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Global strategy and global business environment: The direct and indirect influences of the home country on a firm's global strategy

Northeastern University, College of Business Administration
313 Hayden Hall, 360 Huntington Avenue, Boston, MA 02115, U.S.A.
July 25, 2011
For the published version, please see:
Cuervo-Cazurra, A. 2011. Global strategy and global business environment: The direct and indirect
influences of the home country on a firm’s global strategy. Global Strategy Journal, 1(3-4): 382-386.
Abstract: In this paper I refocus attention to the home country and explain the role it plays on the firm’s
global strategy. I build on an extended view of the resource-based theory to argue that one can separate
the influences of the home country on a firm’s global strategy into two types. First, a direct influence in
which the home country becomes a resource for the company that helps or hinders its global strategy
depending on the views of the home country in host countries. Second, an indirect influence in which
specific characteristics of the home country induce the firm to create resources to operate there, and these
resources, in turn, affect the firm’s global strategy.
Key words: global strategy, environment, home country, international business, resource-based theory
* I thank Steve Tallman for providing useful suggestions for improvement. The financial support of the Center for
International Business Education and Research at the University of South Carolina and the Robert Morrison
Fellowship at Northeastern University are gratefully acknowledged. All errors are mine.
This article studies one aspect of the influence of the global business environment on the firm’s global
strategy: the impact of a firm’s home country. Most international business literature studies the influence
of specific characteristics of the host country on a firm’s global strategy (see recent reviews of the
literature in Rugman, 2009). The literature has paid less attention to how specific characteristics of the
home country influence the global strategy of the firm, at most focusing on distances between home and
host country (Johanson and Vahlne, 1977; see Cuervo-Cazurra and Genc, 2011, for a recent review). One
reason is that much literature focuses on the expansion across countries and takes the country of origin as
a given. This neglect of the home country is understandable, since location tends to receive limited
attention in international business (Dunning, 1998), but unfortunate because studies that focus on how
particular characteristics of the home country affect a firm’s foreign expansion can provide valuable
insights (e.g., Cuervo-Cazurra, 2006; Cuervo-Cazurra and Genc, 2008; del Sol and Kogan, 2007; Garcia-
Canal and Guillen, 2008; Holburn and Zelner, 2010).
Therefore, this article aims to refocus attention to the host country and explain the role it can play
in the firm’s global strategy. The article builds on an extended view of the resource-based view (Penrose,
1959) to explain how one can separate the influences of the home country on a firm’s global strategy into
two types: (1) a direct influence in which the home country becomes a resource for the company that
helps or hinders its global strategy depending on the views of the home country in host countries; and (2)
an indirect influence in which the home country induces the firm to create particular resources to operate
there and these resources then affect the firm’s global strategy.
Environment and resources
To explain the influence of home country on global strategy, I extend the resource-based view and its
application to international business (Cuervo-Cazurra, Maloney, and Manrakhan, 2007; Peng, 2001;
Tallman and Fladmoe-Lindquist, 2002). The resource-based view understands firms as bundles of
resourcesassets that are tied semipermanently to the firm. These resources are used by managers to
create value for customers in competition with the offers of other firms (Penrose, 1959). Some resources
give the firm a relative advantage in its current operations when they provide value to customers, are rare,
and cannot be easily imitated or substituted by competitors (Barney, 1991). However, not all resources
support a firm’s advantage. Some may merely help the firm operate and, thus, be neutral on the advantage
achieved (Montgomery, 1995). Others may become a source of disadvantage to the firm and reduce its
value creation potential (Leonard-Barton, 1992). Existing resources can also be used to expand the firm’s
operations into new activities or new geographies, thus enabling the firm to achieve economies of scale
on resources it has already developed (Montgomery, 1995).
The characteristics of the home country in which the firm emerges influence the types of
resources the firm develops in two ways. First, new resources can be created by the firm by modifying
inputs the company obtains from its environment and by combining external inputs with existing resource
in the firm (Penrose, 1959). The presence or absence of specific inputs outside the firm induces it to
develop specific resources that either rely on the availability of particular external inputs or compensate
for the lack of certain external inputs (Penrose, 1959; Khanna and Palepu, 2010). Second, the particular
norms and institutions prevailing in the country induce the company to develop specific resources to be
able to interact with other players in the marketplace (Oliver, 1997; Peng, Wang, and Jiang, 2008). In
these ways, the environment in which the firm first operates affects the resources the firm develops.
