Showing papers in "Journal of International Business Studies in 2007"
TL;DR: In this paper, the authors present a springboard perspective to describe the internationalization of emerging market multinational corporations (EM MNEs), and discuss unique traits that characterize the international expansion of EM MNE, and the unique motivations that steer them toward internationalization.
Abstract: In this article, we present a springboard perspective to describe the internationalization of emerging market multinational corporations (EM MNEs). EM MNEs use international expansion as a springboard to acquire strategic resources and reduce their institutional and market constraints at home. In so doing, they overcome their latecomer disadvantage in the global stage via a series of aggressive, risk-taking measures by aggressively acquiring or buying critical assets from mature MNEs to compensate for their competitive weaknesses. We discuss unique traits that characterize the international expansion of EM MNEs, and the unique motivations that steer them toward internationalization. We further delineate peculiar strategies and activities undertaken by these firms in pursuit of international expansion, as well as internal and external forces that might compel or facilitate their propulsion into the global scene. We finally explain the risks and remedies associated with this international ‘springboarding’ strategy and highlight major issues meriting further investigation.
2,505 citations
TL;DR: This paper investigated the determinants of Chinese outward direct investment and the extent to which three special explanations (capital market imperfections, special ownership advantages and institutional factors) need to be nested within the general theory of the multinational firm.
Abstract: This study investigates the determinants of Chinese outward direct investment (ODI) and the extent to which three special explanations (capital market imperfections, special ownership advantages and institutional factors) need to be nested within the general theory of the multinational firm. We test our hypotheses using official Chinese ODI data collected between 1984 and 2001. We find Chinese ODI to be associated with high levels of political risk in, and cultural proximity to, host countries throughout, and with host market size and geographic proximity (1984 to 1991) and host natural resources endowments (1992 to 2001). We find strong support for the argument that aspects of the special theory help to explain the behaviour of Chinese MNEs.
2,238 citations
TL;DR: In this paper, the authors argue that home-based social networks play a mediating role in the relationship between inward and outward internationalization and firm performance in the context of born-global small and medium enterprises (SMEs).
Abstract: This paper offers a social network explanation for the purported relationship between internationalization and firm performance in the context of born-global small and medium enterprises (SMEs). We argue that home-based social networks play a mediating role in the relationship between inward and outward internationalization and firm performance. The mediating mechanism is attributed to three information benefits of social networks: (1) knowledge of foreign market opportunities; (2) advice and experiential learning; and (3) referral trust and solidarity. Using survey data from SMEs in the largest emerging economy of China, we found some support for this mediating role of social networks in the form of guanxi. The results imply that international business managers should consider social networks as an efficient means of helping internationally oriented SMEs to go international more rapidly and profitably.
801 citations
TL;DR: In this article, the authors introduce new parameters by focusing on specific ownership advantages and strategic actions that firms have to develop in response to the institutional characteristics of the emerging economies when they decide to pursue outward FDI.
Abstract: Past literature on foreign direct investment generally supports an economics perspective that there is a direct relationship between firm-specific ownership advantages and international expansion. However, in emerging economies, with their institutional environment context characterized by low resource munificence and continuous economic liberalization, a theoretical extension of the current perspective is needed. This paper introduces new parameters by focusing on specific ownership advantages and strategic actions that firms have to develop in response to the institutional characteristics of the emerging economies when they decide to pursue outward FDI. The focus here is on international venturing that requires a firm to engage in activities for new business creation in a foreign country rather than simply seek to distribute a product in another nation. It is shown empirically that the relationship between firm-specific ownership advantages and international venturing is moderated by the degree of home industry competition and export intensity. In addition, such a relationship is mediated by the intensity of corporate entrepreneurial transformation in the form of innovation, new business creation, and strategic renewal.
725 citations
TL;DR: The authors argue that outward foreign direct investment (OFDI) undertaken as escape response to perceived misalignment between firm needs and home country institutional conditions represents an important but under-explored phenomenon in the international business literature.
