Genetic distance,international experience and the performance of cross-border R&D for EMNEs

Cross-border R&D can contribute to the enhancement of independent innovation capabilities of emerging markets multinational enterprises (EMNEs) by benefiting from knowledge management. However, scant research exists examining the location impact of cross-border R&D for EMNEs on performance implications. This paper fills this important theoretical gap by building upon the literature of genetic distance in connection with knowledge management. We use a panel data of Chinese high-tech listed companies to empirically examine the impact of genetic distance on the performance of cross-border R&D and the role played by international experience. Our results reveal a positive relationship between genetic distance and the performance of cross-border R&D. Importantly, we highlight the motivation for cross-border R&D of EMNEs to acquire technical knowledge magnifies the positive effects of genetic distance and performance. Furthermore, our analysis indicates that international experience significantly enhanced the positive effect of genetic distance on cross-border R&D performance. We conclude this paper by discussing theoretical contributions to genetic distance, international management and knowledge management, as well as practical implications for cross-border R&D of EMNEs.     

Greenfield or M&A? An institutional and learning perspective on the establishment mode choice of Chinese outward investments

We develop and test a model of Chinese greenfield investments using institutional and learning theories. Both the host country institutional context and the firm's international characteristics affect the establishment mode. Using 152 Chinese emerging market multinationals (EMNEs) with 401 subsidiaries distributed in 26 countries from 2003 to 2013, we build a database of 284 pairs of host country/Chinese firms to test two hypotheses. We find that, first, governance environment affects the establishment mode: greenfield investments are preferred over acquisitions in relation-based host markets, and M&As are preferred in rule-based countries. Second, the depth of Chinese EMNEs' international experience (i.e. the amount of previous investments in the same host market) moderates the effect of the governance environment on the establishment mode. Firms with greater international depth use more M&As in relation-based markets and more greenfield investments in rule-based markets, suggesting that previous investments in the same host country provide a type of learning that reduces acquisition uncertainty in the former case and increases the self-confidence of Chinese EMNEs in the latter.     

Temporal and Spatial Constructs in Service Firms' Internationalization Patterns: The Determinants of the Accelerated Growth of Emerging MNEs

The recent years have witnessed an unprecedented surge of Emerging Multinational Enterprises (EMNEs), i.e. firms from the emerging economies that have started internationalization very late and have expanded abroad in a rather accelerated fashion.In particular, pace and international diversification emerge as distinctive features of service EMNEs' successful internationalization patterns, inducing scholars to question the applicability of traditional internationalization theories to EMNEs. The Linkage–Leverage–Learning (LLL) Model and the springboard perspective identified some of the critical EMNEs uniqueness and investigated potential antecedents of their abnormal patterns. Nevertheless, previous contributions neglected to provide a solid empirical base for measuring spatio-temporal dimensions of EMNEs' internationalization.This paper aims to empirically investigate the dimensions affecting the pace at which EMNEs enlarge their geographic scope, by performing OLS regression analysis.The main outcomes demonstrate the crucial role of cumulative benefits from inward internationalization and inter-regional diversification strategies in boosting EMNEs' overseas expansion, in opposition to traditional MNEs (TMNEs). The results corroborate some assumptions of emerging theories on EMNEs, and provide insight for extending traditional MNEs theories by rethinking concepts, relations and causalities.     

Diversification and Performance in Developed and Emerging Market Contexts: A Review of the Literature*

The link between diversification and performance has become an important topic for research in diverse fields such as strategic management, industrial organization and financial management. However, a synthesis of the research done in developed and emerging markets is missing. This paper attempts such a synthesis by comparing and contrasting the past cumulative empirical research evidence on the relationship between diversification and firm performance in the context of developed economies to the more recent work in the emerging economies. The empirical literature has been divided into three broad perspectives, and the paper highlights the considerable diversity in its findings in developed and emerging markets across each of these perspectives. Based on this study, it is proposed that related diversification is preferable in developed economies and should be based on specific resources, whereas unrelated diversification is appropriate in emerging economies and should be based on generic resources. Although agency problems exist in both contexts, it is argued that the type of problem differs in developed and emerging markets. The paper concludes by identifying three directions for future research. First, the relationship between diversification and performance should be examined across each industry separately and not in aggregate. Secondly, future research needs to examine the organizational mechanisms required to make diversification successful. Finally, the relationship needs to be examined under unstable and dynamic situations such as the current global economic downturn.     

