Subsidiary marketing knowledge and strategic development of the multinational corporation

This paper explores distinctive marketing knowledge of subsidiaries as an important resource contributing to the performance of the multinational corporation (MNC). Two different paths are analyzed. The first is the direct effect of the usage of subsidiary marketing knowledge on the perceived performance of other MNC units. The second is the indirect effect in which an MNC's usage of subsidiary marketing knowledge affects its performance via capability development in technology and market expansion within the MNC. Using data on 237 MNC subsidiaries in Sweden, six hypotheses are tested in a LISREL model. The results indicate that an MNC's usage of subsidiary marketing knowledge directly affects its performance. Additionally, the results reveal a strong relation between subsidiary marketing knowledge and the subsidiary's impact on development of the capabilities of other MNC units' technology and their expansion on the market, which in turn, positively impacts the performance of the MNC.     

On doing better science: From thrill of discovery to policy implications

In this position paper, I argue that the main purpose of research is to discover and report on phenomena in a truthful manner. Once uncovered, these phenomena can have important implications for society. The utility of research depends on whether it makes a contribution because it is original or can add to cumulative research efforts, is rigorously and reliably done, and is able to inform basic or applied research and later policy. However, five serious “diseases” stifle the production of useful research. These diseases include: significosis, an inordinate focus on statistically significant results; neophilia, an excessive appreciation for novelty; theorrhea, a mania for new theory; arigorium, a deficiency of rigor in theoretical and empirical work; and finally, disjunctivitis, a proclivity to produce large quantities of redundant, trivial, and incoherent works. I surmise that these diseases have caused immense harm to science and have cast doubt on the role of science in society. I discuss what publication gatekeepers should do to eradicate these diseases, to stimulate the undertaking of more useful and impactful research, and to provide the needed incentives to better align the interests of researchers with those of the greater good. Finally, I highlight where technical improvements are needed to enhance research quality, and call on deeper reflection, transparency, and honesty in how we do research.     

The unending embrace: Raymond Vernon, multinational enterprises, and national governments

In this article commemorating Raymond Vernon, I make no attempt to summarize his expansive work on the nature and prospects of multinational enterprises (MNEs). Rather, I discuss three forces — rivalry, uncertainty, and time — that Vernon accentuated in his explanations of the behavior of MNEs. I then make brief observations about Vernon and methodology. Subsequently, I speculate on the following question: A hundred years from now, what single idea will Vernon be remembered for? Acknowledging the product cycle as a leading contender, I nominate and discuss (under the moniker “the unending embrace”) another candidate, one that dwells on the undulating tension between MNEs and governments. I conclude by flagging for future research some questions that that central idea raises.     

Smallpox vaccine policy: the national debate

As a result of the 2001 anthrax attacks, the U.S. government is trying to forge a plan to handle something much worse: an outbreak of smallpox due to terrorist activity. Here's a look at where the debate stands today.     

The developing world to 1990: Trends and implications for multinational business

The strategic postures of multinationals in the Third World are affected by three broad environmental variables. They are political-legal, economic-technological, and socio-cultural variables. In this article, past and future trends and implications of these variables for the multinationals are discussed.     

Work systems in heavy engineering: the role of national culture and national institutions in multinational corporations

This paper is based on an Anglo-German research project of two research groups in both countries. It is based on data collected by qualitative research in the three largest multinational corporations (MNCs) in the lift and escalator industry. The headquarters (HQs) of the three corporations are based in the United States, Finland and Germany, respectively, and all three MNCs each have subsidiaries in Germany and Britain. Our main objects of analysis were change processes in the work systems of these three MNCs.We chose the lift and escalator industry as an example because it has been characterized by strong concentration processes during the last 10 years. Most of these corporations have grown by acquisition and there are strong tendencies in the market towards standardized, globally uniform products.National cultures and institutions, first of all play a role on the HQ level. Important areas were the standardization of products and production technology, the design of management systems and location and relocation decisions for R&D and manufacturing. Second, MNCs take differences in national cultures into account and deliberately “use” them in allocating resources and investment within the multinational group. National cultures and institutions massively shape the very formulation of manufacturing strategies within the multinational groups, as well as the R&D strategies—a particular important field in an industry still relying heavily on small-batch and unit production. National cultures also play a significant role in implementing the global strategies of MNCs in different host countries. Our data reveal striking differences on this level.     