Abstract: In this perspective paper we argue that outward foreign direct investment (OFDI) undertaken as escape response to perceived misalignment between firm needs and home country institutional conditions represents an important but under-explored phenomenon in the international business (IB) literature. We propose that, in advanced industrialized nations, the extent of OFDI as escape is likely to rise with the extent of societal coordination in the political economy. Societal coordination is associated with relatively slower rates of institutional adjustment and thus with relatively greater prevalence of misalignments that may drive OFDI. We illustrate the face validity of our argument and lay out the implications for future research in IB.
610 citations
TL;DR: The authors identify common themes across writers, suggesting that the majority of studies fall into one of three research perspectives: cultural, strategic, and multidimensional, and also identify two constructs from the social sciences (cosmopolitanism and cognitive complexity) that underlie the perspectives found in the literature.
Abstract: Recent developments in the global economy and in multinational corporations have placed significant emphasis on the cognitive orientations of managers, giving rise to a number of concepts such as ‘global mindset’ that are presumed to be associated with the effective management of multinational corporations. This paper reviews the literature on global mindset and clarifies some of the conceptual confusion surrounding the construct. We identify common themes across writers, suggesting that the majority of studies fall into one of three research perspectives: cultural, strategic, and multidimensional. We also identify two constructs from the social sciences – cosmopolitanism and cognitive complexity – that underlie the perspectives found in the literature. We then use these two constructs to develop an integrative theoretical framework of global mindset. We then provide a critical assessment of the field of global mindset and suggest directions for future theoretical and empirical research.
594 citations
TL;DR: In this paper, the authors seek to explain how firms from emerging markets build capabilities to operate in international markets through learning from parental networks using lagged cross-sectional regression models on a sample of 794 Indian firms, finding that firms draw on the international experience of their parental and foreign networks to build such capabilities.
Abstract: In this study we seek to explain how firms from emerging markets build capabilities to operate in international markets through learning from parental networks. The building of these capabilities is of particular interest, as firms from emerging markets may not necessarily possess the monopolistic advantages commonly referred to in IB literature, which allow a firm to succeed in international markets. Using lagged cross-sectional regression models on a sample of 794 Indian firms, we found that firms draw on the international experience of their parental and foreign networks to build such capabilities. Findings also indicate that network scope is beneficial for increasing exposure to international markets only in the case of networks that are either small or medium sized. Additionally, we found that firms lacking market power in their home market benefit through foreign partnerships when internationalizing operations.
577 citations
TL;DR: In this paper, the authors identify a set of issues that have slipped through the net of some of the existing IB frameworks and propose a framework that is found at the intersection of entrepreneurial and internationalisation perspectives, which is known as international entrepreneurial dynamics.
Abstract: The initial stages of internationalisation, prior to firms having established their definitive sources of advantage, remain the relatively unexplored area of the international business (IB) literature. At these early stages, where firms are seeking to establish themselves, and new multinational firms are appearing to exploit new opportunities created by globalisation, the entrepreneurial aspects of internationalisation come to the fore. In this paper we aim to delineate an emerging field of IB scholarship: we use the appearance of international new ventures, and the phenomenon of accelerated internationalisation that they feature, to identify a set of issues that has slipped through the net of some of the existing IB frameworks. We propose that the salient features of accelerated and early internationalisation by the newly internationalising firm are best captured in a framework that is found at the intersection of entrepreneurial and internationalisation perspectives, which we propose be known as international entrepreneurial dynamics. We discuss such a framework in terms of entry points and pathways mapped by firms as they probe the IB arena, and the key factors that impinge on behaviour and strategic choices. In line with recent developments in the entrepreneurship literature, these are grouped into three milestones of entrepreneurial processes that extend across national boundaries: (1) the discovery of new opportunities; (2) the deployment of resources in the exploitation of these opportunities; and (3) the engagement with competitors. Implications for MNE and internationalisation theory are discussed.
