Impacts of institutional pressures and the strength of market supporting institutions in the host country on the ownership strategy of multinational enterprises: theoretical discussion and propositions

The ownership strategy of multinational enterprises (MNEs) i.e. the choice between wholly owned subsidiary (WOS) or international joint venture (IJV) is an extensively studied topic in international business studies. Many past studies concentrated on transactional, economic, location attraction, resource seeking and learning rationales for the ownership strategy of MNEs. However, it is important to note that MNEs enter a new institutional environment also when they enter new international markets. Therefore, the ownership strategy of MNEs is also influenced by the external as well as internal institutions. This paper attempts to address the impacts of different institutional pressures on ownership strategy of MNEs using the arguments from institutional theory. The paper also includes discussion about the strength of market supporting institutions in the host country and its impacts on the ownership strategy of MNEs. On the basis of the theoretical discussion, several propositions are developed in this paper. These propositions relate the ownership strategy of MNEs with the impacts of internal and external institutional pressures on it. It is also proposed to consider the impact of strength of market supporting institutions in the host country on the ownership strategy specifically. When the host country has well developed institutions supporting market conforming values, they can moderate the impacts of coercive and normative pressures from external institutions on the MNEs.     

Empty Signifiers of Transformation in Participatory Planning and the Marginalization of Black People in South Africa

There is no doubt that participation as a development paradigm for the transformation of planning in South Africa took off in the early days of democracy with a revolutionary zeal. The mood of transforming planning practice from apartheid planning associated with top-down authoritarian modernist systems towards bottom-up post-apartheid democratic systems was marked by the emergence of a deluge of African metaphors such as indaba, lekgotla, simunye, tswele pele, etc. These metaphors immediately entered the scene of planning and policy documents, and this was seen largely as signifying the increased participation of black people marking moments of inclusion, transformation and empowerment. However, the legacy of apartheid planning still pervades through the work that planners do and its arresting impact remains unabated in South Africa. This paper explores the emergence of these African metaphors in participatory planning and their implications on the transformation of planning in South Africa. The paper advances the argument that African metaphors of participation have acted as empty signifiers of transformation for black people in the integrated development planning process. While the metaphors are used to construct politically sellable image for participatory processes, participation has gained ideological traction to support Eurocentric and globalist traditions of urban change. Participation reflects a new way of thinking about order, peace and development, and the African metaphors are not instrumental in changing the Eurocentric and global capitalist logic presiding over the constitution of law, theory and the technical instruments of planning.     

Cashbuild of South Africa: Company response to Black employee demands

This is an international case dealing with human resource management in the peculiar social context of South Africa. Cashbuild is a South African building supplies company started in 1978. The focus of the case is the organizational transformation which resulted when the company became responsive to the demands and expectations of Black employees. The Managing Director of Cashbuild noted the similarity in Japanese culture and Zulu culture in stressing group cohesion. Under his leadership, Cashbuild's employees designed a company philosophy which empowered workers by giving them control of four out of five portfolios operative in each branch. The major elements of the change process are discussed. Questions are raised concerning the use of participative management in a society where there is a high element of uncertainty and repression.     

Where business networks and institutions meet: Internationalization decision-making under uncertainty

Both business networks and institutional forces are relevant to firm internationalization but they have seldom been studied together. We investigate under what circumstances firms are more likely to adopt non-predictive strategy in light of the influence of the business networks, the institutional forces, and the home market background affecting their internationalization. Based on survey data from 758 small and medium-sized enterprises (SMEs) from Brazil, China, Poland, Italy, and Sweden, our results support the effects of formal institutional distance and cultural differences on the use of non-predictive strategies by SMEs in internationalization decisions, as well as the contingency effects of business network stability and of having an emerging market background. We integrate research on the liability of foreignness and the liability of outsidership and find that business network stability is critical. It does not moderate the relation between cultural difference and NPS adoption but attenuates the negative relation between institutional distance and NPS adoption, indicating that the liabilities of foreignness and outsidership play different roles in internationalization.     

International HRM in South African multinational companies

With the paucity of published research on human resource management (HRM) policy and practice in the BRICS countries (Brazil, Russia, India, China and South Africa), the rationale for this article is to evaluate the nature of HRM practices, their development, application and diffusion in South African MNCs. It provides an exploratory analysis in a systematic literature review referring to qualitative case study research and research survey literature to better understand HRM strategies and practices developed and diffused by growing emerging market MNCs from South Africa.The findings underline significant challenges of human resource development and controversies regarding host country issues alongside a degree of ‘sophistication’ in the HRM practices of firms analysed. An aim of the article is to identify areas for further research on business and HRM models of Emerging Market MNCs (EMMNCs) in the African context and develop a set of seven research propositions.     

