REVISITING ALTERNATIVE THEORETICAL PARADIGMS IN MANUFACTURING STRATEGY

Testing and cross‐validation of theories and paradigms are necessary to advance the field of manufacturing strategy. When the findings of one study are also obtained in other studies, using entirely different databases, we become more confident in the results. Replication alleviates concerns about spurious results and is one motivation for this study. We examine aspects of the tradeoffs concept, production competence paradigm, and a manufacturing strategy taxonomy framework. In regard to the tradeoffs concept, we found evidence of tradeoffs between some, but certainly not all, manufacturing capabilities of quality, cost, delivery, and customization. The relationships get sharper when controlling for process choice. For example, the tradeoff between cost and customization is particularly strong between plants that have different process choices. We find that such tradeoffs can change, or even disappear, however, once the process choice is in place. With respect to the production competence paradigm, our analysis shows a statistically significant correlation between production competence and operations performance in batch shops, but not in plants with other process choices. Finally, using variables similar to those of Miller and Roth, our data produced three similar clusters even though their unit of analysis was much more macro than ours. Controlling for process choice is consistent with the current manufacturing strategy literature that emphasizes dynamic development of capabilities within the context of path dependencies. A major argument of this strand of research is that operations decisions not only affect current capabilities, but also set the framework for development of capabilities in the future. That being the case, controlling for process choice (or other factors such as industry or markets) should contribute to the understanding of capability‐development paths adopted by different manufacturing plants. In short, we found at least partial support for each of the theories examined here, even though the theories seem on the surface to be contradictory and mutually exclusive. Controlling for process choice or other measures of dependency goes a long way in uncovering consistency across different theories and empirical studies in operations management.     

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.     

INTRODUCTION: SHAPING THE FUTURE OF MANUFACTURING AND SERVICE OPERATIONS

The challenges and opportunities in production and operations management (POM) are almost unlimited because in the world economy, manufacturing andservice operations account for more than 10 trillion dollars per year and in any single industry, the performance varies widely from country to country and from organization to organization. The goal of Production and Operations Management is to contribute to improving the management of manufacturing and service operations all over the world. The editors and reviewers judge the papers published in the journal for their contribution to improving of business practices and to further closeness between research and practice. The journal will publish high quality papers on a broad range of topics in POM, and it encourages all paradigms, old and new. We also invite managers from around the world to describe specific POM problems that provide challenging opportunities for academic research.     

Evolution of industry 4.0 and international business: A systematic literature review and a research agenda

Industry 4.0 has attracted significant attention from researchers in the international business field for a decade. This paper critically analyzes the literature on the relationships between Industry 4.0 and international business. A systematic literature review of 59 studies published between 2011 and December 2020 is conducted. Using the Theory, Context, Characteristics, and Method (TCCM) framework, the review identifies various gaps in research and proposes future research agenda. The results show that (1) Industry 4.0 modifies specific domains in the field of international competitiveness and organization and (2) international business affects the choices and opportunities of adopting Industry 4.0. The need for further theoretical development in the relationships between international business and Industry 4.0 is observed especially in terms of location choices, global value chains, international organizations and international trade. The results contribute to the relevant research field and provide substantial managerial implications.     

International offshoring of services: A parity study

Conventional wisdom suggests that firms engage in international offshoring of services primarily to reduce wage costs associated with a given service activity. Drawing on international business research on the costs of doing business abroad (CODBA), liability of foreignness (LOF), and institutional theory, we investigate the factors that contribute to the location choices for services offshoring activity, including wage differentials between the home and host countries. We find that consistent with a parity perspective but contrary to conventional expectations, a country is more likely to be a destination of services offshoring as the average wage of a country increases. We also find that education level and cultural similarity are significant drivers of offshoring location choices, again consistent with a parity perspective. This study contributes to debates about the economic impact of services offshoring by showing that firms locate offshoring facilities in destinations that are closer in wages to the home country and those with higher education levels and cultural similarity.     