510 citations
TL;DR: Birkinshaw and Hood as mentioned in this paper investigated the strategic roles of subsidiaries in MNCs, and raised the issue of how difficult it is for headquarters to remain in control of its subsidiaries and to influence their strategies over time.
Abstract: The contest for intra-organisational power in the multinational corporation (MNC) has gradually become a prominent issue on the research agenda. As long as 25 years ago, Hedlund (1980) investigated the strategic roles of subsidiaries in MNCs, and Doz and Prahalad (1981) raised the issue of how difficult it is for headquarters to remain in control of its subsidiaries and to influence their strategies over time. Since then, several researchers have suggested that MNCs can be considered to be dispersed structures of power in which the top management’s authority does not necessarily result in hierarchical power being the ultimate control mechanism (Hedlund, 1986; Forsgren, 1989; Ghoshal and Bartlett, 1990; Doz and Prahalad, 1993; Ferner and Edwards, 1995; Kristensen and Zeitlin, 2001; Morgan and Whitley, 2003). Birkinshaw and Hood (1998) examined the evolution of capabilities at the subsidiary level and recognised that, in most corporations, there is an ‘internal competition for charter’ that implies a process of change in subsidiary roles (Birkinshaw and Hood, 1998: 782). Case research has also indicated that changes in the charters of divisions or subsidiaries in MNCs constitute a strong feature of horizontal or vertical competition in the corporate ‘marketplace’ (Galunic and Eisenhardt, 1996; Birkinshaw and Fry, 1998). The tension between the headquarters and overseas laboratories caused by the laboratories’ desire for autonomy and influence is an example of such a competition (Asaka wa, 2001).
502 citations
TL;DR: In this article, the authors present an integrative model of the impact of cultural differences on capability transfer in cross-border acquisitions and propose that cultural differences affect the post-acquisition capability transfer through their impact on social integration, potential absorptive capacity, and capability complementarity.
Abstract: This paper presents an integrative model of the impact of cultural differences on capability transfer in cross-border acquisitions. We propose that cultural differences affect the post-acquisition capability transfer through their impact on social integration, potential absorptive capacity, and capability complementarity. Two dynamic variables – the use of social integration mechanisms, and the degree of operational integration of the acquired unit – are proposed to moderate the effects of cultural differences on social integration and potential absorptive capacity. The implications for acquisition research and practice are discussed.
497 citations
TL;DR: In this paper, the authors examined the relationship between consumers' country-level and product-level images of a country, and the equity they associate with a brand from that country, using canonical correlation analysis.
Abstract: This paper examines the relationships between consumers’ country-level and product-level images of a country, and the equity they associate with a brand from that country, using canonical correlation analysis. Results from mallintercept surveys conducted in an Australian state capital city indicated that the consumer-based equity of a brand was significantly associated with both the macro and micro images of the country of origin of the brand. The relationship between these two sets of constructs was found to be positive as well as product category specific. Furthermore, each consumer-based brand equity dimension contributed differently to the relationship according to the product category, while the contribution of both country image dimensions (macro and micro) was also product category specific. Results also showed that cars, as a product category, are more sensitive to country image than televisions. These findings have direct and important implications for international marketers.
TL;DR: In this paper, a conceptual synthesis of the same predictors on the dual entry-establishment mode choice made in the context of a single foreign investment is presented, and the authors conclude that the degree of the host country's institutional advancement moderates the effect of both technological intensity and international strategy on the establishment and entry mode choice.
Abstract: In this study, we bridge two streams of foreign direct investment literature, specifically studies on establishment mode choice (i.e., the choice between an acquisition and a greenfield establishment) and studies on entry mode choice (i.e., the choice between a wholly owned outlet and a subsidiary with shared ownership). We arrive at a conceptual synthesis for an examination of the effects of the same predictors on the dual entry-establishment mode choice made in the context of a single foreign investment. We demonstrate that a parent firm's technological intensity, international strategy and experience determine both establishment and entry mode choices. Moreover, we apply Williamson's new institutional economics to investigate the influence of institution building on multinational enterprises' dual investment choice. In the context of transition economies, we test empirically the possible moderating effect of a host country's institutional environment. We conclude that the degree of the host country's institutional advancement moderates the effect of both technological intensity and international strategy on the establishment and entry mode choice.