These influences of the home country on the resources a firm develops become more noticeable
outside the home country and at the beginning of a firm’s multinationalization. In a domestic setting,
other domestic competitors develop similar sets of resources in response to the similar availability of
inputs and interaction needs and norms. As a result, managers tend to pay little attention to these
resources because they are not rare. However, in a global setting, competitors in the host country have
responded to different inputs and institutions, resulting in noticeable differences in their resource sets
from those of the focal firm. Managers, therefore, can use resources developed at home as strategic
resources abroad, since these resources have a degree of rarity in comparison to resources developed by
domestic firms. This influence of the home country on global strategy is most noticeable at the beginning
of a firm’s multinationalization, when the home country represents the main source of resources to the
firm. As the firm expands across countries and develops new resources in multiple host countries, it can
use these resources to continue its expansion and, as a result, the influence of the home country
Direct effect: home country as a resource used in global strategy
The home country becomes a resource that affects the firm’s global strategy directly. Individuals in the
host country associate the firm with its perceived home country, which becomes a resource to the firm, an
asset that is tied semipermanently to it.
How the country of origin affects a firm’s advantage abroad depends on the valuation that
individuals in the host country give to the foreign home country. Some consumers dislike foreign
products over domestic ones for the sole reason that they are made in another country, reflecting their
nationalist sentiments (Shimp and Sharma, 1987). This gives firms from these countries a disadvantage.
Other consumers prefer products made in other countries over domestic ones, because they perceive the
countries to be more developed and the products made there to be better (Bailey and Gutierrez de Pineres,
1997). This provides an advantage to firms from such countries. These relative preferences depend on the
perceptions about the particular country of origin of the firm and are not restricted to consumers.
Governments also react to the country of origin. Governments give preferential treatment to firms from
particular home countries because there are friendly historical relationships or trade and investment
agreements between the countries (Frankel and Rose, 2002; Rangan and Drummond, 2004) or because
they perceive firms from certain countries as bringing desirable resources to the country. However,
governments also discriminate against firms from particular countries because they dislike their
governments or they perceive these firms as potentially harmful to the country (Stopford and Strange,
1992). Thus, the home country directly influences a firm’s global strategy in multiple ways. The
influences vary between consumers and governments because they have different relationships with the
firm. Consumers’ views of the home country usually affect the marketing of products in the host country,
with consumers buying products according to their preferences for particular home countries and
companies reacting to these preferences by highlighting or modifying the origin of products (Bilkey and
Nes, 1982). In contrast, governments’ views of the home country have a broader impact on the operations
of the company, with firms choosing countries in which governments do not restrict investments to firms
from particular countries and selecting entry modes based on government support or restriction.
Additionally, other individuals in the country react to the home country and affect the firm's operations,
such as the hiring of local employees or its exposure to lawsuits (Mezias, 2002).
Indirect effect: home country inducing the firm to develop resources that are used in global
The home country indirectly affects the firm’s global strategy. It does so by inducing the firm to develop
particular resources at home to deal with characteristic conditions of the environment there. These
resources are then used by the firm in its international expansion, providing it with the ability to pursue
specific global strategies.
There are several ways resources developed at home in response to existing inputs and
institutions can be used abroad, with various implications for the firm’s strategy. First, some of these
resources induce firms to select countries based on their ability to use the resources there. For example,
firms from corrupt countries become adept at dealing with it and are attracted, rather than repelled, by
corruption abroad (Cuervo-Cazurra, 2006), while firms that face political risk at home learn how to
manage it and are more likely to invest in countries with similar risk (Holburn and Zelner, 2010). This not
only reduces the cost of doing business abroad (Hymer, 1976) and the related liability of foreignness
(Zaheer, 1995), but also helps the firm achieve economies of scale on resources it has developed.