To share or not to share: The role of affect in knowledge sharing by individuals in a diaspora

The diaspora is often credited with helping its homeland, especially when the country is less developed. Yet diasporans are also known to have complex feelings about the homeland. In a study of the South African diaspora, we find that positive affect about both the homeland and the migration experience is positively correlated with the willingness of diasporans to share knowledge with the homeland. But for negative affect there are inflection points, and different intensities of feelings such as guilt and a sense of loss have differing effects. Our findings suggest that an ongoing, beneficial engagement by a diaspora cannot be assumed. Given how individuals are increasingly shaping crossborder economic activity, our findings also suggest that international business research needs to pay greater attention to individuals and individual-level variables such as emotions.     

The role of absorptive capacity and innovation strategy in the design of industry 4.0 business Models - A comparison between SMEs and large enterprises

Technological innovations often lead to redesigns in the business models of established companies, requiring them to incorporate new external knowledge into internal activities. Against this background, this study integrates the concepts of business model design, absorptive capacity, and innovation strategy into a novel research model, which analyzes the redesign of established business models in response to the emergence of Industry 4.0. Industry 4.0, also known as the Industrial Internet of Things, constitutes a contemporary research context that is highly relevant for corporate practice but scarcely regarded in management literature until now. The article contains an analysis of data from 221 German industrial enterprises, conducted through structural equation modeling, with separate data for small and medium-sized enterprises (SMEs) and large enterprises. First, the results indicate that the acquisition, assimilation, transformation, and exploitation of knowledge from the environment enable companies to engage in both exploratory and exploitative innovation strategies. Furthermore, the paper includes an evaluation of the role of exploratory and exploitative innovation strategies that reflects in efficiency-centered and novelty-centered business model designs. The distinct characteristics differentiating SMEs from large enterprises are also explained. The implications of absorptive capacity on innovation strategies, which influence the redesign of extant business models, are discussed from a research and managerial perspective.     

On the performance of platform-based international new ventures: The roles of non-market strategies and managerial competencies

The implications of non-market strategies have gained considerable attention in recent international business and strategy research. However, an in-depth understanding of these strategies and their underpinning mechanisms in platform-based international new ventures (INVs) remains underexplored. To close this gap, this study investigates the drivers and performance outcomes of non-market strategies embraced by internationalizing platform-based firms. We propose that non-market strategies mediate the relationship between managerial competencies and international performance. We also theorize that perceived domestic institutional voids (PDIVs) would have a full strengthening effect on the proposed model. We tested our conceptualization using a unique sample comprising 181 platform-based INVs whose headquarters are based in an institutionally precarious sub-Saharan African country-Ghana. While the results confirm most of our predictions, counterintuitively, our analysis provides no support for the moderating effect of PDIVs on the relationship between non-market strategies and international performance. Together, these findings offer important theoretical and practical implications for the IB and strategy research, especially for platform-based INVs.     

Business Groups as Hierarchical Clique Structures: A Conceptual and Methodological Discussion as it applies to the Mexican Experience

The hierarchically nested set of business groups that result from 110 Mexican firms sharing corporate directors (i.e. interlocking directors) is analysed using social network tools. It is argued that these groupings are one of the many dimensions that should be employed to understand the complex nature of ‘business groups’ broadly understood. The hypothesis that business groups are responses ‘to market failures that arise in the particular institutional contexts of emerging economies’ (Khanna and Rivkin, Strategic Management Journal, 22 (2001), p. 46) is tested using the groups constructed from data on interlocking directorates. The results show that as firms belong to more of the same sets of groups, their financial performance tends to be more similar, thus supporting the idea that ‘groups can make up for under‐developed institutions, thereby reducing transaction costs’ (Khanna and Yafeh, Journal of Economic Literature, 45 (2007), pp. 340–341).     

Recovering the Divide: A Review of Strategy and Tactics in Business and Management

With origins in military history, strategy and tactics is a frequently used conceptual couplet in the business and management literature. This paper reviews how strategy and tactics are portrayed, identifying a dominant ‘pragmatic’ account of strategy as an expression of formal, planned ends achieved through the subordinate means of tactics. Pragmatic distinctions give rise to a range of well‐known problems, in particular in strategy implementation stages. We suggest that some of these problems may be avoided when the strategy–tactics relationship is conceived differently. We elaborate two alternative distinctions: a sociological framing of tactics as mechanisms of resistance to formal, controlling strategies; and a processual perspective, which sidesteps fixed distinctions between tactics and strategy, giving rise to more fluid interrelations between both modes. Based on a review of the business and management literature, we identify key examples of each trope and conclude by drawing insights for each account on the basis of these wider discussions.     