TL;DR: The authors empirically examined the survival of international new ventures by comparing them with other sequential modes of international operations (e.g., acquisitions) and found that INVs have lower unconditional survival probabilities than other modes of foreign market entry.
Abstract: International new ventures (INVs) are a popular mode of entry into foreign markets. INVs, those companies that enter foreign markets at inception, often suffer the two liabilities of newness and foreignness, which may increase the odds of their failure. This paper empirically examines the survival of INVs by comparing them with other sequential modes of international operations (e.g., acquisitions). Data from 275 British firms show that INVs have lower unconditional survival probabilities than other modes of foreign market entry. Our analyses also show that differences in survival probabilities disappear when the firms’ competitive strategies are considered.
TL;DR: In this paper, the authors study the causes of the difficulties faced by firms when they internationalize in search of new markets and argue that the difficulties in internationalization can be separated into three main sets based on their relationship to advantage.
Abstract: We study the causes of the difficulties faced by firms when they internationalize in search of new markets. We build on the resource-based theory to argue that the difficulties in internationalization can be separated into three main sets based on their relationship to advantage: loss of advantage provided by resources transferred abroad; creation of a disadvantage by resources transferred abroad; and lack of complementary resources required to operate abroad. In each set, we further distinguish difficulties that are specific to a firm from those that are common to a set of firms. We argue that only a few of the resulting types of difficulties of internationalization are exclusive to the cross-border expansion, and propose solutions that address the root cause of each type.
TL;DR: In this paper, the authors argue that companies may enter foreign environments either incrementally, as suggested by long-established theory, or by taking larger steps that may result in lower initial performance but, through learning and experience, lead to increased performance in future expansions.
Abstract: We argue that companies may enter foreign environments either incrementally, as suggested by long-established theory, or by taking larger steps that may result in lower initial performance but, through learning and experience, lead to increased performance in future expansions. This idea is corroborated by the experience of Dutch companies entering into Central and Eastern Europe. We also find that expansion steps may be too large, thereby limiting the exploration of foreign environments. Our study suggests that sequential internationalisation strategies do still matter, and that companies have to balance exploitation and exploration in internationalisation.
TL;DR: In this article, the authors explored the entry mode and location choices of firms from an Asian NIE (Taiwan) in an emerging market (the People's Republic of China) and found that the choice of equity stake in an affiliate depends upon the extent of family and institutional share ownerships in the parent company.
Abstract: Previous studies emphasise that the foreign direct investment (FDI) strategies of firms from newly industrialised economies (NIEs) are different from the FDI strategies of firms from developed economies. It has also been shown that NIE firms are often controlled by founding families who make key strategic decisions, and that they rely heavily on network linkages when developing their FDI strategies. What is less clear, however, is how the corporate governance factors in NIEs, the risk preferences of the main shareholder constituencies, and the network-based business culture affect the decision to undertake FDI in emerging markets. This paper explores the entry mode and location choices of firms from an Asian NIE (Taiwan) in an emerging market (the People's Republic of China). It shows that the choice of equity stake in an affiliate depends upon the extent of family and institutional share ownerships in the parent company. High-commitment entry is found to be positively associated with the affiliate being located in areas with strong economic, cultural and historic links with the parent company. Furthermore, the entry mode and location decisions appear to be interrelated, with the parent's equity stake in the affiliate depending inter alia upon the location within China, and the favoured location depending inter alia upon the equity stake.
TL;DR: In this article, the authors explore human resource management practices in multinational corporation (MNC) subsidiaries within an institutional theory framework and find that both the status of the subsidiary human resource department and the degree to which the subsidiary was involved in knowledge transfer with other parts of the MNC had a significant impact on the selection of HRM practices.