Corporation taxes and the debt policy of multinational firms

This paper analyzes the impact of corporate taxes on the capital structure of foreign subsidiaries of multinational firms. The empirical investigation employs a large micro-level panel dataset of German multinationals covering 31 countries over a 10-year period. A special feature of this dataset is that it allows us to distinguish between internal and external debt financing. Our results confirm a positive effect of local tax rates on both types of debt. Moreover, while adverse local credit market conditions are found to reduce external borrowing, internal debt is increasing, supporting the view that the two channels of debt finance are substitutes. Our findings suggest that internal credit markets give rise to significant advantages and enhance multinationals?? opportunities to use debt as a tax shield.     

The relative influence of country conditions, industry structure, and business strategy on multinational corporation subsidiary performance

Two competing theories of firm performance have been proposed in the business strategy literature, the industry structure view and the resource-based view of the firm. Empirical studies have estimated the relative contribution of industry structure, corporate, and business unit effects to business unit performance. These studies, however, have been restricted to using only single-country data. Missing from this debate is an international dimension that includes the relative importance of country conditions as a determinant of firm performance. The objective of this article is to fill this void by adding country characteristics to the analysis. Using cross-country data of four large multinationals in a single industry, we estimate the relative importance of country characteristics in addition to industry structure, corporate characteristics, and subsidiary strategy as determinants of subsidiary performance by using multiple regression analysis. This analysis also will contribute to the discussion on environmental determinism versus strategic choice. Country and industry characteristics are mainly outside the control of management, whereas corporate characteristics and subsidiary strategy are under management's control. Results show that country characteristics are by far the most important determinant of subsidiary performance, followed by industry structure, subsidiary strategy, and corporate characteristics. Thus, country conditions are a very important determinant of firm performance that so far has been overlooked in previous studies. These results indicate that subsidiary performance is determined mainly by conditions outside the control of subsidiary management. In terms of competing theories, these results support the environmental determinism view more than the strategic choice view and the resource-based view of the firm more than the industry structure view. These results also have important implications for multinational corporations' selection of countries for entry and investment and for performance evaluation of subsidiary management.     

Industrial policy: The case for national strategies for world markets

This article considers the objectives of an industrial policy that would develop national strategies for world markets. It describes the tools used to implement such strategies and how the strategies would be organized. The author also considers some of the advantages and disadvantages of developing national strategies for world markets.     

Leadership in small-scale societies: Some implications for theory,research, and practice

Leadership studies concentrate on large-scale societies and organizations with formal hierarchies, large power differences, and diverse membership. Much less is known about leadership in small-scale, homogeneous, and relatively egalitarian societies in which humans have spent most of their existence. We summarize the anthropological literature on leadership from traditional, small-scale societies in terms of (1) the functions and roles of leaders; (2) the traits and behaviors conducive to leader emergence and effectiveness; and (3) the motivations and incentives to assume leadership positions. We address how studies of leadership in small-scale societies inform theory development. By viewing leadership and followership in light of our evolutionary history in small-scale societies, we shed new light on outstanding questions in leadership research and on challenges for leadership practice.     

The market for genetically modified foods: consumer characteristics and policy implications

Conjoint analysis was used to explore consumer preferences for food products that are the product of genetically modified organisms (GMOs). The results of a cluster analysis indicated that consumers fell into three homogeneous groups based on their preference for a branded, low-priced, or GMO-free product. There were some differences between the segments based on the sociodemographic characteristics of age, education, and income. However, consumers in the segment that wished to avoid GMOs were most easily distinguished from consumers in the other two segments based on their high level of risk averseness and belief that GMOs do not positively affect the quality or safety of food products. Implications for food marketers and policymakers are discussed.     

