scispace - formally typeset
Search or ask a question

Showing papers in "Journal of International Business Studies in 2010"


Journal ArticleDOI
TL;DR: In this article, the authors who submit manuscripts to JIBS that appear to suffer from common method variance (CMV) are asked to perform validity checks and resubmit their manuscripts.
Abstract: JIBS receives many manuscripts that report findings from analyzing survey data based on same-respondent replies. This can be problematic since same-respondent studies can suffer from common method variance (CMV). Currently, authors who submit manuscripts to JIBS that appear to suffer from CMV are asked to perform validity checks and resubmit their manuscripts. This letter from the Editors is designed to outline the current state of best practice for handling CMV in international business research.

2,640 citations


Journal ArticleDOI
TL;DR: This article proposed a set of multidimensional measures, including economic, financial, political, administrative, cultural, demographic, knowledge, and global connectedness, as well as geographic distance.
Abstract: Cross-national distance is a key concept in the field of management. Previous research has conceptualized and measured cross-national differences mostly in terms of dyadic cultural distance, and has used the Euclidean approach to measuring it. In contrast, our goal is to disaggregate the construct of distance by proposing a set of multidimensional measures, including economic, financial, political, administrative, cultural, demographic, knowledge, and global connectedness as well as geographic distance. We ground our analysis and choice of empirical dimensions on institutional theories of national business, governance, and innovation systems. In order to overcome the methodological limitations of the Euclidean approach, we calculate dyadic distances using the Mahalanobis method, which is scale-invariant and takes into consideration the variance–covariance matrix. We empirically analyze four different foreign expansion choices of US companies to illustrate the importance of disaggregating the distance construct and the usefulness of our distance calculations, which we make freely available to managers and scholars.

981 citations


Journal ArticleDOI
TL;DR: In this paper, a meta-analysis of 108 empirical studies on processes and performance in 10,632 teams was conducted, and it was found that cultural diversity leads to process losses through task conflict and decreased social integration, but to process gains through increased creativity and satisfaction.
Abstract: Previous research on the role of cultural diversity in teams is equivocal, suggesting that cultural diversity's effect on teams is mediated by specific team processes, and moderated by contextual variables. To reconcile conflicting perspectives and past results, we propose that cultural diversity affects teams through process losses and gains associated with increased divergence and decreased convergence. We examine whether the level (surface-level vs deep-level) and type (cross-national vs intra-national) of cultural diversity affect these processes differently. We hypothesize that task complexity and structural aspects of the team, such as team size, team tenure, and team dispersion, moderate the effects of cultural diversity on teams. We test the hypotheses with a meta-analysis of 108 empirical studies on processes and performance in 10,632 teams. Results suggest that cultural diversity leads to process losses through task conflict and decreased social integration, but to process gains through increased creativity and satisfaction. The effects are almost identical for both levels and types of cultural diversity. Moderator analyses reveal that the effects of cultural diversity vary, depending on contextual influences, as well as on research design and sample characteristics. We propose an agenda for future research, and identify implications for managers.

902 citations


Journal ArticleDOI
TL;DR: In this article, the authors examine the co-evolution of MNE activities and institutions external and internal to the firm, and highlight the scope for firm-level creativity and institutional entrepreneurship that may lead to coevolution with the environment.
Abstract: This paper examines the co-evolution of MNE activities and institutions external and internal to the firm. We develop a theoretical framework for this analysis that draws on the more recent writings of Douglass North on institutions as a response to complex forms of uncertainty associated with the rise in global economic interconnectedness, and of Richard Nelson on the co-evolution of technology and institutions. We link historical changes in the character of MNE activities to changes in the institutional environment, and highlight the scope for firm-level creativity and institutional entrepreneurship that may lead to co-evolution with the environment. We argue that the main drivers for institutional entrepreneurship are now found in the increasing autonomy of MNE subsidiaries. Thus MNE agency derives from more decentralized forms of experimentation in international corporate networks, which competence-creating nodes of new initiatives can co-evolve with local institutions. Unlike most other streams of related literature, our approach connects patterns of institutional change in wider business systems with more micro processes of variety generation and experimentation within and across individual firms. This form of co-evolutionary analysis is increasingly important to understanding the interrelationships between MNE activities and public policy.