Abstract: This study sets out to explore human resource management (HRM) practices in multinational corporation (MNC) subsidiaries within an institutional theory framework. Based on a sample of 158 subsidiaries of MNCs operating in the United States, Russia and Finland, the paper examines factors hypothesised to influence the HRM practices adapted in US, Japanese and European MNC subsidiaries located in Russia, Finland and the US. The results indicate significant differences in HRM practices used across host countries. Both the status of the subsidiary human resource department and the degree to which the subsidiary was involved in knowledge transfer with other parts of the MNC had a significant impact on the selection of HRM practices.
TL;DR: In this article, the authors show that home country bias is in part driven by a need for self-enhancement, which is complementary to the effect of consumer ethnocentrism.
Abstract: Consumers often are positively biased in their evaluations of domestic products vs foreign alternatives. This study establishes economic and socio-psychological motives for this home country bias. Building on social identity theory, this paper shows that home country bias is in part driven by a need for self-enhancement. This influence is stronger for consumers who identify more strongly with their own country, and is complementary to the effect of consumer ethnocentrism, which provides an economic motivation for home country bias. The framework is supported in empirical studies conducted in the Netherlands and in the USA.
TL;DR: In this article, the authors examine from an institutional perspective the legitimacy rationale behind the choice of subsidiary ownership structure among multinational corporations (MNCs) and suggest that, when under a strong pressure to conform at the host country and local industry levels of their institutional environment, MNCs are likely to take a lower ownership stake in exchange for external legitimacy in the local industry that their foreign subsidiaries are entering.
Abstract: In this study, we examine from an institutional perspective the legitimacy rationale behind the choice of subsidiary ownership structure among multinational corporations (MNCs). We suggest that, when under a strong pressure to conform at the host country and local industry levels of their institutional environment, MNCs are likely to take a lower ownership stake in exchange for external legitimacy in the host country or local industry that their foreign subsidiaries are entering. We also suggest that MNCs are likely to take a higher ownership stake in response to strong internal pressure to sustain their internal legitimacy at the corporate level of their institutional environment. We also propose that MNCs are more likely to exchange ownership for legitimacy in local industries than in host countries, and in local markets with a high level of political instability than in those with a low level of political instability. These propositions are generally supported by our analysis of 4451 subsidiaries established by 898 Japanese MNCs that operated in 39 countries across 52 industries (two-digit SIC) between 1988 and 1999.
TL;DR: This paper developed a taxonomy that relates foreign direct investment (FDI) motivation (technology-and cost-based) to its anticipated effects on host countries domestic productivity, and empirically examined the effects of FDI into the United Kingdom on domestic productivity.
Abstract: We develop a taxonomy that relates foreign direct investment (FDI) motivation (technology- and cost-based) to its anticipated effects on host countries domestic productivity. We then empirically examine the effects of FDI into the United Kingdom on domestic productivity, and find that different types of FDI have markedly different productivity spillover effects, which are consistent with the conceptual analysis. The UK gains substantially only from inward FDI motivated by a strong technology-based ownership advantage. As theory predicts, inward FDI motivated by technology-sourcing considerations leads to no productivity spillovers.
TL;DR: This article examined managers' choices about foreign investment location through the use of structured experimentation and found that in creating sets of investments to consider, managers appear to follow fairly rational rules, but the choice of actual investments appears less aligned to traditional models.
Abstract: Many empirical examinations of foreign direct investment location choice have relied on the use of secondary data and surveys on the choices made by firms about the form and location of overseas investment. These studies have two inherent and related problems. First, they rely solely on the location choices made by different firms, and assume that the domains of possible options considered were the same. Second, there is an assumption about the rules used by firms to make these decisions, yet the decisions are made by boundedly rational managers. After reviewing the literature, this study examines managers’ choices about foreign investment location through the use of structured experimentation. The results show that in creating sets of investments to ‘consider’, managers appear to follow fairly rational rules. However, the choice of actual ‘investments’ appears less aligned to traditional models.