OFDI performance of EMNEs: A review and recommendations for future research

Outward foreign direct investment (OFDI) by emerging economy multinational enterprises (EMNEs) is an increasingly significant global economic phenomenon. A growing and extensive body of research has examined the OFDI performance outcomes of EMNEs. Our systematic review seeks to capture the diverse theoretical lenses adopted and advanced in this stream of research, synthesize empirical findings, identify methodological challenges, and recommend directions for future research. Following a comprehensive and rigorous literature review, we identified 175 relevant studies published from 2001 to 2020. Our review suggests that a wide range of theories across disciplinary boundaries have been applied, and in some cases extended, to understand the performance outcomes of the OFDI of EMNEs. Empirically, previous studies have focused on different performance dimensions when assessing the OFDI outcomes of EMNEs, and investigated antecedents and contingencies across micro, meso, and macro levels. Based on our review findings, we propose a number of future research directions to move this research stream forward.     

An Effectual–Causal View of Managerial Decisions in the Internationalization of Indian MNEs

We use effectuation theory to understand the internationalization of emerging market multinational enterprises (EMNEs), specifically answering the questions of: (a) how managerial decision logic differs across EMNEs that face disadvantages vs. those that do not, and (b) what managerial decision logic helps EMNEs to mitigate disadvantages. We employ a case research approach to analyze decision events across eight firms that internationalized from India between 1990 and 2015. We find that EMNEs are attuned to welcoming and leveraging surprises in order to transform challenging markets into opportunities; form cautious partnerships with self-selecting stakeholders, and; balance all-or-nothing opportunities with losses they can afford. Furthermore, while EMNEs adopt relatively balanced effectual-causal actions to mitigate the liability of multinationality (LoM), they are more effectual than causal in mitigating the liabilities of foreignness (LoF) and liabilities of origin (LoR).     

私营企业的企业家背景、多元化战略与企业业绩

本文运用"高阶理论"考察了私营企业的企业家背景、多元化战略选择以及企业业绩之间的关系.研究发现,与低学历的、年长的、创业前没有"企业负责人"经历的企业家相比,高学历的、年轻的以及创业之前曾担任过"企业负责人"的企业家更倾向于选择多元化战略.研究也发现,高学历、低年龄、"企业负责人"经历与高的销售额、资产额、资产增长率和净资产增长率正相关;多元化战略能够带来更大的资产规模、更高的资产增长率和净资产增长率,但对利润率没有显著的影响.同时,企业家的背景与多元化战略的交互作用同样影响着企业的业绩.创业前有过"企业负责人"经历的企业家采用多元化战略可以带来更好的业绩,而没有这种经历的企业家则会收到负面的效果.有意思的是,高学历和低学历的企业家采用多元化战略都提高了企业的销售额、资产额和净资产增长率,而中等学历的企业家采取多元化战略则带来了相反的效果.本文最后对该现象的可能原因进行了探讨.     

International acquisition performance and experience: A resource-based view. Evidence from French acquisitions in the United States (1988–2004)

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.     

International Diversification,Business Group Affiliation and Firm Performance: Empirical Evidence from India*

We investigate the impact of business group affiliation on the relationship between international diversification and firm performance for emerging economy firms. We develop the theoretical arguments based on an integration of the literature on international diversification with the institutional theory perspective. We argue for a U‐shaped relationship between international diversification and firm performance, and suggest that a firm's affiliation to a business group moderates the relationship between international diversification and firm performance. Based on a sample of Indian firms, we find that firm performance is positively related to the degree of internationalization, while business group affiliation reduces the positive effect of internationalization on firm performance.     

The impact of distance on acquisition performance

A challenge in interpreting research is that the construct of ‘distance’ has multiple dimensions that influence acquisition performance. We expand Ghemawat's (2001) typology of distance with its dimensions of cultural, administrative, geographic, and economic distance (CAGE) from a review of 61 empirical research studies of how distance affects acquisition performance. We identify different impacts of distance dimensions on acquisition performance to find that distance dimensions are interdependent. As a result, context matters, when considering the impact of distance on acquisition performance. Supporting institutional theory, the direction of distance may matter, as the results may be different for acquirers in developed and emerging economies. Additional implications for research and management practice are identified.     

