Showing papers in "Journal of International Business Studies in 1990"

Firm Ownership Preferences and Host Government Restrictions: An Integrated Approach

Abstract: Two approaches may explain how multinational enterprises (MNEs) select ownership structures for subsidiaries. The first argues that MNEs prefer structures that minimize that transaction costs of doing business abroad. The second argues that ownership structures are determined by negotiations with host governments, whose outcomes depend on the bargaining power of the firm. This paper presents a framework integrating these two approaches and uses statistical methods to separate their effects empirically.

The Role of Expatriates in the Management of Interdependence Complexity and Risk in Multinational Corporations

Abstract: A multilevel analysis of environmental (country) and organizational (affiliate) factors is used to explain the differential utilization rates of U.S. nationals in overseas professional positions of a major U.S. bank with 84 branches in 43 countries. The research suggests that to the extent that the affiliates of a multinational corporation operate in environments with differing levels of political risk, cultural distance, and competition and have operations with different levels of complexity and interdependence, a single staffing policy may be inappropriate.

International Orientation as a Precondition for Export Success

Abstract: Every country, particularly if it depends on foreign trade to such a high degree as the Federal Republic of Germany, has a vital interest in exploiting all its export opportunities. The authors have developed a measurement concept focusing on the foreign orientation of business managers. Their empirical research suggests that as many as one-third of the small- and medium-sized firms with a primarily domestic focus in their country could be turned into successful exporters. The paper not only reveals obstacles to exporting as perceived by the managers of these companies, but also points to specific measures to improve the efficiency of existing export promotion programs.

Do Corporate Codes of Ethics Reflect National Character? Evidence from Europe and the United States

Abstract: This paper analyses the usage and contents of corporate codes of ethics. The results from a sample of 600 large European companies are contrasted with findings reported for similar U.S. firms. The comparison reveals that significantly fewer European than U.S. firms adopted codes of ethics. In Europe, the large majority of codes have been introduced only very recently and there are indications that codes made their way into Europe via subsidiaries of U.S. firms. However, there are striking differences in content between U.S. and European codes of ethics pointing to the existence of a distinctly European approach to codifying ethics.

An Empirical Analysis of the Integration-Responsiveness Framework in Global Industries

Abstract: In this study, businesses competing in global industries were categorized into three groups according to the integration-responsiveness framework for conceptualizing industry pressures confronting business competing internationally. Using this framework, contextual conditions associated with each group were examined. Competitive attributes distinguishing each group were then identified to clarify alternate business-level strategies for competing within a global industry context. Beyond providing additional insight into the nature of competition in global industries, several broad extensions to the integration-responsiveness framework are suggested.

Linking Product and Process Innovations and Modes of International Sourcing in Global Competition: A Case of Foreign Multinational Firms

Abstract: In increasingly complex global competition, multinational firms, U.S. and foreign alike, have stepped up international sourcing of components and finished products to serve various markets. Since an increasing portion of global competition is shaped by European and Japanese multinational firms with due emphasis on product quality and manufacturing, it is an opportune time to examine the like among their product development, manufacturing, and sourcing activities. Those European and Japanese multinational firms marketing products in the United States are chosen as subjects of this study.

The Relationship Between Offshore Sourcing and Innovativeness of U.S. Multinational Firms: An Empirical Investigation

Abstract: In increasingly complex global competition, U.S. multinational firms have stepped up imports under items 806.30 and 807.00 of the Tariff Schedules of the United States as a part of offshore sourcing of components and finished products to serve the U.S. market.

The Determinants of Export Decisions and Attitudes to a Distant Market: Norwegian Fishery Exports to Japan

Abstract: This paper focuses on the process that occurs when active exporters, reacting to new opportunities, either enter or increase exports to psychologically distant markets. The overall purpose of the study is to provide guidance for export promotion activities. Since future exports cannot be observed directly, the attitude regarding future exports is introduced as this study's primary dependent variable. A model is formulated where firm and product attributes, as well as perceived barriers/opportunities are proposed as determinants of attitudes towards future exports. Previous export experience in the relevant market is also introduced as an additional variable in explaining attitude towards future exports. The model is tested in a two-step procedure with multiple discriminant and regression analysis. The data used to test the model is taken from a survey of Norwegian exporters of fishery products.

A Market Performance Comparison of U.S. Firms Active in Domestic, Developed and Developing Countries

Abstract: Direct foreign investment (DFI) may benefit investors through superior cash flows or lower risk relative to purely domestic firms. This paper considers three groups of U.S. firms: those without significant international operations, those with international operations in developed countries, and those with international operations in developing countries. After performing risk-return performance analysis on the three groups, the findings show developing country DFI results in inferior performance, but that there are no statistically significant differences in market performance among the three.

The Importance of Work Goals: An International Perspective

Abstract: The paper probes into the basic question of what individuals seek from working. Results from a representative sample of the labor force in seven countries (n = 8192) showed that the two most dominant work goals are “interesting work” and “good pay.” These were consistent internationally, across different organizational levels, between the genders and among different age categories.