TL;DR: In this article, the authors provided macro-country level data demonstrating the increased internationalization of many nations over the past decade, and they also addressed the broader conceptual issues of how to interpret country-level vs firm-level data.
Abstract: We are pleased that Dunning et al. have provided macro (country) level data demonstrating the increased internationalization of many nations over the past decade. We also appreciate their findings lending support to our perspective on the regional nature of world business. Our work was based solely on micro (firm) level data. Both country-level data and firm-level data have methodological problems, which we attempt to reconcile in this commentary. We also address the broader conceptual issues of how to interpret country-level vs firm-level data.
TL;DR: In this article, the authors examined the foreign location choices of the top 100 US multinational corporations in 1980 and 2000 and found that the extent of MNC activities around the globe is more extensive than assumed by regionalists' arguments and well beyond Ohmae's TRIAD, but still less widespread than claimed by the globalists.
Abstract: In this paper we examine foreign location choices of the top 100 US multinational corporations (MNCs) in 1980 and 2000. We first ask whether there has been a change in MNC foreign location choice in this two-decade period. Second, we explore the underlying reasons of location change by focusing on country-level factors, accounting for firm-, industry- and regionallevel explanations. Our findings suggest, first, that the extent of MNCs’ activities around the globe is more extensive than assumed by regionalists’ arguments and well beyond Ohmae’s TRIAD, but still less widespread than claimed by the globalists – the two main traditions within the globalization– regionalization debate. Second, we uncover an interesting de-location pattern in this period. Third, we develop an integrative framework where both economic and institutional-cultural arguments are shown to influence MNCs’ foreign location choice in different ways. We conclude with a discussion of our
TL;DR: This article found evidence for the coexistence within Chinese manufacturing industry of both curvilinear and linear relationships between inward foreign direct investment (FDI) and the productivity of locally owned enterprises (LOEs).
Abstract: This paper finds evidence for the coexistence within Chinese manufacturing industry of both curvilinear and linear relationships between inward foreign direct investment (FDI) and the productivity of locally owned enterprises (LOEs). This complexity of spillover effects challenges the laissez-faire view that all inward FDI into all types of domestic industry is equally valuable in terms of productivity spillover benefits. Our findings suggest that inward FDI into China leads either to spillovers that decline beyond a critical point, or to effects that continue linearly, depending on the ownership of foreign investors and the technological characteristics of the industry concerned. Our analysis yields original insights into the complex pattern of spillover effects from FDI into China, and deeper understanding of its possible causes.
TL;DR: In this paper, the authors argue that the focus has been primarily on path-dependency and learning-based aspects of internationalization, while managerial intentionality and the possibility of managers making deliberate strategic choices towards further internationalization have not been very prominent in the IB literature.
Abstract: Several decades of research in the field of international business have advanced various theories and studies on the internationalization of firms. Our assessment of the literature on internationalization shows that the focus has been primarily on path-dependency and learning-based aspects of internationalization, while managerial intentionality and the possibility of managers making deliberate strategic choices towards further internationalization have not been very prominent in the IB literature. We argue that internationalization paths and processes should be approached as a joint outcome of management intentionality and experience-based learning. In other words, managers are assumed to have the ability and the intention to influence the evolutionary paths of the firm. We derive a future research agenda that calls for the pursuit of this promising and emergent research stream. Moreover, we develop a model integrating managerial intentionality, knowledge/experience and other factors (institutional and selection forces) to explain heterogeneous outcomes of internationalization positions, paths and processes.
TL;DR: In this paper, the authors combine data on international trade linkages with network methods to examine the global trading system as an interdependent complex network, and suggest new network-based measures of international economic integration, at both a global system-wide level and a local country level.
