International Experience in International Business Research: A Conceptualization and Exploration of Key Themes

International experience, the experience that firms accrue from operating internationally, is a key concept in explaining firm internationalization. This paper reviews the conceptualization of international experience in the international business literature. It highlights how prior research has identified three dimensions of the international experience construct (length, scope and diversity), thereby demonstrating that international experience should be treated as a multidimensional construct. In addition, intensity is presented as a fourth and novel dimension of international experience. The importance of this multidimensional conceptualization is highlighted in an explanation of why the international diversification and international experience constructs are not synonymous. In light of the importance of international experience in explaining firm internationalization, the authors explore how the source of the firm's international experience will determine the limits to its application in foreign markets. In particular, the authors distinguish between location‐bound international experience and non‐location‐bound international experience as sources of firm‐specific advantages (FSAs). The FSAs that the firm develops from its experience with equity and non‐equity entry modes are presented as examples of specific FSAs developed within the firm's bundle of FSAs concerning internationalization. The paper concludes with some implications of the conceptualization of international experience for several issues of international business research as well as providing managerial implications.     

UK International Joint Ventures with the Triad: Evidence for the 1990s

This paper identifies and analyses some basic trends and patterns in international joint venture activity between UK firms and partner firms located in the Triad (North America, Western Europe and Japan) over the 1990–96 period. Several dimensions of UK international joint venture activity are examined: trends over time, geographic distribution of foreign partners, industry characteristics, the purpose of the venture, the number of partners and the UK partners' equity shareholding. The study serves to update and extend previous analyses of UK international joint venture activity with partners from developed market economies.     

Diaspora Ownership and Homeland Firms' Internationalization

Although the contribution of diaspora to international business is becoming more evident, little is known about the channels used by individual firms to benefit from diaspora. In this paper, we propose equity ownership as a form of connection between the homeland firms and diasporans (i.e. diaspora members). Specifically, we draw on the literature on diaspora combined with an owners-as-resources perspective to theorize about how diaspora owners can affect the homeland firm's internationalization. We suggest that the anticipated entry costs deriving from the liability of foreignness faced by homeland firms explain how the impact of diaspora owners varies depending on entry mode. Finally, we compare diaspora owners to other types of foreign owner which we argue have lower levels of motivation and ability to help homeland firms to internationalize, and contribute relatively less to their internationalization than diaspora owners. We test and confirm our predictions using data on 2608 domestically controlled Indian firms and their internationalization in 2006–2012.     

The micro-foundations of industrial diversification through foreign acquisitions: The multifaceted role of CEO experience

This paper examines the micro-foundations of cross-border industrial diversification strategies. We study the impact of observable CEO experience attributes on the propensity to acquire foreign target firms in unrelated (versus related) industries. Our findings, based on a sample of UK-based firms that engaged in cross-border acquisitions between 2010 and 2016, support an inverted U-shaped relationship between life experience of the CEO and the likelihood of engaging in unrelated foreign acquisitions. Further, we find that CEOs' broad-based work experience, across countries or industries, is associated with a higher propensity to engage in unrelated foreign acquisitions. Finally, CEOs’ education experience in MBA-type qualifications is associated with a preference for related foreign acquisitions. We discuss the theoretical implications of these findings and outline directions for future research in the context of micro-foundations in international business, strategic leadership, and upper echelons theory.     

Organizational Networking in UK Biotechnology Clusters

Differences in growth patterns between regional clusters are often attributed to the extent to which they benefit from agglomeration, defined as the advantages that derive from being proximately located with other companies and institutions in the same industry. Foremost among these supply‐side externalities are the knowledge ‘spillover’ effects that can result from firms interacting extensively in both horizontal (complementary equivalent firms) and vertical (value chain) directions. The paper presents evidence from two surveys, one national and one regionally based, of networking patterns in UK biotechnology, focusing on how firms engage with other small firms, with large pharmaceuticals, and with research centres, and how far these interactions are regional, national or international in character. It suggests that where companies do collaborate, there is a tendency for the intensity of activity to increase as the location of the partner moves from the local to the international space. We evaluate the obvious interpretation that local linkages may be satisfactory for idea generation and early product development, but that national and international connections are more important for manufacturing, marketing and distribution activities. However, we conclude that a broader set of largely industry factors account for the networking patterns – namely, the science‐technology base, research funding, firms' business models, and competitor strategies in evolving markets – and that these matter more to clustered UK biotechnology firms than the cluster itself. These findings suggest a rethinking of cluster policy and the theoretical basis for clusters.     