EXPLORING LINKAGES BETWEEN MANUFACTURING STRATEGY,BUSINESS STRATEGY,AND ORGANIZATIONAL STRATEGY

In recent years there has been an increased emphasis on the development of manufacturing and business strategies. In spite of that high level of emphasis, limited empirical research has been published on the linkage between manufacturing strategy, business strategy, and organizational performance. Our study examines that linkage. Our main contribution lies in (i) building constructs for some important elements of manufacturing strategy and business strategy and (ii) testing the impact of linkage between manufacturing strategy and business strategy on organizational performance. The study is based on 175 responses from senior executives in manufacturing organizations.     

The effect of informal and formal institutions on foreign market entry selection and performance

We investigate the impact of informal institutional distance and formal institutions on a key decision (namely location choice) of multinational enterprises (MNEs) when they expand abroad through foreign direct investment. The findings of the research that has analyzed these decisions have been non-conclusive, and this study aims to provide further theoretical and empirical evidence by considering the interaction effect of informal institutional distance and formal institutions in the location choice and its performance implications. Through an analysis of the internationalization of mobile telecommunications carriers, we demonstrate that formal institutions in a host country positively moderate the negative relationship between informal institutional distance and the likelihood of an MNE entering that country. Moreover, we find that those location choices that can be predicted through the institutional lens obtain higher performance than those entries that cannot be predicted through the interaction of informal and formal institutions.     

An empirical evaluation of the management resourcing strategy of a Western multinational within a post-socialist Polish subsidiary

The continued globalization process and internationalization of business is increasingly raising issues concerning human resource strategy and practice in those organizations operating across international boundaries. This paper presents an empirical evaluation of the management resourcing strategy of a Western multinational corporation (MNC) within a post-socialist Polish subsidiary. Findings suggest a high level of pragmatism in relation to management staffing decisions. Whilst normative resourcing models emphasize the importance of environment, organization and job analysis in selecting and preparing managers for expatriate appointments, these processes are contingency constrained. Difficulties of adaptation and integration of the Polish subsidiary serve to increase reliance on expatriate managers.     

Top management departures in cross-border acquisitions: Governance issues in an international context

This study examined top management team departures in U.S. manufacturing firms acquired by a foreign multinational during the six-year period following acquisition. Results indicated that greater cultural distance between the United States and the home country of the foreign multinational, higher levels of international integration in the target industry, and poor preacquisition performance in the U.S. target company were related to greater postacquisition top management departures. These effects were moderated significantly by the foreign acquirer’s international business and U.S. acquisition experience and showed different patterns over the short-term, intermediate-term, and long-term. Implications for future research on top management teams involved in cross-border acquisitions are discussed.     

Crafting business models for conflicting goals: Lessons from creative service firms

The business model construct has become attractive to both managers and academics. It reflects how the most important organization's strategic and tactical choices regarding the allocation of resources interact in order to create and capture value. Yet with the growing entrepreneurial complexity, managers often end up pursuing conflicting and even paradoxical strategic goals, thus rendering the business modelling processes more complex, too. Well-known examples are profit versus social value, stakeholder versus company interests, exploration versus exploitation and environmental sustainability versus economic returns. The academic business model literature so far has provided limited insights on how to implement business models beyond a single goal and focused mainly on the initial strategic choice of a business model, ignoring that such salient tensions are often persistent and resurface within the business practice. In this study we leverage paradox theory to investigate how managers of creative firms make tactical choices to accommodate (not solve) salient tensions within their business models, focusing on the domains like services provided, choice of clients, networking and resourcing practices, revenue models and new venture creation. Based on qualitative case study research, we found four integrating and three differentiating decision-making tactics that managers deploy to create both economic and creative value through their business models. Adding to the business model theory, we show how business models are crafted in managerial practices by making tactical decisions to solve conflicts and paradoxes. The results equally enrich the paradox literature by providing for tactical-level approaches toward working through the paradox.     

