Digital communication technologies have become ubiquitous for various firm processes related to international business (IB) and global strategy. However, IB and strategy scholars lack an encompassing and theory-based typology of these technologies that facilitates analysis and discussion of their uses and effects. Likewise, managers have a large choice of technologies at their disposal making it difficult to determine what technology to use in different IB areas. This paper aims to develop a typology of digital communication technologies based on the synchronicity and interactivity of these technologies and capture their fundamental social and temporal dimensions. This results in four ideal types: broadcasting, corresponding, aggregating and collaborating technologies.
This is a conceptual paper incorporating theoretical perspectives to theorize about four ideal types of digital communication technologies. A subsequent empirical test of this typology has been provided in the appendix.
The authors discuss how the typology might be applied in IB decisions and some of the contingencies that impact this choice. Building on that, the authors develop directions for future research to increase their understanding of the use of digital communication technologies to help improve IB functions. Overall, the authors suggest future research explores contingencies about where and when different types of digital communication technologies should be used. Finally, the authors provide implication of having a unified typology for both academics and managers.
The authors offer a robust framework for thinking about and capturing different types of digital communication technologies that can be applied by researchers and used by managers when making decisions related to IB. The authors also provide some initial testing of the typology with a three-country study design helping to determine its validity.
]]>The authors’ contention in this paper is that the expression of subsidiary strategy in IB literature has become fragmented and incomplete. Therefore, this study aims to propose a rethink on how IB scholarship approaches the important issue of subsidiary strategy by holistically examining the discrete and integrated set of activities, choices and decisions that constitute the subsidiary strategy process for, in this context, assuming a competence-creating role within the multinational enterprise (MNE).
A conceptual model is designed to illustrate the holistic process of subsidiary strategy from assigned to assumed role and how a subsidiary can navigate a pathway to elevated performance and survival.
The paper identifies the key integrated elements that constitute a holistic strategic process that can enhance a subsidiary’s standing within the MNE and maximise its survival prospects.
Particular focus is placed on subsidiaries that strategise to advance their internal corporate role to competence creator via upgraded knowledge capabilities.
This paper offers a roadmap for IB scholars to contribute to a future discourse around the subsidiary strategy process for assuming a competence-creating role.
]]>The purpose of this study is to examine the question of whether the repatriation adjustment process varies with different combinations of duration and purpose of international assignments.
A multiple-case study within one company was conducted based on in-depth interview data.
The authors find that learning-driven international assignments are more beneficial for career growth and receive better organizational support, as assignees are able to maintain regular communication (visibility) with the home unit. On the other hand, those on demand-driven, long-duration international assignments need to have a closer connection (integration) with employees in the host unit and find it challenging to maintain high visibility in the home unit simultaneously.
The authors contribute to existing research by highlighting that demand-driven assignees on longer assignments face greater challenges upon returning home. In addition, expatriates on short-term assignments face drastically fewer challenges than expatriates on longer assignments.
]]>Wars, and violent conflicts generally, can generate significant institutional dynamics and new legitimacy pressures for multinational enterprises (MNEs). The purpose of this paper is to understand the nature or source of institutional pressures facing MNEs in war and to examine how MNEs respond and navigate these institutional pressures.
This is a conceptual paper.
Through the theoretical lens of institutional theory and drawing on insights from the devastating Russian–Ukrainian war in Europe, the study provides a framework that explains the nature of institutional pressures impacting MNEs in a major war conflict and how MNEs respond to these pressures. Central to the framework is the impact of formal and informal institutions on MNEs during war. As a result of regulatory and social pressures, MNEs have to make important strategic decisions either to protect their legitimacy or to defend their economic objectives against institutional demands.
As the paper situates the pressures of war for MNEs in a formal and informal institutional context, this offers a new approach to understanding the costs and pressures of war on MNEs.
]]>Previous scholars have assumed that multinational enterprises (MNEs) can reduce the liability of foreignness and increase profitability by investing in corporate social responsibility (CSR). However, empirical validation of this assumption has rarely been attempted. This study aims to provide empirical evidence that the adoption of multi-stakeholder initiatives, which are globally recognized as signals of CSR, helps MNEs increase profits from internationalization.
Fixed effect models, which address model misspecification problems, and instrumental variable estimation, which controls for the endogeneity in firms’ choice of internationalization, offer empirical evidence supporting the moderating effects of global multi-stakeholder initiatives on the relationship between internationalization and firm performance.
This study examines the moderating role of multi-stakeholder initiatives in the relationship between internationalization and firm performance, drawing on signaling and stakeholder theories. The results suggest that the signaling effect of multi-stakeholder initiatives can help MNEs overcome the liability of foreignness and, therefore, profit from overseas markets.