Ownership Patterns of U.S. Joint Ventures Abroad and the Liberalization of Foreign Government Regulations in the 1980s: Evidence from the Benchmark Surveys

Abstract: Data from the Benchmark Surveys of the Commerce Department show the beginning of a global liberalization in government restrictions on foreign equity in the 1980s. This was manifested in a small but unmistakable across-the-board reduction in the share of 50-50 and minority affiliates out of all U.S. affiliates in a country. Across countries there remains a huge variation in this proportion, and the second part of the paper seeks to statistically explain this variation in a cross-sectional regression analysis.

Problems and Developments in the Core Theory of International Business

Abstract: The established theory of international business is not without problems. It is necessary to specify the key relationships between internalisation and market structure and between internalisation and competitive advantage more carefully. This chapter attempts to clarify the former relationship by reference to the work of Hymer and the latter by contrasting the nature of internalisation decisions with those building short-run competitive advantage. Avenues of development of the theory include the integration of non-traditional concepts and the reintegration of areas of research which have become divorced from core international business theory.

International Perceptions of Cost Constraints on Voluntary Information Disclosures: A Comparative Study of U.K. and U.S. Multinationals

Abstract: The main purpose of this paper is to examine the cost constraints on voluntary information disclosure in a comparative study of the perceptions of financial executives in U.K. and U.S. multinationals. The study examines the perceived net costs or benefits of disclosing information voluntarily, the types of costs involved and the significance of cost constraints in respect of specific items of disclosure. The results suggest that while there is substantial agreement on the major cost constraints involved and the individual items giving rise to major net costs, there are significantly different perceptions by U.K. and U.S. financial executives in terms of the overall emphasis of responses to the issue of cost constraints on voluntary information disclosures.

A Longitudinal Study Comparing Perceptions of U.S. and Japanese Consumer Products in a Third/Neutral Country: Finland 1975 to 1985

Abstract: While substantial research has been done on the competitive struggle between U.S. and Japanese consumer products, few studies have examined the U.S. Japan rivalry from a neutral-third country perspective. This study, covering a ten-year period (1975–1985) of data collection, examines changes in Finnish perceptions of U.S. and Japanese consumer products and marketing efforts. Results indicate that while Finnish consumer perceptions of U.S. products and marketing efforts have improved over time, the corresponding perceptions of the Japanese alternative have improved substantially more. Similarly, in areas where U.S. competitors had initial advantages, the study results indicate that by 1985 Japanese firms were able to overcome such advantages and were perceived as superior in all categories.

A Four Nation Study of thee Relationship Between Marketing Effectiveness, Corporate Culture, Corporate Values, and Market Orientation

Abstract: The aim of this study was to establish the ways in which senior executives in four countries which shared a common language—United Kingdom, United States, Australia and New Zealand—characterized both their firm's marketing effectiveness, and corporate culture and beliefs. Results give support to those theorists who advance cultural specificity as the primary moderator of top managerial attitudes, but also emphasise that the best predictor of marketing effectiveness is similar in all four nations—the primacy of the importance of people, and with quality.

FDI Theories and the Performance of Foreign Multinationals Operating in the U.S.

Abstract: Based on firm-specific financial data, performance of foreign multinationals operating in the U.S. is evaluated to determine if they enjoy advantages over U.S. firms. Results of this study indicate that foreign firms operating in the U.S. are less profitable than randomly selected U.S. firms, that they spend more in research and development but less in advertising, and that they have higher debt levels combined with higher liquidity. In addition, the findings also demonstrate that the determinants of excess market value, as measured by Tobin's q, differ between foreign-owned firms and American-owned firms, and that the performance of foreign multinationals differ by country of origin. This suggests that foreign-owned firms may have different reasons for investing in the U.S. and that foreign multinationals present investment opportunities to the U.S. investors distinct from American firms.

Behavioral Relations in Across-Culture Distribution Systems: Influence, Control and Conflict in U.S. Japanese Marketing Channels

Abstract: A mail survey of Japanese distributors of US products provided data for an examination of how perceptions of influence affect control and conflict in the relationship Results indicated that aggressive influence evoked resistance and conflict, while more subtle influence strategies appeared to reduce conflict Results suggested that influence, as practiced in western channels, may not be effective in relationship such as these

Transfer Pricing Determinants of U.S. Multinationals

Abstract: This paper examines the influence of environmental and firm-specific variables on the selection of international transfer pricing strategies. The primary data were obtained from 164 multinational enterprises by means of a questionnaire. Responses were analyzed by performing factor analysis and constructing a probit model. The findings suggest that legal constraints and firm size are significant determinants in the selection of international transfer pricing strategies by U.S. multinationals.

