Emerging global contenders: The South African experience

The global strategies of three major South African MNEs are examined with a view to understanding the applicability of existing theories to developing country firms and their emergence as global industry leaders.Emerging market MNEs are motivated by both defensive and offensive considerations. At the same time, home market domination allows potential contenders to develop competitive firm-specific advantages that are non-location based.We propose that successful emerging market MNEs start to build their global positions on the back of asset exploitation, but soon follow with asset seeking behavior. When country specific advantages are less important, contenders can accelerate their development of non-location based FSAs rapidly. Finally, leadership and domestic dominance may be more important than country specific advantages in explaining the success of emerging market MNEs.     

Outbound Foreign Direct Investment (FDI) Motivation and Domestic Employment by Multinational Enterprises (MNEs)

This study investigates whether and how outbound foreign direct investment (FDI) boosts or reduces domestic employment by multinational enterprises (MNEs). Based on analyses of a firm-level sample of 18,252 subsidiary-year cases of Japanese MNEs in 59 countries from 1996 to 2010, the findings indicate that outbound FDI motivated by (1) market seeking for scale and scope expansion, (2) natural resource seeking, or (3) strategic asset seeking tends to serve as a “strategic complement” that enhances domestic employment by MNEs. However, outbound FDI motivated by (4) market seeking associated with declines in domestic demand or (5) labor resource seeking tends to act as a “strategic substitute” that reduces domestic employment by MNEs. The implications for theory, practice, and policymaking are discussed.     

Multinational Enterprises: Leveraging a Corporate International Entrepreneurship Lens for New Insights Into Subsidiary Initiatives

Corporate entrepreneurship has long been acknowledged as critical to multinational enterprises (MNEs), with dispersed entrepreneurial efforts involving subsidiary initiatives becoming increasingly relied upon. Yet despite the global context in which MNEs operate, the conversation has not fully embraced the extent to which many of its entrepreneurial activities overlap with internationalization. In this paper, we identify a set of opportunity phenotypes for subsidiary initiatives based on their market focus as well as the knowledge and capabilities leveraged to identify and exploit the opportunity. The recursive relationship between opportunities and dynamic capabilities is then discussed, with an emphasis on building a research agenda for corporate international entrepreneurship.     

Local, regional, or global? Geographic orientation and relative financial performance of emerging market multinational enterprises

We extend the regional/global strategies literature by analyzing the relative performance of emerging market (EM) multinational enterprises (MNEs) based on their geographic orientation. We develop a framework showing that firms adopt three geographic orientations—local, regional, and global—and test our framework with the market penetration strategies (sales) of 701 MNEs from 28 EMs during 2000–2006. Our analysis shows that distinguishing among these three geographic segments is important, as not all of these geographic segments enhance firms’ financial performance relative to their industry: a combination of local and global orientations enhances while regional orientation reduces the relative financial performance of EM MNEs.     

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 geography of British exports: Country-level versus firm-level evidence

This study investigates the degree of regionalization of UK exporters. The firm-level findings, based on an original set of primary data of 356 UK exporters, are contrasted with the UK national trade flows as well as with the geographic spread of the UK, European and the world’s largest MNEs. The analysis produced consistent findings of regionalization regardless of the classification thresholds or sales matrices employed. The findings also imply that country-level data supports the firm-level findings of regionalization. While the analysis presents relatively strong corroborating evidence of regionalization of UK exports, it also indicates that UK exporters might be more multi-regional and global oriented than previously thought.     

Does innovation lead to global orientation? Empirical evidence from a sample of Italian firms

This paper analyses the relationship between innovation at firm and industry level, and the global vs regional strategy of multinational enterprises (MNEs). Based on data from a sample of large Italian manufacturing firms, the analysis shows that technological assets affect a firm’s ability to overcome the liability of (regional) foreignness: the extent to which MNEs can exploit their firm-specific technological advantages is greater within their home region, but they also exploit them outside it. Furthermore, the results show that a firm’s foreign (outside the home country) and global sales (outside the home region) are higher, the greater the technology intensity of the industry in which they operate. These findings suggest that, although MNEs tend to operate regionally rather than globally, their strategic orientation is contingent upon firm- and industry-specific factors. Managers need to take the potential for globally exploiting R&D investments into account, even if it may not be equally successful within and outside the home region, and may be constrained by a number of inter-regional barriers.     

Unions and the Welfare Impact of Foreign Direct Investment — A Wisdom Extension

Abstract. This paper extends the recent literature, e.g. Leahy and Montagna (Economic Journal 110: 80–92, 2000), in relation to the link between unionization, inward foreign direct investment (FDI) and country welfare in an oligopoly market structure. It is shown that the common results, that unions may reduce welfare under FDI while multinational enterprises (MNEs) will strictly trade off union wages at each location, are generally driven by the assumption relating to the scope of the bargaining with the union, namely the ‘right to manage’ (RTM). In particular, our extension to efficient bargaining (EB) demonstrates that union power may increase welfare in the presence of FDI, while the MNEs’ choice between FDI and exports will include profit‐sharing arbitrage with unions, in addition to the usual wage comparison considerations.     