Although the internationalization–firm performance relationship has been a subject of debate in the field of international business, the role of firms’ stakeholder engagement in this relationship has been largely overlooked in previous studies. In this study, the authors explore the impact of multi-stakeholder initiatives on the internationalization–firm performance relationship. Our primary contention is that multi-stakeholder initiatives have moderating effects on this relationship by reducing the liability of foreignness experienced by MNEs in host countries. Furthermore, the findings suggest that active engagement in multi-stakeholder initiatives significantly contributes to the financial success of MNEs as they internationalize.
]]>This paper aims to contribute to the understanding of the relationship between innovation and export performance by examining the effect of different types of innovation on export performance and testing the assumption underlying most studies in the field that competitive advantage mediates this relationship.
From the literature review, this paper proposes a research model that is estimated using a sample of 200 Spanish exporting manufacturing companies. Data for this study were collected with an ad hoc questionnaire, and the partial least squares structural equation modeling technique was chosen to analyze the data.
The results show that there is a positive relationship between product and business process innovation and export performance and that competitive advantage mediates this relationship, but only when it is based on costs, not on differentiation.
This paper provides evidence that product and business process innovation are positively related to export performance and that competitive advantage mediates these relationships, but only when the advantage is low cost. Unexpectedly, this paper finds that differentiation is neither related to export performance nor explains the relationship between innovation and export performance.
]]>This study aims to analyse how different types of public policies have supported the internationalisation of latecomer science-based firms, taking the case of large Brazilian pharmaceutical companies (LBPCs).
The methodology comprises a multiple case study and uses a literature review, fieldwork interviews and document analysis of eight LBPCs, five policymakers and three sector experts.
Direct and indirect policies differ in supporting LBPCs’ internationalisation motivation. The indirect policies created the necessary conditions to accumulate knowledge and capacity in the domestic market. LBPCs that adhere more to policies supporting production and technological capabilities development are internationalising as an extension of their innovative efforts. In contrast, LBPCs that have built productive capacities and have not yet reached a minimum level of technological capacity go abroad to exploit their production capabilities with the support of direct policies.
This study contributes to international business and evolutionary literature, demonstrating the channels through which public policies support latecomer science-based firms. The results show that direct and indirect policies assist firms’ internationalisation in different ways, according to actors’ perception: providing support to strengthen their domestic capabilities, which have become competitive advantages in the international market; or offering support to external expansion. It emphasises that industrial policies are relevant to support companies in creating the initial conditions (ownership advantages) to internationalise, and direct policies are important to help companies to design international strategies. This study also debates that policies supporting companies’ internationalisation depend on their adhesion to programmes and incentives and their routines and capabilities, which are specific to each company and lead to different motivations for international expansion.
]]>When terrorism threaten geopolitical stability, many policymakers turn to economic sanctions. In this way, governments and multilateral organizations continue to affect corporate and managerial choices, through the shaping and constraining of international trade policies. Still, most of the international business remain relatively quiet about the impact of the non-market environment on firms’ strategic efforts. Questions remain about how firms adjust their strategies in the face of the often-sudden impact of changes in multilateral rules and enforcement mechanisms. This study aims to address this question by shedding light on three potential adjustment strategies for firms that have been impacted by sanctions.
As part of a larger, multimethod study, the authors undertook 16 semi-structured interviews with senior managers of firms whose operations have been affected by international sanctions.
International and political tensions can affect businesses in many ways, from exporting to strategies associated with global knowledge sourcing. Learnings from organizations that have had to respond to sudden and extreme changes in their fragile ecosystems will aid this study. In this commentary paper, the authors offer suggestions about how to adapt, respond and operate in a new reality.
While the imposition of long-term political sanctions, especially by powerful nations and multilateral institutions, has become more frequent, how businesses cope with these extreme external shifts still remains unknown. This paper focuses on firms operating in a sanctioned regime, investigating how they deal with these sudden changes in their environment.
]]>This study aims to explore how the absorptive capacity of emerging market multinationals (EMNEs) facilitates increased acquirer performance in industry exploration and technology exploration cross-border acquisitions (CBAs).
The research context for this study is Brazilian EMNEs and their CBAs. The final database contains 101 CBAs.
The authors find that industry exploration strategies negatively affect financial performance, but technology exploration strategies have a positive effect. The acquirer’s absorptive capacity can exacerbate the negative effects, except in instances of technology exploration strategies, where there is a demonstrable benefit from the acquirer’s absorptive capacity.