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.     

The Role of Language in Knowledge Transfer to Geographically Dispersed Manufacturing Operations

This study proposes a model of the effects of language on knowledge transfer to geographically dispersed operations. Rather than focusing on the distance between two language groups, we look at the commonalities between their languages, introducing the construct of linguistic relatedness as a way to measure the overlap in the structural features of the dominant languages at play between firms and their overseas manufacturing operations. We focus on the structural aspects of language (e.g., grammar, pronunciation, and word formation), rather than the functional aspects that deal with usage and interpretation. This allows us to separate the effects of language from those of culture and test whether linguistic distance may be more or at least differently relevant in communication-related tasks. We test our model of knowledge transfer and linguistic relatedness through a survey of international operations managers representing US-owned multinational enterprises with manufacturing plants in 22 countries. While linguistic relatedness shows the expected positive relationships with ease of knowledge communication and normative integration, it is negatively related to knowledge understanding — an echo of the psychic distance paradox and a reminder that distance can sometimes be beneficial, as it signals the need for attention to complex processes such as communication of knowledge.     

CEO Narcissism and Global Performance Variance in Multinational Enterprises: The Roles of Foreign Direct Investment Risk-Taking and Business Group Affiliation

This study examines key mechanisms through which CEO narcissism influences global performance variance in the context of Asian emerging market multinational enterprises. Building on the contextual reinforcement model of narcissism and the cushion hypothesis, we focus on the role of foreign direct investment (FDI) risk-taking and business group affiliation (BGA). We test our moderated mediation model on data from 149 South Korean multinational enterprises from 2006 to 2016. The results show that CEO narcissism is positively associated with FDI risk-taking. The effect of CEO narcissism on global performance variance is mediated by FDI risk-taking. Furthermore, BGA moderates the above-mentioned relationships. Our findings offer important contributions to the international business and CEO narcissism literatures.     

A business version of the prisoner’s dilemma: A teaching technique

The “prisoner’s dilemma” is an archetypal choice dilemma widely used for teaching and research in the social sciences. A version of the prisoner’s dilemma which set the problem in an ordinary business context was used as a pedagogic instrument with graduate business students, fully employed and aspiring to upward mobility, and nurses—both male and female—employed at various supervisory levels. The site was a college in metropolitan Detroit. The method engages students in verbal expression, explanation, and justification of their choices and thus departs from mainstream research which treats the prisoner’s dilemma mainly in mathematical terms, usually based upon experiments requiring many iterative choices. Also, whereas the prisoner’s dilemma places the subjects in the frame of mind of being prisoners, this version is of choice-making by free people, with the additional unspecified choice available of not to play the game. Replication outcomes were similar enough to support tentative generalization, although statistical analysis was not significant because of the small number of cases. Results suggest that the method may be useful to managers in their analysis of ethical choice situations and development of alternate scenarios. Vivid lessons regarding the ethical dimensions of business behavior can be learned from the use of the prisoner’s dilemma.     

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.     

战略国际人力资源管理与企业绩效关系研究——基于在华跨国企业的经验证据

企业国际化中人力资源实践如何影响绩效,既是一个国际企业管理问题,更是人力资源管理领域的中心问题;因为任何一种国际化战略的成功都离不开恰当的人力资源管理方式,而成功的跨国公司对人力资源管理的导向选择也主要取决于它能否更好地支撑其国际化战略的实施.本文以100家在华跨国企业为研究样本,在战略国际人力资源管理(SIHRM)的框架下,将人力资源管理系统和国际化程度对企业绩效的影响作为主要研究问题,构建层级回归模型,通过实证检验考察人力资源管理与企业绩效的关系.研究结果表明,企业绩效不仅同人力资源管理与企业战略的整合程度有关,而且同人力资源管理系统与国际化程度之间存在积极的联系.该研究结论为中国企业在国际化过程中如何实施有效的战略国际人力资源管理以提升组织绩效并获取持续竞争优势提供借鉴与参考.     