Host country corruption and MNE location choice: The view of institutional pluralism

Whether to invest in a corrupt host country is an important decision for MNEs. Although scholars have investigated the contingent impacts of the institutional characteristics of the MNE parent's home country, extant research concentrates on examining the country-level contingent impact. It neglects the institutional pluralism view that MNEs could face different institutional logics through firm-level channels in their home country, which influences their decision to enter a corrupt host country. Employing the unique dataset of 42,126 Japanese MNE-host country-year pairs, this study finds that MNEs are discouraged from investing in corrupt host countries when they have greater foreign ownership or a higher ratio of independent board members because they face shareholder-oriented institutional logic in the home country. Such an effect is mitigated when MNEs are embedded in cross-equity holdings, as they face stakeholder-oriented logic.     

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.     

Why the Home Region Matters: Location and Regional Multinationals

Much of the literature in international business analysing the multinational enterprise uses the country as the relevant environmental parameter. This paper presents both theoretical and empirical evidence to demonstrate that country‐level analysis now needs to be augmented by analysis at the ‘regional’ level of the broad triad markets of Europe, North America and the Asia Pacific. The great majority of the world's 500 largest firms concentrate their activities within their home region of the triad. This study uses variance component analysis and finds that this home region effect outperforms the country effect. Together, the regional and industry effects explain most of the geographic expansion of multinational enterprises (MNEs), whereas country, firm and year effects are very minor. The new data and variance component analysis on the activities of large MNEs reported here suggest that new thinking is required about the importance of large regions of the triad as the relevant unit of analysis for business strategy to supplement the conventional focus on the country.     

Host-country Headquarters of U.S. Firms in China: An Empirical Study

Recent studies show that large multinational enterprises (MNEs) adopt an organizational unit, called host-country headquarters (HCHQ), in key foreign countries (Ma and Delios, 2010; Ma, Delios and Lau, 2013). In this study, we examine the factors that are associated with the establishment of an HCHQ by US firms in China. We hypothesize that an HCHQ is associated with both firm-specific factors and host country-specific factors. We find that an HCHQ is associated with the firm's scope diversification and degree of internationalization, and the strategic importance of foreign host country and subsidiary diversification in that host country. The findings are based on archival data of U.S. Fortune 500 firms. The findings add to the understanding of an important organizational structure of large U.S. firms in China, and possibly to MNE structures more widely in key foreign countries.     

Location choice of Chinese outward FDI – An ethnicity-based population ecology perspective

Drawing on population ecology theory (PET) which conceptualizes an individual organization's survival as a result of organizational changes at the population level, we explain why multinational enterprises (MNEs) from emerging markets prefer to enter countries with an existing population of co-national peers. Our study of a sample of Chinese MNEs shows that the size of co-national MNEs population in the host country has a positive effect on new FDI entries by firms from the same home country. Interestingly, the co-province and co-industry-formed organizational population in the host country has an inverted U-shaped effect on the new FDI entries, and that provincial dialect and co-national immigrants flatten this curvilinear effect. We also analyze how the focal relationships vary between host countries with different levels of economic development and between different industries. Our study contributes to the research of FDI location choices by providing a population ecology-based explanation that differs fundamentally from those based on agglomeration economics and institutional theory. The study also advances PET by theorizing how legitimizing and competing forces interact to jointly influence the way the extant population of certain types of organizations influences the entries of the same type of organizations into the population.     

Product architecture,global operations networks,and operational performance: an exploratory study

Abstract

This paper investigates the relationships between product architectures and global operations networks and their impact on operational performance, based on survey data from 82 Swedish manufacturers. We find that modular and integral product architectures are associated with different characteristics of the global operations network, and that global operations network designs are characterised by three dimensions: network, plant and supply chain. The key aspects are network structure (configuration as well as coordination), plant focus (scale or scope) and the locus of supply chain capabilities (internal or external).     

Are multinational enterprises from the emerging economies global or regional?

While there is ample statistical evidence that the top 500 multinational enterprises (MNEs) are predominantly home-region-bound or bi-regional, the operations of MNEs from the emerging economies have not been comprehensively analyzed. This constitutes a vital gap since firms from emerging economies have been making prominent acquisitions in recent years, and these economies are expected to post impressive growth despite the global economic slowdown. MNE managers cannot ignore such opportunities and threats. This study analyzes the operations of MNEs from four leading emerging economies – Brazil, Russia, India and China (BRIC). Since aggregated FDI data often lack transparency due to off-shore tax havens, we supplement that analysis by examining 1430 mergers and acquisitions undertaken by MNEs from BRIC economies during 2000–2007. We also develop insights into their dispersion pattern across five industry sectors in six geographical regions.     