The study contributes first by providing a more nuanced understanding of the effects of absorptive capacity on postacquisition performance, depending on the type of knowledge explored. Second, by drawing on EMNE learning perspectives, the authors demonstrate the versatility of absorptive capacity in emerging markets.
]]>This study aims to examine the impact of institutional investors and their classes on the stock return volatility of an emerging market. The paper also determines the moderating role of firm size, crisis and turnover on such relationships.
The study covers nonfinancial companies of the Bombay Stock Exchange-100 index that are listed during the study period. The study uses fixed effects and systematic generalized method of moments estimators to look over the association between institutional investors and firms’ stock return volatility.
The study provides evidence that institutional investors destabilize the Indian stock market. It indicates that institutional investors do not engage in management activities; they earn short-term gains depending on information efficiency. Pressure-insensitive institutional investors have a significant positive relation with stock return volatility, while pressure-sensitive institutional investors do not. The study also reflects that pressure-sensitive institutional investors are underweighted in India, which jointly represents an insignificant nonlinear association between institutional ownership and stocks’ volatility. Furthermore, outcomes reveal that the intersection effect of the crisis, firm size and turnover is positively and significantly related to such relationships.
The outcomes encourage initiatives that keep track of institutional investors in the Indian stock market. To control the destabilizing effect of pressure-insensitive institutional investors, regulators should follow strict regulations on their trading patterns. Moreover, it guides the potential researchers that they should also take into account the impact of other classes of ownership structure or what type of ownership can help in stabilizing or destabilizing the Indian stock market.
Abundant literature studies the relationship between institutional ownership and firm performance in the Indian context. From the standpoint of making management decisions, the return and volatility of stock returns are both different aspects. However, this study examines the effect of institutional ownership and its groups on the volatility of stock return using the panel data estimator, which was previously not discussed in the literature.
]]>Green transition is a long-term direction of corporate development that can achieve sustainable corporate development. This study aims to investigate whether state ownership promotes corporate green transition by mitigating managerial myopia and the impact of environmental regulations, internal controls and ownership on this pathway.
Using data from 2,608 Chinese listed companies for 2010–2019, the authors investigate the relationship between state ownership, managerial myopia and corporate green transition by using fixed-effects and moderated mediation models.
State ownership can boost green transitions and alleviate managerial myopia. Managerial myopia mediates the relationship between state ownership and corporate green transition. Furthermore, environmental regulations, internal controls and ownership moderate the mediating effects of managerial myopia.
The authors construct a multidimensional green transition index to examine the influence of state ownership on corporate green transition behavior and reveal the underlying mechanism by which state ownership promotes green transition by “mitigating managerial myopia.” This study enriches the literature on state ownership, management myopia and green transition and provides important evidence for the promotion of mixed ownership reforms.
]]>Chinese firms are winning market share from foreign multinational enterprises in domestic markets. The international business literature suggests that this is happening because these firms are developing non-traditional firm-specific advantages (FSAs). Strategic factor market (SFM) theory provides a good basis for explaining how this is happening. However, it is underdeveloped in terms of analysing unique resources and unique access to those resources by Chinese firms in their domestic markets. This paper aims to develop a framework to understand how Chinese firms have developed non-traditional FSAs.
The case study method is adopted to explore how Chinese firms develop non-traditional FSAs. Specifically, the authors compare paired case studies of a Chinese firm and a foreign multinational in each of two industries.
The authors find that Chinese firms have developed non-traditional FSAs because of more relevant experience, better adapted strategies and privileged relationships. This has enabled Chinese firms to develop non-traditional FSAs.
The authors propose a framework that conceptualises non-traditional FSA development in Chinese firms as a product of superior access to unique and valuable resources in their domestic SFMs.
]]>This study aims to analyse how multinational corporations (MNCs) organise value chain activities to penetrate new market segments. It contributes by expanding traditional decisions regarding the vertical fine-slicing of value chain activities (whether performed internally or externally) and the consideration of resource-sharing decisions (integration or separation) for each value chain function.
The authors draw on primary data collected from two case study firms operating in the large emerging Chinese market: Volvo Construction Equipment AB and Epiroc AB. In-depth cases illustrate how foreign MNCs expand into new market segments and simultaneously target both the lower-priced mid-market and the premium segments in the Chinese mining and construction industry.
The results reveal that product diversification creates challenges for managers who must oversee new (vertical) value chains, often simultaneously. Beyond geography and modes of governance, managers must decide whether to integrate or separate value chain activities for the new product lines. The study identifies four main strategic choices for firms to address this complexity, focusing on the decision to internalise or externalise (i.e. within or across organisational boundaries) and integrate or separate value chain activities between different product lines.