Globalization and its impact on global managers' decision processes

Globalization of business can have a profound impact on the decision-making processes of managers responsible for making these complex interrelated decisions. This paper explores the global decision-making processes of global managers. The first element examined is the multiple intelligences that global managers need to be able to address the issues associated with global decisions. These eight IQs are considered critical elements in the decision-making capabilities of global managers. Following this discussion, the composition of global groups and their impact on the decision-making process is explored to determine how the composition of the group inhibits/supports the global manager. The next step in the decision-making process discussed in the paper is that of the nature of the task(s). The type of task can have a direct impact on the effectiveness as well as the efficiency of global manager's decision-making. The crux of the issue is that a global orientation to decision-making is poised as being significantly different from decision processes use by managers in a multinational context.     

Socio-political processes in international management in post-socialist contexts: Knowledge,learning and transnational institution building

This paper contributes to the recent debates and emerging concepts in the international business literature by applying a social–institutionalist perspective that focuses on the processes of institution building in ventures between Western multinational corporations and post-socialist enterprises. It is argued that the knowledge and learning processes within these transnational sites are constitutive of the actual management and organizational practices that emerge in these social microcosms of transformation. In transition and other emerging economic contexts, international ventures are typically based on asymmetrical relationships, in which the balance of power is structurally weighted in favor of the MNC. Notwithstanding this dominance structure, constructing new practices within the transnational social space is a socio-political process involving power-holders such as senior managers representing the Western MNC and the local enterprise. The paper argues that the strategic orientations of these key power-holders are critical variables in explaining the diversity of concrete patterns of institution building on transnational sites.     

跨国经营海外子公司业务发展中企业的战略选择——辉瑞制药中国公司在华生产范围发展路径(1993~2002年)的启示

经济全球化给更多企业带来了跨国经营的机会与动力。本文着重分析在跨国经营中海外子公司在当地的业务范围如何演化、其发展路径通常受哪些因素的影响,而企业又可以通过做出哪些战略选择来更好地调节其发展路径。通过对辉瑞制药中国公司在1993￣2002年期间在华生产范围发展路径的描述和分析,本文提出两个观点。一是在跨国经营中企业通常面临保持公司在全球的业务整合以及适应当地市场具体条件的双重压力,当两者之间存在较大差异时,由于决策者的认知受有限理性的制约,海外子公司的业务并不会按现有文献中所提出的按母公司已有业务从强到弱顺序发展,而是呈现迂回发展的路径。二是企业可以通过对战略变量的参数的选择来调节其海外子公司的业务发展,而这样的参数调节过程有助于企业通过试探逐渐积累关于当地市场的知识,从而在跨国经营的双重压力中获取平衡。通过上述分析,本文希冀对中国企业开展国际化经营提供的启示是当企业在海外扩张中面临陌生的环境时,对当地市场的特性给予足够的关注并保持战略上的灵活性是取得成功的关键。     

Distribution system choice in a service industry: An analysis of international insurance firms operating in the United States

Service firms play an increasingly important role in the global economy. However, the internationalization strategies of such firms, and especially their distribution system choices, have been underexplored in the international management literature. One specific service industry that has internationalized rapidly in recent years is the insurance industry. This paper examines the determinants and performance implications of the choice by international insurance firms between two rival distribution systems: direct writing and independent sales agents. Drawing on the transaction cost theory-based literature on resource commitment, control, and risk, we develop hypotheses on the determinants of the choice between these two distribution systems and on the performance implications of this choice for insurance firms. Analyzing a sample of 168 distribution entries into the United States by insurance firms from six foreign countries over the 1992–2000 period, we find that cultural distance has a U-shaped effect on the probability of direct writing, and that an insurer's intangible assets have a positive effect on this probability. We also find that the direct writing system performs better in terms of profitability, but that the independent agency system performs better in terms of market share growth.