Setting the Record Straight: Hymer, Internationalization Theory and Transaction Cost Economics

Abstract: Along with the rise and development of transaction cost economics, Stephen H. Hymer's works have recently become a matter of some controversy. This note clarifies the main issues in the controversy and explores the contributions of Hymer's theory of the MNE. A review of Hymer's works reveals that he had incorporated a Coasian theory of firms and markets in his theory as early as 1968. This note suggests that the genesis of transaction costs as applied to the MNE can be traced to Hymer.

Some Empirical Dimensions of Countertrade

Abstract: This paper discusses some of the recent theories of why countries impose countertrade obligations and compares some of the implications of these theories with data obtained from a comprehensive database of countertrade transactions.

The Exchange Rate Exposure of a Global Competitor

Abstract: This paper analyzes the exposure of operating cash flows to an exogenous exchange rate change for a firm operating internationally as a multimarket oligopolist (i.e., a “global” competitor) and facing demand that depends in a general way on the exchange rate. It is shown that exposure is the sum of a base case exposure identified in other studies and two other components: terms associated with exchange rate-induced demand shifts and terms associated with competitors's reoptimization following the exchange rate shock. In general, the magnitudes of these additional terms are significant, especially in the presence of asymmetries across markets and firms. Numerical examples are provided that incorporate asymmetries corresponding to stylized facts about some U.S. markets and U.S. manufacturers.

The Long Path to the IBM-Mexico Agreement: An Analysis of the Microcomputer Investment Negotiations 1983–86

Abstract: Studies of negotiation have proliferated, but few, especially in international business, have systematically detailed the complexity of negotiations in situ. This paper describes and explains the widely publicized, controversial talks between IBM and the Mexican government that followed IBM's proposal to established a 100%-owned personal computer assembly plant near Guadalajara.

An Examination of Country and Culture-Based Differences in Compensation Practices

Abstract: This study explores the relationship between country-based and culture-based differences in pay practices. Pay data from forty-one manufacturing industries in twenty-eight countries across five different culture clusters were examined. Although significant differences were found between countries in terms of pay level, the largest portion of the variance in the relationship between wages and benefits is due to cultural affiliation. The implications for cultural clustering theory and internationally pay decisionmaking are discussed.

Japan vs. Silicon Valley: Quality-Cost Trade-Off Philosophies

Abstract: While Japanese manufacturing philosophies are said to be based on “quality is free” notions, it is commonly accepted that U.S. manufacturing centers on a “quality is costly” belief. This paper provides empirical data that test this conceptual division, seeking evidence about the quality tradeoff philosophies of U.S. and Japanese electronics manufacturing managers.

The Role of Product-Specific Factors in Intra-Firm Trade of U.S. Manufacturing Multinational Corporations

Abstract: This study examines the role of major product-specific factors in the product patterns of intra-firm trade of U.S. manufacturing MNCs. Using pooled time-series (1982–86), cross-sectional (nineteen products) regression analysis, this study finds that the technology intensity of a product has a strong positive effect on the propensity of the product to intra-firm trade. In contrast, the economies of scale level appears to have a constraining effect on the propensity. Finally, the vertical integration intensity and the international production intensity are found to have no significant bearings on the propensity.

A Comparison of the Plant Location Strategies of Foreign and Domestic Manufacturers in the U.S.

Abstract: Several studies have investigated that locational strategies of multinationals across national borders but there have been very few investigations of the locational strategies of multinational and international firms within the borders of a given nation. The influx of foreign manufactures into the U.S. in the seventies and eighties provided a unique opportunity to study their locational strategies within the U.S., which because of its spatial diversity and size, permits identifiable patterns to emerge in the locational strategies of manufacturers.

Examining Event Study Methodologies in Foreign Exchange Markets

Abstract: A Brown and Warner [1980, 1985] event study methodology is applied to the foreign exchange area. Comparisons of the performance of four abnormal return models are examined with simulations under different experimental conditions, such as choice of foreign currency or numeraire, level of abnormal shock, sample size, length of estimation period, market return proxy, and time period examined. The results provide practical suggestions on the selection of an event study methodology and demonstrate that some of the findings of Brown and Warner are not generalizable to the foreign exchange area.

Sovereign Debt Ratings: A Judgmental Model Based on the Analytic Hierarchy Process

Abstract: The major rating agencies assign quality rating to international security offerings. These ratings serve as indicators of perceived sovereign risk associated with such offerings. A review of the ratings process followed by the major rating agencies (in particular, the Standard & Poor's Corporation) reveals that ratings are assigned with considerable reliance on informal judgment. Informal judgmental systems, however, can induce serious inconsistencies in the relative importance assigned to criteria used in assigning rating and lead to biased ratings. This paper presents a formal judgmental model for assigning sovereign debt ratings that avoids the potential inconsistencies of informal systems. Model use is illustrated by relying on descriptions of the ratings process published by Standard and Poor’s Corporation. While the model proposed in this paper provides a framework for the rating agencies to ensure consistency in their ratings process, we suggest a complementary relationship between multivariate statistical classification models typically used to assess economic and political risk and the proposed model which assigns country risk ratings.