Abstract: We combine data on international trade linkages with network methods to examine the global trading system as an interdependent complex network. We map the topology of the international trade network, and suggest new network-based measures of international economic integration, at both a global system-wide level and a local country level. We develop network-based measures that incorporate not only the volume of trade but also the influence that a country has on the international trading system. These measures incorporate the structure and function of the network, and may provide a more meaningful approach to globalization than current measures based on trade volumes. We find that, in terms of participation and influence in the network, global trade is hierarchical, with a core–periphery structure at higher levels of trade, though integration of smaller countries into the network increased considerably over the 1990s. The network is strongly ‘balkanized’ according to geography of trading partners, but not as strongly by income or legal origin. Using these new measures we find that a country's position in the network has substantial implications for economic growth. We therefore suggest that a network approach to international economic integration has potential for useful applications in international business, finance and development.
TL;DR: In this article, the impact of cross-national knowledge transfer on firm innovative performance was examined from a resource-based perspective, and the results suggest that innovative performance is a curvilinear function of the international knowledge content used by a firm to innovate.
Abstract: This study examines the determinants of international knowledge flow. From a resource-based perspective, it evaluates the impact of cross-national knowledge transfer on firm innovative performance. Based on 56,027 US patents owned by 53 selected firms in the US-based pharmaceutical industry, the results suggest that innovative performance is a curvilinear function of the international knowledge content used by a firm to innovate. As hypothesized, it was found that at (1) low and moderate levels of international knowledge content, a firm's strategy to transfer international knowledge improves its innovative performance, and at (2) higher levels of international knowledge content, there are diminishing marginal returns to transferring knowledge from overseas.
TL;DR: In this paper, a study of 133 expatriates from 14 MNCs indicated that the main determinant of repatriate retention is the availability of repatriation support programs, and an emerging one, which focuses on individual career activism in a changing employment context.
Abstract: This paper reviews and integrates two perspectives on repatriate retention: a traditional one, which suggests that the main determinant of repatriate retention is the availability of repatriation support programs; and an emerging one, which focuses on individual career activism in a changing employment context. Results of a study of 133 expatriates from 14 MNCs indicate that both views contribute to our understanding of repatriate retention. Building on the results of our study, we put forward a framework to guide future research.
TL;DR: In this article, the authors examine the pattern of entry into international markets for a set of international new ventures and show that they need not be a distinct breed of firms, as previous research has portrayed, and demonstrate that the decision to internationalize or not should be considered jointly with the capacity allocation decision to specific international markets, as analysing these separately may lead to biased results.
Abstract: There is a small but theoretically important literature on ‘born-globals’ or international new venture firms that positions itself in contrast to the more established sequential international entry literature. In this paper we examine the pattern of entry into international markets for a set of international new ventures and show that they need not be a distinct breed of firms, as previous research has portrayed. Absent a specific technological advantage, the decision for a new venture to internationalize at inception is influenced by the size of its home market and by its production capacity, as well as by cultural and economic forces that also influence other more traditional firms that stage their entry into international markets. Most importantly, we demonstrate that the decision to internationalize or not should be considered jointly with the capacity allocation decision to specific international markets, as analysing these separately may lead to biased results.
TL;DR: This paper examined knowledge flows between foreign multinational companies (MNCs) and host country organizations in 30 countries and found that in technologically advanced countries, knowledge outflows to foreign MNCs greatly outweigh knowledge inflows.
Abstract: We use patent citation data to examine knowledge flows between foreign multinational companies (MNCs) and host country organisations in 30 countries. We find not just significant knowledge inflows from foreign MNCs to host country organisations, but also significant outflows back from the host country to foreign MNCs. In fact, in technologically advanced countries, knowledge outflows to foreign MNCs greatly outweigh knowledge inflows. Even in technologically less advanced countries, knowledge outflows are only slightly weaker than inflows. Additional analysis shows that the exact pattern varies across sectors within a country, depending on the country's expertise in individual sectors. Finally, knowledge inflows and outflows appear to track personnel flows between foreign MNCs and host country organisations.