Second, other resources can help the firm achieve an advantage in comparison to other foreign
investors in the same host country. Firms that emerge in countries with poorly developed institutions and
unsophisticated providers of inputs and intermediate products have to compensate for these deficiencies
by developing some resources (Khanna and Palepu, 2010). When these firms enter other countries with
underdeveloped institutions and weak input providers, they can achieve an advantage over firms coming
from countries with better institutions. For example, firms from countries with poorly developed
institutions generate resources to deal with such institutions and become dominant investors over firms
from advanced economies in countries with poor institutions (Cuervo-Cazurra and Genc, 2008), while
firms that operate in regulated industries at home learn how to manage government relationships and
become dominant investors in regulated industries in other countries (Garcia-Canal and Guillen, 2008).
Third, still other resources can help the firm achieve an advantage against domestic competitors.
Some dimensions of the home country environment induce the firm to develop highly sophisticated
resources to operate there (Cuervo-Cazurra and Genc, 2011), for example to abide by high quality
regulations or satisfy the needs of highly demanding capital markets. These highly sophisticated resources
can then be used in countries with lower requirements, providing the firm with an advantage over
domestic competitors that have not been forced to upgrade their resources. Thus, in contrast to the
traditional arguments that distance has a negative impact on the firm (Johanson and Valhne, 1977), in
some dimensions the distance between home and host has a positive impact on the ability of the foreign
firm to achieve an advantage over domestic companies. For example, companies that face promarket
reforms in their home country generate the ability to deal with them and achieve superior profitability in
other countries that experience promarket reforms later (del Sol and Kogan, 2007).
The article focuses attention on how the conditions of the home country affect the global strategy of the
firm. It extends the resource-based view from its traditional focus on resources developed to achieve an
advantage in the industry, toward resources developed in response to the general conditions of the home
country. Although the latter are not advantages in the home country (since all firms develop similar
resources), they can provide the firm with an advantage abroad and affect its global strategy. The home
country can directly become a resource that can be used abroad or indirectly induce the firm to develop
particular resources to be used abroad later. Their use and relation to advantage or disadvantage induces
the firm to follow particular global strategies.
The articles that accompany this article provide sophisticated examples of how aspects of the
home country affect a firm’s global strategy. First, Devinney (2011) indicates another limit of the
influence of the home country on the global strategy of the firm. Traditionally, multinational companies
transferred resources and practices developed in the home country to other countries to address their
corporate social responsibilities there. However, the emergence of a global monitoring democracy with
actors (such as nongovernment organizations and labor unions) overlooking the actions of multinational
firms limits the ability of multinationals to follow this strategy. Instead, multinational firms are
increasingly being required to create global strategies for dealing with their responsibilities across
countries, reducing the influence of the home county on how they undertake corporate social
Second, Boddewyn and Doh (2011) illustrate how a firm not only develops particular resources to
compensate for missing inputs at home, but also does this in a host country. Similar to the situation in
which a firm will develop resources to compensate for the lack of inputs or collective goods in the home
country, in a host country in which collective goods are missing, the multinational will have to invest in
their development. However, instead of developing them internally, as is often the case in the home
country, in a host country the multinational firm may choose instead to assist the government or
nongovernmental organizations in the creation of these collective goods. The use of this assistance mode
is the result of high uncertainty in the defense of contractual obligations and low asset specificity.
Third, Rangan and Drummond (2011) explain in detail how the home country can become a
resource that supports the advantage of the firm in particular host countries. Multinationals face the
challenge of controlling their host country operations and capturing value. However, firms originating in
home countries with significant ties to the host countrysuch as economic, security, political, or
migratorybenefit from this association in comparison to firms originating in countries with weak ties.
The ties facilitate the sanctioning and monitoring of misbehavior in the host country and enable the firm
to achieve higher commitment and performance in the host country.