'Management Standards' and work-related stress in the UK: policy background and science

In the late 1990s, the Health and Safety Commission, as the lead authority in the UK responsible for Health and Safety at Work, conducted an extensive consultation exercise to elicit views about how work-related stress should be tackled. The Commission subsequently decided that regulation was not justified and opted for an approach with four strands. One of these was to work with stakeholders to develop clear, agreed standards of good management practice. This paper describes and discusses the rationale behind a standards-based approach that is essentially based on a method of controlling hazards. The Management Standards approach uses a taxonomy of six stressors that has evolved out of extensive research carried out on behalf of the UK's Health and Safety Executive (HSE) and in conjunction with stakeholders, and a three-phase risk assessment methodology. Further developmental work on the standards (which are to be subjected to public consultation) and associated measurement tools is described in a companion paper in this issue of Work & Stress (Cousins, Mackay, Clarke, Kelly, Kelly, & McCaig, 2004). The emphasis is on prevention towards reducing stress in the UK working population. We review current thinking on models of work stress, consider evidence linking workplace psychosocial factors and various health and organizational outcomes, and examine the effectiveness of organizational interventions. We argue that the literature supports an approach that aims to move organizational states (represented by the current situation) to more desirable ones (represented by the six Management Standards), and that this is an effective 'population' based approach to tackling workplace stress and promoting individual and organizational health.     

The influence of “country of origin” on multinational corporation global strategy: A conceptual framework

This article examines the proposition that MNCs from a particular country are likely to exhibit profile similarities that are distinct from those of MNCs emanating from another country due to differences in home country factors. We call this “country of origin effect” (COE). A generalized framework is presented briefly explaining the nature of relationships among various COE elements that influence MNC strategy. A number of research propositions are offered that postulate the presumed effect of COE elements on MNC strategy and competitive behavior. Finally, suggestions are made as to the implications of this avenue of enquiry for further research as well as guide for management action.     

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.     

Mirror, mirror on the wall: reflections from failure to establish a truly uniform national health care policy

When the author gazed into the proverbial mirror and asked if the U.S. health care system was the fairest of them all, it shattered. In this article, Thompson tells why the system is broken and what failure to fix it means to physician executives. He suggests that we, as Americans, must reinvent ourselves by realigning our value systems and and stifling our obsession with profit before trying to reinvent health care.     

Employer-employee based quality circles in Japan: human resource policy implications for American firms

This paper traces the development of the quality circle in Japan with reference to such traditions as permanent employment, nenko (seniority-based compensation), enterprise unionism, and management paternalism. Quality circles are examined as tools for motivating employees, reducing labor turnover, effecting employee "career expansion," and allowing employee participation in job redesign.     

Capital investment evaluation for the multinational firm

In their profit-seeking activities, multinational corporations have global opportunities to evaluate as well as increased risks and complexities to contend with. Hence, there is a significant need for the development of robust models to handle the new dimensions faced by firms functioning in an international environment. Particularly, in capital budgeting where decisions are made regarding the long-run livelihood and performance of the firm, it is essential to analyze carefully and to reflect adequately all of the critical variables. The great number of relevant variables, their significant interrelationships, and the high degree of uncertainty render mathematical optimization models extremely complex or infeasible to solve within reasonable computer memory or time limitations. To overcome these shortcomings and to arrive at an economically rational treatment of the capital budgeting problem, a “Hertz-type” simulation model is formulated for the multinational firm. The important international variables—foreign exchange rates, foreign tax methodology, host government controls, and other social, economic and political factors—are reflected in the model. A two stage approach is utilized: first, investment projects are analyzed by the subsidiary and if they pass this first screening they are proposed for the parent's consideration; second, the parent evaluates the attractiveness of projects from its point of view and ranks proposals for acceptance considering all global opportunities. The model is designed so that sensitivity analysis can be easily performed.