This study builds upon the internalisation theory and recent international business contributions that focus on value chain configurations to explain MNCs’ product diversification as a growth strategy in a host emerging market. It also sheds light on the choice of conducting new activities in-house or externally and elucidates firms’ managerial decisions to operationally integrate or separate individual value chain activities. The study provides insights into the drivers explaining managerial decisions to configure value chain activities across product lines and contributes to the growing body of literature on MNC activities in emerging economies by highlighting that product diversification impacts entry mode diversity and resource sharing across units.
]]>Recent international business research finds that state-owned multinational enterprises (SOMNEs) invest relatively more in politically risky host countries than do privately-owned multinational enterprises (MNEs). This study aims to investigate theoretically and empirically whether state ownership mitigates the impact of host-country political risk on subsidiary economic risk.
The authors link theoretical arguments on state ownership to arguments from non-market strategy literature to outline mechanisms whereby state ownership can buffer subsidiaries from political risk, weakening the link between host-country political risk and earnings volatility in subsidiaries. Using a data set on Norwegian MNEs’ foreign subsidiaries across almost two decades, the authors test this prediction using both matching methods and panel regressions.
While standard panel regressions provide empirical support only for the infrastructure sector and for the highest political risk contexts, nearest-neighbour matching models – comparing only otherwise similar private- and SOMNE subsidiaries using the full sample – reveal more general support for the political risk mitigation hypothesis.
The study presents the first comprehensive analysis of whether state ownership can mitigate the effect of political risk on subsidiary economic risk.
]]>This paper aims to explore the ambiguity and limitations of measuring firm-level multinationality (FLM) using theoretical and empirical comparisons of existing methods. The paper puts forward a list of five key aspects that collectively serve as a tool for researchers to select the most appropriate method for future research and as a basis for the future development of methods.
Firstly, the author reviews existing methods of measuring FLM and consolidates findings into five key aspects. Secondly, the author uses the aspects to compare existing methods theoretically, and subsequently, the author groups them into three distinct streams. Thirdly, the author compares existing methods across a sample of the 35 largest European MNEs by sales in 2020 to identify and demonstrate the ambiguity and limitations of these methods.
The author identifies the five key aspects of measuring FLM: framework, aggregation, segmentation, metrics and indicators. Using empirical comparison, the author empirically confirms the limitations highlighted in the literature and shows the differences and inconsistencies among methods, which cause confusion rather than clarity in the extant literature. Additionally, the author emphasises that three distinct streams further drive the debate on the regional/global nature and present further limitations of methods not mentioned in the literature to date.
This paper provides the most comprehensive review of the existing literature on FLM, resulting in five novel aspects of measuring FLM. The analysis of a sample of 35 European firms demonstrates and identifies the ambiguity and limitations of FLM-measuring methods.
]]>This paper aims to examine the question, “How do firm-level, home-country and host-country environmental performance (EP) affect the outward foreign direct investment (OFDI) of Chinese multinational enterprises (MNEs)?”
The authors examine the relationships between EP and OFDI propensity and between EP and OFDI intensity using a sample of 359 Chinese firms in industries with a significant environmental footprint between 2009 and 2019 (2,002 firm-year observations) and a Heckman two-stage model.
This study shows that the propensity for OFDI by Chinese MNEs is significantly and positively related to the firm’s prior EP and the country-level EP of China. However, the amount of FDI invested is significantly and positively related to the firm’s prior EP and negatively related to the EP of the host country.
The findings suggest that FDI in a country by an MNE is determined by a combination of firm-level EP, home-country EP and host-country EP. This study finds that the decision to undertake FDI (propensity) and the decision about how much to invest (intensity) are determined by different factors. The propensity for FDI is determined by the home-country EP and firm-level EP. However, the intensity of FDI is determined by a combination of the host country EP and firm-level EP. A limitation is that this study only examines MNEs in China, so the findings may not apply to other countries.
This paper shows that MNEs’ EP is positively related to the propensity and intensity of their OFDI decisions. However, this paper shows that the home-country and host-country EP may also play an important role in determining the propensity or intensity of OFDI.
]]>Although the integration of sustainability into business strategies and operations has received considerable scholarly attention, little is known about how sustainability initiatives across the extended value chain affect this integration. This study aims to analyze the impact of multinational corporations’ supply chain sustainability initiatives on their environmental, social and corporate governance (ESG) performance and the moderating role of the key country-level factors of the multinational’s headquarters.