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... Second, we highlight that these home-institutional effects can vary over time and are based on the subsidiary establishment's characteristics (i.e., greenfield vs. acquired subsidiaries). Thus, we contribute to the evolving research related to the home institutions and strategies of MNEs (Cuervo-Cazurra, 2011;Li, Xia, Shapiro & Lin, 2018;Marano, et al., 2016;Wan & Hoskisson, 2003;Zhou & Guillén, 2015) and to the literature on the choice of subsidiary-establishment mode, particularly because the previous literature has given little attention to the post-subsidiary-establishment outcomes (Dikova & Brouthers, 2016). We do this by studying how the home-institutional effect varies based on the establishment mode of the subsidiary (greenfield vs. acquisition) and how such effects enhance or decay over time for greenfield and acquired subsidiaries. ...
... In general, home institutions cause MNEs to develop their own internal institutions (comprised of values, routines, practices and decisions) that form the basis of their competitive advantage, and these internal institutions persist in light of new (or different) external institutions faced when the MNE enters a new foreign market (Oliver, 1997;Lu, 2002). The home-institutional effect has been reflected in various practices adopted by MNEs' foreign subsidiaries such as the choice of entry mode and international markets (Lu, 2002), innovation (Maksimov et al., 2017), lobbying (Shirodkar et al., 2017), diversification strategies and firm performance Cuervo-Cazurra, 2011;Marano, et al., 2016;Stoian & Mohr, 2016;Wan & Hoskisson, 2003;Zhou & Guillén, 2015). ...
... Our study reinforces the arguments and findings of prior studies that emphasize the influence of home-country institutionsan increasingly important dimension in IB research (Cuervo-Cazurra, Ciravegna, Melgarejo & Lopez, 2018;Cuervo-Cazurra, 2011;Marano, et al., 2016;Zhou & Guillén, 2015) on the activities of MNEs' foreign subsidiaries (in our case, on their environmental innovations). ...
In this study, we argue that foreign subsidiaries of multinational enterprises (MNEs) vary in terms of their engagement in environmental innovation depending on the strength of the MNE's home-ecological institutions. We also propose that the manifestation of this home-institutional effect varies depending on the choice of the subsidiary establishment mode (acquisition vs. greenfield) and over time based on the subsidiaries’ host experience. We test our hypotheses using a sample of foreign subsidiaries in Spain over the period 2003–2015. Our results support the home-institutional effect on subsidiary-level environmental innovation as well as the moderating effects of the subsidiary establishment mode and host experience.
... Scholars have provided important insights into how firms' domestic country context and the country context of firms' foreign investors shape firms' behavior and strategizing. For instance, firms' domestic country context affects internationalization strategies (Cuervo-Cazurra, 2011;Hoskisson et al., 2013;Urbig et al., 2022), and foreign investors' country context shapes (e.g., firms' auditor choice) (Kim et al., 2019) and corporate governance practices (Aggarwal et al., 2011). Nevertheless, the insights are each confined to one specific area of strategic decision making and only constitute single actions of a complex competitive repertoire and do not fully reflect strategy as a portfolio of actions. ...
... Moreover, we add further evidence to research stressing the impact of the domestic country context on firms' strategizing (e.g., Cuervo-Cazurra, 2011;Grøgaard et al., 2019;Hoskisson et al., 2013;Urbig et al., 2022) by empirically investigating the relation of a diverse set of country factors with firms' strategizing in the context of developed and developing countries. Our findings also imply that studies examining the moderating role of the domestic country context in the relationship between firm strategies and performance (e.g., Chakrabarti et al., 2007;Wan & Hoskisson, 2003) should theoretically and empirically take into account how the country context may not only serve as a moderator of the strategy-performance relationship but could also act as a determinant of firms' ability or willingness to employ certain strategies. ...