Regional Integration,Multinational Enterprise Strategy and the Impact of Country‐level Risk: The Case of the EMU

The European Monetary Union (EMU) provides a new macro‐level, institutional setting for multinational enterprises (MNEs). The authors investigate the impact of regional integration on MNE strategy by analysing Belgian firms’ entry‐mode choices in foreign markets, both EMU and non‐EMU ones, with a focus on what impact remains of country‐level risk. They demonstrate that regional integration has altered the impact of country‐level institutional risk on MNE entry‐mode choices inside the EMU. The conventional predictions of international business theory have been reversed, with higher country‐level risk inside the EMU driving a preference for wholly owned subsidiaries. Within the integrated region, insider firms now view higher country‐level risk as the equivalent of higher, micro‐level contracting risk. Such risk can best be mitigated through full internalization, combined with arm's length contracts, rather than through equity joint ventures.     

Radiocesium in Fish from the Savannah River and Steel Creek: Potential Food Chain Exposure to the Public

This study examined radiocesium (137Cs) levels in fish from the vicinity of the Department of Energy's Savannah River Site (SRS), a former nuclear weapons production facility in South Carolina. Fish from the Savannah River were sampled above (upstream), along, and below (downstream) the SRS, and from Steel Creek, a tributary that runs through the SRS. There was some off-site contamination of 137Cs in the Savannah River watershed due to low-level releases from past nuclear production on the SRS. The null hypotheses tested were that there would be no differences in 137Cs levels as a function of location along the river, and between species collected from the river and from Steel Creek on the SRS. For six of eight species of fish collected from the Savannah River, there were no differences in 137Cs levels in muscle from fish collected above, along, or below the SRS; exceptions were bowfin and shellcracker. Fish collected from Steel Creek had significantly higher levels (by about an order of magnitude) of 137Cs in muscle tissue than fish collected in the Savannah River. However, no fish from either Steel Creek or the Savannah River had 137Cs levels above the European Economic Community limit for fresh meat of 0.6 Bq/g. Lifetime cancer risk was calculated using the cancer slope factor of 3.2 x 10(-11)/pCi, and various fish consumption scenarios reflecting actual data from Savannah River fishermen. Using mean 137Cs concentrations and median fish consumption for 70 years for Black males-the group with the highest consumption-the excess lifetime risk associated with the eight species of fish in the Savannah River ranged from 9.0 x 10(-7) to 1.0 x 10(-5). The same calculation for fish from Steel Creek gave risk estimates from 1.4 to 8.0 x 10(-5). The 95% level for consumption by Blacks, however, was about 70 kg/year. Black fishermen consuming that amount of bass from Steel Creek would sustain a lifetime risk of 3.1 x 10(-4), whereas the same consumption of Savannah River bass would yield a risk estimate of 1.5 x 10(-5).     

Outsourcing to emerging markets: Theoretical perspectives and policy implications

Creating value through outsourcing has emerged as a popular competitive strategy for firms in various industries. In order to survive in the domestic and international marketplaces, firms, especially in developed countries, are seeking opportunities offshore, which is one focus of globalization. Offshore outsourcing has emerged as a popular competitive strategy and emerging markets have become increasingly attractive locations. As firms in developed countries (e.g., the US) continue to face enormous challenges to sustain competitive advantage, outsourcing to emerging markets is becoming an increasingly important source of business renewal and corporate transformation.In spite of the growing strategic significance of sourcing, we have limited knowledge of offshoring and outsourcing to emerging markets. The objectives of this review are fourfold: (1) to provide a better understanding of the concepts of offshoring and outsourcing business models, (2) to discuss relevant theoretical perspectives related to outsourcing, (3) to present a taxonomy of outsourcing strategies drawing on the extant literature, and (4) to discuss public policy implications. Conclusions and direction for future research are provided.     

Managing international business operations in a changing institutional context: The case of the St. Petersburg hotel industry

This article advances the institutional view of business strategy by analyzing the post-socialist institutional transition in Russia and its implications for business strategies in the St. Petersburg hotel industry. The development of the institutional context is divided into three periods: socialist, early transition and late transition. The strategies of foreign hotel enterprises characteristic of each period are investigated with respect to entry/ownership mode, product, supply and human resource management strategies, and sales and marketing. The study is based on 24 semi-structured interviews with hotel managers, and a variety of local archival sources.The analysis shows how tightly companies are integrated with the formal and informal macro- and industry-level institutional context of Russia. In the case of the hotel industry, the impact of the change in the institutional context from a centrally planned to a market economy centers on the connections of the hotel enterprise with public and private sector actors. Here, empirical analysis shows that first, the degree of integration varied between the three time periods examined, second, many relevant institutional effects are observed at industry level, and third, foreign and local enterprises differ especially during the period of rapid institutional change.     