Directors’ human capital,firm strategy,and firm performance

Ideally, corporations are directed by boards whose directors provide valuable human capital that match the firms’ strategy. We investigate how directors’ human capital (international experience, industrial know-how, CEO experience, and financial know-how) affects firm performance including the firm’s strategy (diversification and internationalization) and how human capital is related to acquisition strategies (non-diversifying and international acquisitions). Our sample consists of 560 firm-year observations in Switzerland. We find empirical evidence that directors’ human capital affects firm performance and that this relationship depends on the firm’s strategy. Furthermore, human capital is also correlated with acquisition strategy. The study shows that focusing on board independence and compliance issues may be unrewarding in board research and practice.     

R&D internationalization,product diversification and international performance for emerging market enterprises: An empirical study on Chinese enterprises

One motivation behind R&D internationalization for emerging market multinationals (EM MNEs) is to expand international markets. This paper analyzes whether the R&D internationalization of EM MNEs contributes to an improvement in international performance measured by foreign sales as a percentage of total sales (FSTS). Using panel data on China's listed companies, this paper introduces more scientific and normative indicators for measuring R&D internationalization in terms of geographic distribution (breadth) and overseas investment (depth). The results reveal an inverted U-shape relationship between R&D internationalization and international performance that is initially positive and eventually becomes negative. Product diversification has a significant moderating effect on the relationship between R&D internationalization breadth and international performance.     

Institutional transitions,global mindset,and EMNE internationalization

Recently revised theoretical explanations of the internationalization process have been offered to specifically account for the propensity of Emerging Market Multinationals (EMNEs) to engage in accelerated internationalization. However, this literature stream has yet to consider how the fundamental institutional transitions occurring in emerging markets promote the individual and organizational level global mindset that helps account for this accelerated, proactive international expansion. Our dynamic multi-level conceptual framework examines the influences of both the home country institutions and intra-organizational mindsets on the development of EMNE outward FDI decision making. This framework contributes to extant literature by integrating conceptualizations of national culture with the informal and formal institutions offered by institutional theory, while examining how fundamental shifts in these influence the intra-organizational context. Furthermore, our conceptual framework adopts a multi-level perspective of global mindset as an antecedent of firm decision making and adds to the global mindset literature by arguing that institutional transition is a macro level antecedent of global mindset.     

R&D alliance portfolio and innovation in an emerging market: The role of business group affiliation and institutional reforms

The role of institutional factors in shaping the outcomes of research and development (R&D) alliance portfolios (APs) is underexplored in the extant literature. This study examines how institutional contingencies in an emerging market context affect the relationship between R&D AP composition (i.e., size and diversity) and firm innovation performance. This study draws on institutional perspective to suggest that business group affiliation (BGA) and institutional reforms positively moderate the relationship between R&D AP composition and innovation performance. A longitudinal empirical investigation conducted on a sample of 185 firms from Indian high-tech sectors, for the period 2003–2015, broadly supports our arguments. This study contributes to the AP and emerging markets literature by highlighting the effects of institutional contingencies of emerging markets on the outcomes of R&D APs.     

Corporate Political Activity and Firm Performance: The Moderating Effects of International and Product Diversification

Prior research has found that corporate political activity (CPA) can both positively and negatively impact firm performance. Combining agency theory with the resource-based view, we examine the relationship between domestic lobbying (a key form of CPA) and firm performance by explicating the moderating effects of international and product diversification. We argue that expansion into international and product markets increases a firm's resources and reduces agency costs in domestic lobbying. Our results, based on a sample of 737 firms, show that lobbying is positively associated with performance for firms that are diversified in both international markets and along product-lines; whereas lobbying is counter-productive for purely domestic and undiversified firms. Our results contribute to the literature on the firm performance implications of corporate political activity by highlighting the roles of international and product diversification.     

Too Big to Learn: The Effects of Major Acquisition Failures on Subsequent Acquisition Divestment

We examine whether firms learn from their major acquisition failures. Drawing from a threat‐rigidity theoretical framework, we suggest that firms do not learn from their major acquisition failures. Furthermore, we hypothesize that host‐country experience reinforces the negative effects of major acquisition failures. Our research hypotheses are tested using an event history analysis of 741 acquisitions undertaken by French listed and non‐listed firms in the USA between January 1988 and December 2008. We use failure divestment (divestment resulting from acquisition failure) as a proxy for acquisition performance. Consistent with our theoretical framework, we find that major acquisition failures have a negative impact on future acquisition performance. Furthermore, we find that such negative effects are reinforced by firms’ host‐country experience.     