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Recent research has shown that firms' ability to employ complex competitive repertoires can create long‐term competitive advantages. Since research on its determinants has focused on the firm level, we lack an understanding of how country‐level factors impact firms' implementation of complex competitive repertoires. Our cross‐country study addresses this gap by integrating a model of country‐level competitiveness factors with insights from the literature on competitive dynamics and portable governance. We argue that a country context with high‐quality competitiveness factors enables firms to implement complex competitive repertoires. In addition, we hypothesize that firms with foreign investors from countries with high‐quality competitiveness factors can partially compensate for low‐quality factors in firms' domestic context. We found support for our hypotheses in an unbalanced sample containing 1,340 firms from 32 countries. Employing complex competitive repertoires (i.e., diverse and dynamic arrays of competitive actions), such as price reductions or new product introductions, can help firms outcompete their competition. We argue and empirically show that firms' domestic country context, specifically high‐quality governance, factor and demand conditions, related and supporting industries, and strong context for rivalry drive their ability to implement complex repertoires. Moreover, we find that ownership by foreign investors from favorable country backgrounds can partly compensate for firms' weak conditions at home by serving as enabling bridges. Managers who aim to improve their firms' repertoire complexity but are restricted by their domestic country context may consider attracting foreign investors from countries that have what their countries lack.
... First, a vital learning source for MNEs is the country in which the firm is based (Cuervo-Cazurra, 2011;Cuervo-Cazurra, 2016). The influence of the home country on MNEs' decisions is one of the key topics that the IB literature has analyzed in recent years (Banalieva et al., 2018;Cuervo-Cazurra, 2011;Lee & Weng, 2013;Ramamurti, 2012). ...
... First, a vital learning source for MNEs is the country in which the firm is based (Cuervo-Cazurra, 2011;Cuervo-Cazurra, 2016). The influence of the home country on MNEs' decisions is one of the key topics that the IB literature has analyzed in recent years (Banalieva et al., 2018;Cuervo-Cazurra, 2011;Lee & Weng, 2013;Ramamurti, 2012). The home country determines the MNEs' structure and strategy with persisting effects over time (Kimberly, 1979;Schein, 1983), influencing MNEs' decisions when expanding abroad (Cuervo-Cazurra, 2006;Holburn & Zelner, 2010;Perkins, 2014). ...
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Research summary This research examines the role played by home and host country learning in the relationship between the speed of institutional change and subsidiary performance. We posit a negative relationship between the speed of institutional change in the host country and subsidiary performance. We also argue that this relationship is contingent on the institutional learning that parent multinationals (MNEs) have previously attained in other countries. By integrating the dynamic institution-based view and the organizational learning literature, our analysis highlights the key role that abilities and skills developed by MNEs to face rapid institutional changes have on the host countries in which they operate. We test our theoretical model using a sample of 342 subsidiaries from 68 MNEs operating in emerging and developed economies during 2001–2017. // Managerial summary MNEs regularly face institutional changes in both home and host countries. However, institutions evolve at different speeds. According to previous studies, the performance of subsidiaries is threatened when institutional changes happen quickly. MNEs need to develop the ability to help their subsidiaries face changes immediately and with no loss of performance. Our research shows that MNEs can learn from prior rapid institutional changes in the home and host countries and transfer this knowledge to their subsidiaries so that they can be more equipped to deal with it in the future.
... Such a novel theoretical attempt in regard of understanding emerging market firms' strategic behavior and international performance is quite valuable because it provides new insights. Scholarly efforts rise to fundamentally explain internationalization of emerging economy firms and performance implications (Child and Rodrigues, 2005;Cuervo-Cazurra, 2011;Gammeltoft, Barnard, and Madhok, 2010;Luo and Tung, 2007;Mathews, 2006;Morck, Yeung, and Zhao, 2008). ...
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The increasing prominence of emerging market firms in global markets through an upsurge of internationalization has ignited substantial research inquiries on its impact on firm performance. The international expansion strategy of emerging market firms entails growth imperatives that potentially affect performance. Though the topic has been extensively investigated in the international business and strategic management literature, relatively less knowledge has been identified on the relationship between internationalization and performance linkage that pertains to a notable research gap in emerging economy firms. Previous studies have neglected to examine the functions of firm resources that are unique and contingent on the international performance of emerging market firms. Building on the internationalization theory and the resource-based view (RBV) of the firm, this research seeks to both theoretically and methodologically explore the impacts of the relationship between internationalization and organizational capabilities on the performance of emerging market firms by analyzing the sample of 1,915 Indian firms for the research period of 2000-2010 with a total of 20,041 unbalanced panel data observations. The empirical results using feasible generalized least squares regression analysis indicate that there is significant and positive statistical support for the effects of internationalization and organizational capabilities on the performance of emerging market firms. Empirical findings also indicate a positive moderating role of unabsorbed organizational slack on the relationship between internationalization and firm performance. Absorbed slack resources, R&D, and marketing capabilities are found to negatively moderate the performance consequences of internationalization.