新兴国家企业选择专业化战略的情境识别及机制探讨--基于深圳企业的多案例研究

已有研究将发达国家高比例的企业专业化归因于其长期发展形成的强制度环境,那么,弱制度环境下的新兴国家如何推动企业采取专业化发展方式?现实中,中国一些地区(如深圳、广州)已表现出明显的专业化倾向,原因在哪?文章基于环境依赖视角探讨新兴国家的企业专业化问题,通过对深圳的三家专业化企业进行多案例研究,旨在识别该地区影响企业采取专业化发展方式的情境框架,并分析具体的影响机制。研究发现:(1)识别了支持型营商环境、高度市场化、敏捷供应链构成的企业战略选择情境框架。受到改革开放政策、内地庞大市场容量、近港区位优势和全价值链分工等外力作用,以及营商环境、市场环境、供应链之间相互作用内生关系影响,形成了螺旋演进式的情境正向优化模型。(2)外部情境会引致企业固化甚至暂时锁定在专业化战略上。支持型营商环境产生资源集聚效应,高度市场化引导行业分工出现,敏捷供应链形成专业化固化效应。研究解释了新兴国家为何会出现专业化比例提高现象,从情境构建角度拓展了企业战略选择的环境依赖理论,对新兴国家的产业政策调整和企业战略选择实践具有指导意义。     

Overcoming the liability of foreignness without strong firm capabilities — the value of market-based resources

The concept of “liability of foreignness” — the costs of doing business abroad — has been known and discussed since the mid-1970s. At the core of these discussions is the role that firm capabilities play in overcoming or limiting these costs. This raises the question of how firms with inappropriate, limited or constrained capabilities relative to their host environment overcome the liability of foreignness. This paper focuses on the subsidiaries of “emerging multinationals” and how they manage the demands of a technologically and economically highly developed host country. A host location with sophisticated markets and well-developed institutional infrastructure may be a highly challenging environment for firms that have grown their organizational capabilities in less developed contexts. This paper explores that situation and considers how resources available on the market — for example through supplier inputs — assist subsidiaries to benefit from their presence in a munificent location. Despite the acknowledged limitations of a transaction-based approach, this paper presents evidence that purchasing knowledge provides an accessible strategy for overcoming some liabilities of foreignness.     

Competitive renaissance through digital transformation

Dramatic health, environmental, and social-related challenges put pressure on firms to rethink their strategies and growth paths. Is a digital-enabled transformation able to help firms cope with these challenges and drive a competitive renaissance of our economic system? Are extant theories and concepts able to interpret the digital transformation? This management focus section aims to advance a relevant and impactful research agenda in the area of “business strategy and digitalization” through 4 contributions – both conceptual and empirical – that contribute to the understanding of the so-called “digital transformation” and its implications for both scholars and practitioners.     

Institutional voids and firms' resource commitment in emerging markets: A review and future research agenda

The impact of institutional environments on firms' strategic decisions has been examined in strategy and international business literature. Yet, the current state of knowledge about how institutional voids affect firms' resource commitment in emerging markets is equivocal. This paper reviews and develops an integrative framework that maps the key conceptualizations, theoretical frames, mechanisms, contingencies and outcomes in the institutional voids – resource commitment literature. Altogether, this paper structures institutional voids and resource commitment research into salient themes to help scholars scope the field and explore value-adding avenues to further our understanding of internationalization and resource commitment decisions in emerging markets.     

Institutional agency by MNEs: A review and future research agenda

Although the study of institutional agency by MNEs is gaining traction in the IB literature, there are gaps in our understanding of how MNEs purposively engage with institutions in home and host markets. By systematically reviewing 73 articles in 26 journals over a 17-year period, I assess the embeddedness of institutional agency in the IB field; and present key findings along societal and organizational field triggers, individual and organizational enablers and types of institutional agency, as well as the consequences for institutional maintenance, creation and transformation. The review demonstrates that very few IB studies explicitly examine MNEs' intentional actions in relation to institutions. Consequently, I call for an advancement in MNE strategy and structure debates to account for the ways in which MNEs can address institutional contradictions. I develop propositions on these as well as micro-level activities that offer opportunities for MNEs to display institutional agency, setting a clear agenda for future research.     

Reforming the South African health care system

South Africa's success in reforming its health care delivery system will depend very largely on its success in reforming its shattered political and economic structure. In this article, the author describes the social, political, and economic factors that dominate the South African scene and suggests the alternative courses that are available to bring the country out of its apartheid past. Both South Africa and its internal and external critics will have to approach the task with patient understanding and flexibility to achieve lasting and satisfactory results.