Is experience valuable in international strategic alliances?

This study investigates whether firms benefit from prior alliance experiences as they undertake international strategic alliances. Different from previous studies that mostly focus on equity joint ventures, this study investigates non-equity alliances. This specific investigation is essential, because the complexity and uncertainty associated with such alliances potentially magnify the benefits of experiential learning. With a sample of 629 international, non-equity alliances formed by US firms, our results confirm the contribution of ISA experience in general, as well as that of experience specific to partner's country of origin and alliance activity type. The results also reveal a contingent benefit of ISA experiences, where experience of technological cooperation and experience with alliance partners from emerging countries both add more to firm value. We derive consistent evidence, as performance is assessed either by the market's perception of ISA value creation, or by the post announcement operating earnings in practice.     

Equity Ownership in Cross‐border Mergers and Acquisitions by British Firms: An Analysis of Real Options and Transaction Cost Factors

The authors investigate the factors influencing the share of equity ownership sought in cross‐border mergers and acquisitions (CBM&As). Drawing on real options theory and transaction cost economics (TCE), they address and hypothesize key factors linked to commitment under exogenous uncertainty and the separation of desired and non‐desired assets’ influence on share of equity sought by acquiring firms in CBM&As. Empirical analysis based on 1872 CBM&As undertaken by British firms in both developed and emerging economies shows that British MNEs are more likely to pursue a partial acquisition in a target foreign firm when those foreign firms are from culturally distant countries. Further, findings support the view that the high cost of separating desired assets from non‐desired assets motivates firms to make a partial acquisition rather than acquire the target completely. This is one of the first studies to use real options theory to address the cost of commitment under exogenous uncertainty, as well as TCE logic to address the separation of desired and non‐desired assets in the target firm while analysing equity ownership sought in CBM&As. Empirically, this paper contributes by examining CBM&As by British firms in both developed and emerging markets.     

Income determination for corporate tax purposes using IFRS as a starting point: evidence for listed companies within Austria, Germany, and The Netherlands

The internationalisation of financial accounting and the European Commission’s ambition to harmonise corporate taxation have raised the question whether IFRS accounts could be used for tax purposes. In order to quantify the effects of an IFRS-based taxation on corporate tax burdens in different EU member states, we estimate firms’ tax equity using notes on income taxes in IFRS financial statements of companies listed in Austria, Germany, and The Netherlands. The difference between estimated tax equity and IFRS-equity, adjusted for the effect resulting from the recognition of deferred taxes, shows the effect of using IFRS as a tax base on the present value of corporate taxes. We find that estimated tax equity is mostly lower than IFRS-equity, indicating that an IFRS-based taxation would often increase the present value of corporate taxes. The median of estimated tax equity is 5.6 % (Austria), 6.4 % (Germany) and 9.0 % (The Netherlands) below IFRS-equity. However, an IFRS-based taxation does not always induce higher equity as often argued in the literature. In 307 of 1,113 totally analysed firm-years, estimated tax equity exceeds IFRS-equity. To find a further estimation for the effects of tax base reforms we also approximate the total stock of unused tax losses and the amount of useable tax losses. We find that deferred tax assets for unused tax losses are depreciated to a substantial extent.     

Understanding Drivers of Risk‐Adjusted Performance for Service Firms with International Operations*

This article investigates whether international operations of service firms increase performance while reducing risk. The article draws on a longitudinal dataset of 584 internationally operating service firms from the United States. Analysis indicates that international diversification is negatively related to risk‐adjusted performance. However, it is established that international diversification interacts with internationalization and positively influences risk‐adjusted performance. This finding offers significant promise for firms, as it indicates that international operations (if managed well), through exposure to varied foreign markets coupled with adequate global scope, can lead to firms’ increased risk‐adjusted performance. The results provide a mechanism for decision‐makers to better understand international operations of service firms and present a strategy for achieving success in international markets by effectively managing two important levers: internationalization and international market diversification.     

Cross-border M&As: The impact of cultural friction and CEO change on the performance of acquired companies

This study analyzes the impact of cross-border mergers and acquisitions (M&As) on the performance of target firms. Based on institutional theory, we hypothesize that performance deteriorates because of a lack of legitimacy, particularly when there is friction between the two national cultures and a higher risk of clashes between organizational cultures. We test our assumptions using an original dataset to compare the performance of Italian firms involved in inward cross-border M&As with that of continuing local firms that have a similar ex-ante likelihood of being merged or acquired. We apply coarsened exact matching (CEM) to establish the control group and a difference-in-differences (DID) approach to account for the possibility that target companies produce superior results simply because foreign investors “cherry-pick” the best-performing firms. Contrary to predictions, we find that foreign ownership does not deteriorate growth but enhances the profitability of target firms compared to purely domestic companies. In addition, we illustrate that the latter result remains applicable when cultural frictions between national cultures are high and when the CEO of the target company is replaced or joined by a new CEO after the deal.     