... Country-of-origin perspectives (Harzing & Sorge, 2003;Noorderhaven & Harzing, 2003) have also analyzed the home-country influence on a wide range of organizational dimensions and behaviours, such as human resource management (Ferner & Quintanilla, 1998). However, it is only relatively recently that International Business (IB) scholars have incorporated the home country as a theoretical factor influencing patterns of firm internationalization (Aharoni, 2014;Buckley, 2018;Cuervo-Cazurra, 2011;Cuervo-Cazurra, Luo, Ramamurti, & Ang, 2018;Lundan, 2018;Peng, 2012a/b;Wu & Chen, 2014;Yin, De Popris, & Jabbour, 2021). ...
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International Business research has focused attention on the role of the home country in firm internationalization. While this has produced insights as to how home countries condition firm internationalization, significant gaps remain. We focus on two. First, research on how and why countries differ in their internationalization support is limited. Second, research on how countries differ in the extension of their internationalization support into host countries is scant. Addressing these gaps, we develop a conceptual paper and put forward nine propositions. We theorize how differences in the dominant mode of economic coordination in home countries – in market-, business-, and state-led economies – relate to variation in their internationalization support. Our framework is relevant to developed and emerging economies.
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The study empirically explores the relationship between OFDI and the home country's institutional quality by employing a panel of 23 European emerging countries between 2000 and 2019. In doing so, the study employs the VECM estimation procedure. The key findings of this research indicate that the rate of adjustment to reach long-run equilibrium in European post-transition countries is lower than in European transition countries. In conclusion, there is evidence, for the period being investigated, of causality between the home country's institutional quality and OFDI in both regions. Also, most of the transition countries are still in the process of building the institutional environment, with many institutional voids and different starting points of their internalization process. In fact, most of the countries, especially European transition countries, are in stage 2 or stage 3 of their investment development path (IDP) development, where IFDI stock still remains higher than OFDI stock.
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Purpose The authors meta-analyze research on the diversification–performance relationship to empirically establish the impact of home-country formal institutional quality on this relationship. Prior research assumes that a country’s formal institutional quality negatively affects the diversification–performance relationship, especially when it involves unrelated diversification. However, empirical evidence for these propositions is inconclusive because existing studies consider blocks of countries with limited institutional heterogeneity. To provide more clarity, this study aims to consider the diversification–performance relationship across developed, emerging and developing countries. Design/methodology/approach The meta-analysis relies on a sample of 293 effect sizes of the diversification–performance relationship from 76 primary studies across 15 countries between 1988 and 2019. The sample excludes effects sizes from papers that consider both product and international diversification to control for complex interactions between the strategies, as well as papers that did not consider both related and unrelated diversification. Findings The results confirm that stronger home-country formal institutions weaken the diversification–performance relationship by decreasing the relative efficiency of internal markets versus external ones. Further, the effect is less negative for related diversification because this strategy can better exploit market frictions in countries with stronger formal institutions and more efficient external markets than its unrelated counterpart. Originality/value The study contributes to the literatures on the diversification–performance relationship and home-country governance by providing robust evidence for how formal institutional quality impacts the efficacy of related and unrelated diversification.
Purpose Recent empirical findings on the relationship between internationalization and firm performance (I–P) suggest a significant role of firm's context. Extending this line of argument, the authors study the effect of internationalization on firm's performance for emerging market firms from knowledge-intensive industries, taking into account the firm's motive of internationalization and host country’s location-based advantages. Design/methodology/approach The authors link host country-specific advantages (CSAs) with firm-specific advantages (FSAs) to identify three distinct settings of internationalization for emerging economy firms – (1) asset-exploitative internationalization in developing or least developed countries, (2) asset-exploitative internationalization in developed countries and (3) strategic asset-seeking internationalization. The authors test this study’s hypotheses on a sample of 415 Indian firms from knowledge-intensive industries. Findings The authors find that firm's performance upon internationalization is non-linear in each of the three different settings. The nature of the non-linear relationship depends upon location-based advantages of the host country and the motive of internationalization. Originality/value The motive of internationalization and the location-based advantages sought during internationalization are unique for emerging economy firms. Hence, the study extends understanding of the I–P linkage in an emerging economy context.