This study analyzes data published by the top 201 multinationals among Fortune Global 500 companies over the period 2011–2021 on their attempts to integrate sustainability measures in extended supply chains and the resultant impact on their ESG scores. A fixed-effect model is used in the primary empirical study.
Results indicate that managerial interventions through a more robust supply chain policy framework, monitoring mechanisms, corrective actions and training initiatives lead to better ESG-environment pillar performance for multinationals. Additionally, the ESG-environment pillar performance is influenced by the socioeconomic model and country-level ESG risks of the nation where the multinational is headquartered.
The implications of this study are vital for understanding the criticality of sustainability initiatives in the supply chain for a firm’s overall ESG performance. To attain better levels of sustainable performance, multinationals must assume a stewardship position and deploy sustainability initiatives in their extended supply chain.
]]>This study aims to examine whether and why subsidiary-unit managers’ prior international work experiences across multinational enterprises’ (MNEs) home and host countries impact their subsidiary-unit performance, considering the mediating effect of their advice networks.
A survey on 222 subsidiary-unit managers (154 parent country nationals [PCNs] and 68 host country nationals [HCNs]) of a Korean MNE operating in China, Vietnam, Thailand, Singapore, Hungary and Slovakia was conducted. The authors analyzed the data using partial least square structural equation modeling, multigroup analysis and bootstrapping techniques.
PCN subsidiary managers with more prior international work experience manage better-performing units due to the strength of the manager’s advice networks across local parties. However, for HCN subsidiary managers, this study did not find such mediating roles of the size and strength of their advice networks in the MNE home country.
This study provides novel insights and empirical evidence about the effect of the length of prior international work experience of subsidiary managers on their advice-seeking networks and subsidiary-unit performance. In addition, it draws on and add to social capital theory about how international work experience impacts dealing with local businesses and the relationship with corporate headquarters.
]]>The purpose of this paper is to contribute to the discussion on how multinational company (MNC) headquarters (HQs) can manage the existing coopetition paradox to ensure innovation within the MNC. In contrast to the rather scarce previous research, the authors argue that HQ needs to solve the coopetition paradox under the sway of a parenting paradox. Hence, HQ faces a dual paradox.
Drawing on the literature on HQ’s role during MNCs’ innovation processes, this conceptual paper revisits the previously suggested HQ measures to enable coopetition among subsidiaries. By applying a sheer ignorance perspective, the authors contribute with a more nuanced understanding of the HQ’s role in innovation activities.
The article identifies four challenges as the HQ faces a parenting paradox that hinders its ability to solve the coopetition paradox: context specificity of subsidiaries’ innovation work, normative expectations of subsidiary managers, potential opportunistic behavior of HQ manager and HQ underestimation of needed resources. The article suggests that HQ needs to become more informed and preferably even embedded in the local innovation networks of its most important subsidiaries and that coopetition should not be managed solely on an HQ level.
Advocating a sheer ignorance perspective, the article pioneers in discussing the role that HQ plays in managing coopetition among subsidiaries in innovation activities.
]]>Conventional wisdom suggests that war in the host country makes it unattractive for foreign firms to invest. To see if this is true for US firms on the aggregate, this paper aims to examine the veracity of a “permanent war economy” hypothesis, that foreign direct investment (FDI) may, in fact, increase in the host country not despite, but because of, war, i.e. one that lends credence to the idea that, in the USA, “defense [has] become one of constant preparation for future wars and foreign interventions rather than an exercise in response to one-off threats.”
The authors test the hypotheses using Generalized Method of Moments estimation, with Heckman Selection, on US FDI data from the Bureau of Economic Analysis and war data from the Correlates of War2 Project, the Uppsala Conflict Data Program/International Peace Research Institute data set, the International Crisis Behavior Project and the Center for Systemic Peace Major Episodes of Political Violence data set. The final sample consists of 351 country-year observations in 55 host countries from 1982 to 2006.
The findings indicate that overall US FDI in a host country in a given year decreases if the host country is engaged in wars with multiple countries and if the US Government is involved in the war. Most notably, the results show that US involvement in multiple host country wars is actually correlated with increased US FDI into the host country, providing empirical support for the “permanent war economy” hypothesis.
While other studies have focused on war and FDI, the authors have sought to show the impact of the involvement of arguably the most influential country, i.e. the USA, in the sovereign matters of a focal host country. By studying FDI from the USA as a function of US involvement in wars overseas, over the years with the greatest use of private military companies by the USA and the largest portion of global FDI accounted for by the USA, this work motivates a research agenda on home-host-"other” relations in the context of war and FDI, with the “other” being the supranational “elephant in the room.”
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