherein firms gravitate towards ‘psychologically close’ markets and increase commitment to international markets in a gradual, stepwise manner through a series of evolutionary ‘stages.’ However, much of the recent literature provides clear evidence of rapid and dedicated internationalisation by ‘born global’ firms. Typically, these are smaller entrepreneurial firms that internationalise from inception or begin shortly thereafter. Their main source of competitive advantage is often related to a more sophisticated knowledge base that they use to exploit the dynamics of an increasingly global market environment. This contribution posits that there is growing evidence of another phenomenon, that of the emergence of ‘born-again’ global firms. These are firms that have been well established in their domestic markets, with apparently no great motivation to internationalise, but which have suddenly embraced rapid and dedicated internationalisation. The underlying motivations and triggers leading to such a strategy are explored and illustrated through a number of case studies. Research and public policy implications of the ‘born-again’ global phenomenon are discussed.
Top-cited authors
Yadong Luo
  • University of Miami
Torben Pedersen
  • Copenhagen Business School
Nicolai J. Foss
  • Università commerciale Luigi Bocconi
Björn Ambos
  • University of St.Gallen
Michael A Hitt
  • Texas A&M University