跨国绿色创新国际合作中机会主义行为治理机制研究

跨国绿色创新国际合作是提高本土企业绿色创新能力,拓展外商企业发展空间的有效途径,但国际合作过程中机会主义行为造成跨国绿色创新国际合作的短期化。本文基于演化博弈理论及模拟仿真手段探索跨国绿色创新国际合作机会主义行为治理机制,以及外商直接投资、对外直接投资及政府监管对跨国绿色创新国际合作机会主义行为治理的作用关系。研究表明：外商直接投资增加、与市场状况和产业类别相匹配的政府监管强度均可有效遏制跨国绿色创新国际合作中机会主义行为,使其向互惠主义策略演化,但对外直接投资因逆向技术溢出效应较弱,对其遏制作用效果甚微。同时,乐观的绿色创新国际合作市场前景将显著抑制国际合作中的机会主义行为,有利于长期绿色创新合作关系的维持,而悲观的市场前景不利于跨国绿色创新国际合作稳定性。最后,本文设计出最优机会主义行为治理机制,促进跨国绿色创新国际合作双赢目标的实现。     

Masstige model and measure for brand management

The purpose of this article is to reconceptualize the term “masstige” (Mass Prestige) marketing, develop a masstige model for brand management, and extend the use of the Masstige Mean Scale (MMS). The study was conducted based on the data from 600 individuals living in the United States, France, and India using a structured questionnaire consisting of different factors/sources of brand equity, such as mass prestige, brand knowledge, and perceived quality. On the basis of the findings, we establish that the greater the brand's Masstige Mean Index (MMI) value (“MMIV”), the higher the potential customers' top-of-mind brand awareness. Low MMIVs imply that firms have a long way to go to build their brands. We argue that MMI may allow firms to measure brand equity in different regions, within a country or in foreign countries, to derive insights into the popularity of their brands. We posit three theoretical propositions and develop two theoretical models (i) a hexagon model and (ii) a three-stage model for masstige marketing to define, reconceptualize, and explain the phenomenon.     

Additive Manufacturing and Production Internationalization: An Internalization Perspective

Additive manufacturing (AM) has been touted as a transformative technology that alters the way production is organized across geographical and organizational boundaries, yet little is known what this means for firms' internationalization of production. In this paper, we take an internalization theory perspective to hypothesize how the adoption of AM technology influences a firm's propensity to have an international production subsidiary, the number of foreign production subsidiaries that it operates, and the number of countries in which it has foreign production subsidiaries. To test our hypotheses, we rely on European Patent Office data to identify firms with AM-related patents and match this information to firm-level data of international production subsidiary networks from Bureau Van Dijk. Using both propensity score matching and zero-inflated negative binomial regressions, we find that AM firms are more likely to have a foreign production subsidiary than non-AM firms and operate them in more countries. We find partial evidence that AM firms have more foreign production subsidiaries than non-AM firms, in particular as compared to comparable innovative firms.     

Entrepreneurship and strategy in the international SME

Small and medium enterprises (SMEs) have begun to play a critical role in international trade. Statistics from the Organization for Economic Cooperation and Development (OECD) and other sources indicate that SMEs now account for a very substantial proportion of exports from most industrialized nations. But very little is known about the effect of having an international entrepreneurial orientation, or the role of specific strategies associated with this construct, on the foreign performance of such firms. Using data from an empirical study of SMEs, we devise a structural model that reveals the role of international entrepreneurial orientation, key strategic activities, and the collective effect of these constructs on the international performance of the modern, international SME. These findings and their implications for scholars and managers are discussed.     

International new ventures and governance structures—are international entrepreneurs strategic or entrepreneurial?