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This empirical article examines how the institutional development of the home country and host countries in which multinational enterprises (MNEs) are embedded can drive MNEs’ research and development (R&D) intensity. In doing so, this study analyzes 967 firm-year observations of 234 pharmaceutical firms from 30 developed and less developed countries in the period from 2010 to 2017. We find empirical support for internationalization toward developed countries as a driver of R&D intensity at the firm level. Furthermore, we find that this positive effect is stronger for MNEs from less institutionally developed home countries. The results can help managers, researchers, and policymakers to better understand the innovation process in R&D-intensive industries. JEL CLASSIFICATION: M16, O32
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Bisnis dalam konteks global merupakan bisnis yang mendunia.Bisnis dalam konteks global sebagai bisnis yang melibatkan berbagai transaksi antar negara khususnya melalui kegiatan perdagangan ekspor dan impor (eksport and import) antar negara, lisensi dan waralaba (licensing and franchising), kontrak manufaktur dan alih daya (contract manufacturaing and outsourching), aliansi strategis dan usaha patungan (strategic aliances and joint ventures), investasi langsung luar negeri (foreign direct investment atau FDI), pembukaan berbagai kantor cabang (subsidairies) di berbagai negara maupun melalui perusahaan multinasional (multinational corporation atau MNC) dengan tujuan untuk meraih kepuasan bagi setiap individu, perusahaan, dan organisasi
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Current trends appear to suggest that globally integrated strategies are the wave of the future for many industries, but no theoretically sound, firm-level model explains this situation. International business models explain industry trends from economic perspectives, and organizational theory is beginning to examine the organizing principles of multinational firms, but a gap exists in explaining the strategic motivations of multinational firms as they expand and integrate worldwide. This article develops a capability-driven, as opposed to market-driven, framework of multinational strategy. This contingent framework explains the organizational consequences of international expansion and global integration depending on the capability types, capability strategies, and multinational strategies of the multinational firm.
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From the Preface: The research journey for this book began fifteen years ago when we were teaching in a Harvard Business School Executive Program, Managing Global Opportunities in China and India. The program targeted Western multinationals and investors interested in business opportunities in the then rapidly growing Chinese market and the newly liberalizing Indian market. In Mumbai, as part of that executive program, we invited Ratan Tata, chairman of Tata Sons Limited, to share with the group Tata's strategy for the new Indian market. We were surprised to see Western executives' reaction to Tata's ambitious plans for exploiting the new ambient opportunities. Their experience in Western markets had convinced these executives that emerging market business groups like the Tata's, consisting of several dozen companies in disparate, seemingly unrelated businesses, were anachronisms, doomed to go the way of the dinosaurs unless they radically restructured and focused on one or two core businesses. The disconnect between how emerging market senior leaders like Ratan Tata and leaders of Western multinationals in our executive program thought about the strategic implication of emerging market opportunities was truly fascinating to us. The crux of this book is to advance a structural framework for thinking about the nature and extent of differences between emerging markets and mature markets on the one hand, and among emerging markets on the other. That is, the so-called BRIC economies—Brazil, Russia, India, and China—differ from the United States, the United Kingdom, and Japan on the one hand, but they also differ from each other quite extensively. We specify how. In particular, we articulate a framework to calibrate the differences in soft and hard institutional infrastructure— we refer to the absence in emerging markets of things we take for granted in our backyard in Boston as institutional voids—that permeate emerging markets, and then offer solutions for dealing with these. Tarun Khanna is the Jorge Paulo Lemann Professor at Harvard Business School and the author of Billions of Entrepreneurs: How China and India Are Reshaping Their Future and Yours (Harvard Business School Press, 2008).