Transnational Diaspora and Civil Society Actors Driving MNE Internationalisation: The Case of Grameenphone in Bangladesh

Multinational enterprises (MNEs) are viewed as proactive global economic actors that enter new and emerging markets with intentional strategies, building on their inherent resources and firm-specific advantages. However, an international joint venture involves numerous actors in the market entry process. While emerging markets tend to feature complex institutional contexts and idiographic entry challenges, our study with a focus on emerging market presents two under-examined types of stakeholders as distinct social actors' that affect internationalisation process: the transnational diaspora and civil society actors. It provides evidence of the reactive internationalisation of an MNE, showing how the transnational diaspora drove the MNE's internationalisation and how a civil society actor, in conjunction with a diaspora member, facilitated the creation of an international joint venture (IJV) in Bangladesh. This case study analyses and describes the stages of development, documenting how Norwegian Telenor, American Gonophone, Japanese Marubeni and Bangladeshi Grameen Bank created an IJV named Grameenphone in Bangladesh, and how diaspora and civil society actors made up the prime movers and organisational capability base for this process, which would not have happened without their market-driving and enabling influence. The findings illustrate the central role of transnational diaspora entrepreneurship and the related innovation, motivation, contextual intelligence, networking and funding that supported this emerging-market IJV development. The study contributes to research on international joint ventures, transnational diaspora entrepreneurship and civil society actors and the internationalisation of MNEs.     

Headquarter Services in the Global Integration of Production

This study examines knowledge management within multinational enterprises (MNEs) by analyzing whether greater interdependence of production between U.S. parent firms and their foreign subsidiaries increases the provision of headquarter (HQ) services from the home country. The findings suggest that U.S. parents provide more assistance to their foreign subsidiaries that are linked in a global value chain than to those that are not involved in production sharing. This study builds on the earlier studies of the relationship between intra-MNE product flows and knowledge flows in multiple ways. First, it separately examines the relationship for high-tech and low-tech manufacturing industries, and finds that knowledge services from HQ that could be combined with knowledge of the subsidiary, such as R&D services, are primarily associated with production sharing with subsidiaries in high-tech manufacturing industries, which are assumed to be more technologically capable. Likewise, it finds that knowledge services from HQ that might be considered to be more passively received from the parent, such as industrial-type maintenance and design, are primarily associated with subsidiaries in low-tech manufacturing industries, which are assumed to be less technologically capable. Second, this study is the first one, to our knowledge, that gauges intra-firm knowledge flows using dollar-denominated measures of HQ services provided by parents to their subsidiaries.     

Home governments and MNEs in Russia: Relationships and MNE external legitimacy

This paper examines the complex relationships between the government and multinational enterprises (MNEs) in Russia. Different from most studies that focus on the state as a whole, we distinguish between different levels of government, namely federal and regional. We investigate how these relationships influence the ability of Russian MNEs to gain external legitimacy. We report the findings of a qualitative multiple-case study of 12 Russian MNEs based on observations and 55 face-to-face interviews conducted in 2014 and 2015. The analysis reveals four different types of relationships: collaborative, submissive, adversarial, and collusive. We find that collaborative and submissive relationships have a positive effect on the external legitimacy of MNEs, whereas adversarial and collusive ones have a negative effect. We conclude that Russian MNEs are able to gain external legitimacy by capitalizing on different types of relationships with the federal and regional governments and using them to advance their own international activities.     

Psychic distance and ownership in acquisitions: Direction matters

Recent research has begun to explore the impact of country-of-origin and direction on internationalization decisions in response to controversy over the use of symmetrical and absolute values of distance. In this paper we contribute to this stream of research by studying the moderating influence of direction on the distance–ownership relationship as it relates to cross-border acquisitions. We ground our arguments in transaction cost economics and supplement this lens using institutional theory to contextualize the home-host country relationship through moderating effects. Through our study of 25,440 full and partial acquisitions (9577 MNEs, 25 countries, 15 years), we demonstrate that the distance–ownership relationship is moderated by direction. We further find that acquisition ownership decisions made by emerging country MNEs differ significantly from those made by developed country MNEs. Our findings demonstrate that future research on the impact of distance should consider the differences between MNEs from emerging versus developed economies, in addition to host country characteristics.     

Market Penetration and Acquisition Strategies for Emerging Economies

Multinational enterprises (MNEs) are expanding their global reach, carrying their products and brands to new and diverse markets in emerging economies. As they tailor their strategies to the local context, they have to create product and brand portfolios that match their competences with local needs. A multi-tier strategy with local and/or global brands may provide MNEs with the widest reach into the market and the potential for market leadership. However, it has to be supported with an appropriate combination of global and local resources. Foreign entrants therefore have to develop operational capabilities for the specific context, which requires complementary resources that are typically controlled by local firms. As institutional obstacles and weaknesses of local firms often inhibit the direct acquisitions, foreign investors may pursue unconventional strategies to acquire local resources.We outline the strategies for penetrating local markets through multi-tier branding and the acquisition of local firms, and offer new typologies that describe staged, multiple, indirect, or brownfield acquisitions. We illustrate them by analysing the entry and growth of Carlsberg Breweries in four very different emerging economies: Poland, Lithuania, Vietnam and China.