Born Global firms have attracted significant research interest over the past decade and one of the recurring research questions is how Born Global firms are able to overcome resource limitations to establish effective international sales and marketing channels so rapidly. Several qualitative studies have been performed in order to investigate this question and most conclude that Born Global firms do it by using entrepreneurial hybrid structures to govern their international activities. This study offers a quantitative analysis on whether there are significant differences between the international activities of small international firms and seeks to determine whether Born Global firms are more ‘entrepreneurial’ in terms of governance of their international activities and resources than other small international firms. The study adopts Aspelund and Moen’s (2005) classification of small international firms according to their time to internationalization and share of foreign sales and investigates differences in characteristics and governance of international activities. As expected, the study found differences in a broad range of characteristics between the firms that had adopted the different internationalization strategies. More surprisingly, the study fails to identify any differences between the firms on international governance structures for international operations. This a very intriguing result as it opposes a lot of qualitative work over the past decade and it also implies that Born Global firms are strategic in deciding their governance structures for international marketing activities regardless of their resource situation. Implications of the findings are discussed and alternative venues for further research are proposed.     

Country location choices of service multinationals: An empirical study of the international hotel sector

This article examines international country location choices for equity investment undertaken by global hotel chains. Why do certain host countries attract more hotel investment than others? A second underlying issue that we tackle in this article is whether the traditional foreign direct investment determinants used in past studies on manufacturing also apply to services—or whether service sector-specific determinants are better explanatory variables for understanding the distribution of service foreign direct investment across countries.     

Multinational firms' pace of expansion within host countries: How high rates of pro-market reform hamper the local exploitation of foreign expansion knowledge

Although increases in corporate ownership positions in foreign markets occur frequently, the factors that determine how quickly such increases occur are underexplored. Combining international business research on experiential learning, knowledge recombination, and pro-market reform, we hypothesize that a firm's international experience with ownership increases has a positive effect on the pace at which the firm implements an ownership increase in a host country, but that this effect is weaker during periods of quicker pro-market reform in the country. We find support for our hypotheses in an analysis of Austrian firms expanding in Central and Eastern Europe, suggesting that, rather than merely being beneficial to foreign investors, pro-market reform also poses a challenge to them.     

Sales Forecasting with Financial Indicators and Experts' Input

We present a method for forecasting sales using financial market information and test this method on annual data for US public retailers. Our method is motivated by the permanent income hypothesis in economics, which states that the amount of consumer spending and the mix of spending between discretionary and necessity items depend on the returns achieved on equity portfolios held by consumers. Taking as input forecasts from other sources, such as equity analysts or time‐series models, we construct a market‐based forecast by augmenting the input forecast with one additional variable, lagged return on an aggregate financial market index. For this, we develop and estimate a martingale model of joint evolution of sales forecasts and the market index. We show that the market‐based forecast achieves an average 15% reduction in mean absolute percentage error compared with forecasts given by equity analysts at the same time instant on out‐of‐sample data. We extensively analyze the performance improvement using alternative model specifications and statistics. We also show that equity analysts do not incorporate lagged financial market returns in their forecasts. Our model yields correlation coefficients between retail sales and market returns for all firms in the data set. Besides forecasting, these results can be applied in risk management and hedging.     

Bargaining power and the trade-off between the ownership and control of international joint ventures in China

Equity ownership and operational control constitute two crucial elements in the design of the governance structure of international joint ventures (IJVs). Based on the bargaining power theory, this study proposes that discrepancies between majority ownership and dominant control may exist as a consequence of bilateral bargaining, which is attributable to the influence of both contextual and resource content variables. Based on a survey database containing over 700 IJVs in China, our empirical findings illustrate contingencies under which equity share and dominance of control may reveal a trade-off relationship. The foreign partner will be more likely to secure a position of dominant control by accepting ownership concessions when it is at the upstream stage of the IJV, which is characterized by a high dependence on foreign input. Furthermore, while intangible resources furnished by the foreign parent exert positive impacts on the foreign partner’s attainment of dominant operational control in general, the foreign partner’s supply of product related knowledge and marketing expertise is particularly capable of rendering it bargaining power in managing the trade-off between ownership and control whenever necessary. These findings may suggest foreign firms adopt a flexible mindset in their negotiations with potential local counterparts in order to achieve collaborative goals.     

风险投资的地理亲近：对中国风险投资的实证研究

风险投资的地理亲近是指风险投资机构倾向于投资其所在地周边的企业。利用CVSource数据库,搜集2010年至2012年623家风险投资机构对1 020家企业的2 973轮风险投资交易事件信息,采用1：1配伍设计,运用STATA进行relogit回归分析,研究空间距离对投资交易达成可能性的影响。研究结果表明,随着两地空间距离的增加,风险投资交易达成的可能性降低,投资金额对空间距离与投资发生可能性之间关系起倒U形的调节作用,风险投资机构的经验调节二者之间的反向作用,经验丰富的风险投资机构不很在意目标企业的位置,其经验可以在某种程度上消除距离带来的不利影响。