Whereas conventional wisdom holds that policy risk?the risk that a government will opportunistically alter policies to expropriate a firm's profits or assets?deters foreign direct investment (FDI), we argue that multinational firms vary in their response to host-country policy risk as the result of differences in organizational capabilities for assessing and managing such risk, which are shaped by the home-country policymaking environment. Specifically, we hypothesize that firms from home countries with weaker institutional constraints on policymakers, or more intense political rent-seeking as the result of redistributive pressures among different economic or ethnic groups, will be less sensitive to host-country policy risk in their international expansion strategies. Moreover, firms from home-country environments with sufficiently weak institutional constraints or sufficiently strong redistributive pressures will seek out riskier host countries for their international investments in order to leverage their political capabilities, which may serve a source of superior performance. We find support for our hypotheses in a statistical analysis of the FDI location choices of multinational firms in the electric power industry during the period 1990 - 1999, the industry's first decade of internationalization.
The concept of consumer ethnocentrism is introduced and a corresponding measure, the CETSCALE, is formulated and validated. Four separate studies provide support for the CETSCALE's reliability and convergent and discriminant validity. A series of nomological validity tests show consumer ethnocentrism to be moderately predictive of theoretically related constructs.
The Oxford Handbook of International Business contain articles by distinguished scholars in the field of international business. The authors are all authorities on their chosen topics and have been active as leaders in the Academy of International Business. Their articles survey and synthesize relevant literature of recent years. The book is split into five major sections, providing comprehensive coverage of the following areas: the history and theory of the multinational enterprise; the political and policy environment of international business; strategies of multinational enterprises; the financial areas of the multinational enterprise (marketing, finance and accounting, Human Resource Management [HRM], and innovation); and business systems in Asia, South America, and the transitional economies.
This article first traces the changing world economic scenario for international business over the past two decades, and then goes on to examine its implications for the location of foreign direct investment and multinational enterprise activity. It suggests that many of the explanations of the 1970s and early 1980s need to be modified as firm-specific assets have become mobile across natural boundaries. A final section of the article examines the dynamic interface between the value-added activities of multinational national enterprises in different locations.
This paper examines the nature of the core capabilities of a firm, focusing in particular on their interaction with new product and process development projects. Two new concepts about core capabilities are explored here. First, while core capabilities are traditionally treated as clusters of distinct technical systems, skills, and managerial systems, these dimensions of capabilities are deeply rooted in values, which constitute an often overlooked but critical fourth dimension. Second, traditional core capabilities have a down side that inhibits innovation, here called core rigidities. Managers of new product and process development projects thus face a paradox: how to take advantage of core capabilities without being hampered by their dysfunctional flip side. Such projects play an important role in emerging strategies by highlighting the need for change and leading the way. Twenty case studies of new product and process development projects in five firms provide illustrative data.
Understanding sources of sustained competitive advantage has become a major area of research in strategic management. Building on the assumptions that strategic resources are heterogeneously distributed across firms and that these differences are stable over time, this article examines the link between firm resources and sustained competitive advantage. Four empirical indicators of the potential of firm resources to generate sustained competitive advantage-value, rareness, imitability, and substitutability are discussed. The model is applied by analyzing the potential of several firm resources for generating sustained competitive advantages. The article concludes by examining implications of this firm resource model of sustained competitive advantage for other business disciplines.
Explores the mutual interdependence of states and firms throughout the world, showing how global structural changes - in finance, technology, knowledge and politics - often impel governments to seek the help and co-operation of managers of multinational enterprises. Yet, this is constrained by each country's economic resources, its social structures and its political history. Based on grass-roots research into the experience of over 50 multinationals and more than 100 investment projects in three developing countries - Brazil, Malaysia and Kenya - the authors develop a matrix of agendas. They present the impact on projects of the multiple factors affecting the bargaining relationships between the government and the foreign firm at different times and in a variety of economic sectors. In a conclusion they offer some guidelines for actions to both governments and firms and some points to future interdisciplinary research. -from Publisher