Relationship multiplexity,multiple resource acquisition,and export performance of emerging-market firms

Drawing on the relational view and absorptive capacity theoretical lens, we examine the relationship between relationship multiplexity, multiple resource acquisition and export performance of emerging-market (EM) firms participating in buyer-supplier relationships with developed-country multinational companies (DC MNCs). Based on a sample of 128 firms in aviation, furniture, steelworks, automobile, and electronic sectors, we find that relationship multiplexity is positively related to the capacity of EM firms participating in these inter-firm exchanges to acquire technological, marketing, and managerial resources from their DC MNC counterparts, with the most benefit occurring in the acquisition of technological and marketing resources. Furthermore, our study shows that as EM firms seek to enhance their export performance while supplying DC MNCs, it is their successful acquisition of technological and marketing resources, but not managerial resources, that are significantly associated with their superior export performance. Our study contributes to the extant literature by providing important insights into the specific sources of internationalization advantages and/or disadvantages for EM exporters by being suppliers to DC MNCs in multiplex relationships.     

Market reactions to acquisition announcements: The importance of signaling ‘why’ and ‘where’

Acquisitions are risky events but not all acquisitions involve the same levels of risk. We suggest that the announced acquisition motive – the ‘why’ of the acquisition – is an important risk signal. We categorize acquisition motives and distinguish between acquisitions with ‘pure explore’ and ‘pure exploit’ motives. Recognizing that most acquisitions have multiple motives, we identify acquisitions with ‘ambidextrous’ motives – that is different combinations of explorative and exploitative motives – too. Then, building on recent contributions to signaling theory, we argue that the ‘why’ will matter more, if the ‘where’ pertains to a high-risk setting. We measure this using target-to-acquirer industry relatedness. We find that the market reacts more positively to pure acquisitions, aimed at exploration or exploitation, compared to ambidextrous acquisitions. We show that the market reacts more positively to ambidextrous acquisitions orientated towards exploitation than ambidextrous acquisitions orientated toward exploration. Finally, we find that relatedness moderates this relationship, in that the market is more willing to tolerate exploration in a related industry. Our core contribution is to the literatures on acquisition motives and ambidexterity. We provide new insights into the incidence of specific motives, the ways in which they are mixed, and the market's reaction to their announcement. In addition, we contribute to the emerging literature that takes on behavioral perspective of market reactions by showing that the ‘why’ and ‘where’ of an acquisition matter.     

Similarity perceptions in investor reactions to acquisition announcements

We contribute to an improved understanding of investor reactions to acquisition announcements by building on the recent research in cognitive psychology that distinguishes between the following two types of cognitive similarity assessments: taxonomic and thematic similarity. We theorize and find that investor reactions to taxonomic acquisitions, where synergies are easier to comprehend, are generally more positive than investor reactions to thematic acquisitions, which require higher cognitive processing. We argue that this effect is driven by the cognitive processing of investors, instead of “true” synergy, since the more negative announcement returns for thematic deals reverse a few days after the announcement, converging with the announcement returns of taxonomic deals. Moreover, we find that attempts by the acquiring company to help investors assess thematic acquisitions do not seem to be effective at eliminating this effect and instead appear to aggravate investor suspicion. Overall, our findings contribute to the emerging behavioral perspective of investor reactions to acquisition announcements.     

Environmental practices and firm performance in emerging markets: the mediating role of product quality

Environmental practices have not received as much research attention in emerging market contexts as traditional topics like quality. However, the importance of environmental practices for a firm’s production strategy has been increasing at an unprecedented level across the globe. Our research objective is, therefore, to investigate the interplay between environmental practices and quality in the pursuit of firm performance. Relying on 492 responses from Turkish manufacturers to test our hypotheses, we show that environmental practices directly improve the quality of products over and above the effect of quality management practices in emerging markets. Product quality, in turn, is important for increasing firm performance, acting as a mediator for the positive effects of environmental practices on performance. Thus, we reveal that product quality functions as an instrumental conduit between environmental practices and firm performance in emerging markets like Turkey where stakeholder pressures are weak, and regulations are often not properly enforced.