795 citations


Journal ArticleDOI
TL;DR: In this article, the authors argue that international acquisitions facilitate internalization of tangible and intangible resources that are both difficult to trade through market transactions and take time to develop internally, thus constituting an important strategic lever of value creation for emerging economy firms.
Abstract: While overseas acquisitions by emerging-economy firms are gaining increased attention from the business press, our understanding of whether and why this inorganic mode of international expansion creates value to acquirer firms is limited. We argue that international acquisitions facilitate internalization of tangible and intangible resources that are both difficult to trade through market transactions and take time to develop internally, thus constituting an important strategic lever of value creation for emerging-economy firms. Furthermore, the magnitude of value created will be higher when the target firms are located in advanced economic and institutional environments: country markets that carry the promise of higher quality of resources, and therefore, stronger complementarity to the existing capabilities of emerging-economy firms. An event study of 425 cross-border acquisitions by Indian firms during 2000–2007 supports our predictions.

554 citations


Journal ArticleDOI
TL;DR: The 2010 Journal of International Business Studies (JIBS) special issue on Culture in International Business Research as discussed by the authors is a collection of 10 articles on culture and IB, all of which were submitted to the editorial team led by JIBS Editorin-Chief Lorraine Eden.
Abstract: Journal of International Business Studies (2010) 41, 1259–1274. doi:10.1057/jibs.2010.41 OVERVIEW OF 41.8: HOFSTEDE AND GLOBE IN CROSS-CULTURAL RESEARCH While Hofstede’s work was not the first systematic study on crossnational cultures, his seminal book, Culture’s Consequences: International Differences in Work-Related Values (1980), succeeded in putting cross-cultural analysis at the forefront of international business (IB) research. In a later paper, he boldly asserted that the “business of international business is culture” (1994: 1). Despite the criticisms that have been voiced against his work (see McSweeney, 2002; Oyserman, Coon, & Kemmelmeier, 2002), Hofstede’s influence on the fields of IB and management is undeniable: according to Harzing’s “Publish or Perish” citation index, as of June 2010 there were over 54,000 citations to his work. This is a remarkable record that attests to, first, the growing popularity of cross-cultural research in light of continued internationalization of the world economy, and second, Hofstede’s personal impact on scholarly research. This JIBS issue brings together 10 articles on culture and IB, all of which were submitted to the editorial team led by JIBS Editorin-Chief Lorraine Eden. While the articles were independently submitted through the regular double-blind reviewing process, the decision to join them in one collection creates, in effect, a Special Issue on “Culture in International Business Research”, which the JIBS editors hope will be widely read and cited by IB scholars. In general terms, the papers in this collection fall into one of two categories: (1) articles and commentaries about conceptual and methodological issues associated with Hofstede’s oeuvre vs the Global Leadership and Organizational Behavior Effectiveness (GLOBE) project’s cultural dimensions, and (2) articles and perspectives that use culture and/or cultural dimensions, as well as the operational measurement thereof, to explain differences in behavior and practices across countries. The common feature of all these scholarly pieces is that they challenge particular assumptions often made too easily in conventional cross-cultural research. The first paper in this collection is a perspective written by Franke and Richey that cautions against “questionable generalizations from small numbers of countries in international business research”. Using statistical analysis to support their assertion, Franke and Richey argue that in order to draw “credible” generalizations in IB, a minimum of 7–10 countries must be used. This is an important message: researchers should never formulate strong conclusions about the impact of cultural dimensions on Journal of International Business Studies (2010) 41, 1259–1274 & 2010 Academy of International Business All rights reserved 0047-2506

554 citations


Journal ArticleDOI
TL;DR: In this paper, the authors examined how institutional configurations, not single institutions, provided companies with institutional capital and argued that competitive advantage in high-tech industries with radical innovation may be supported by combinations of certain institutional conditions: lax employment protection, weak collective bargaining coverage, extensive university training, little occupational training and a large stock market.
Abstract: We examine how institutional configurations, not single institutions, provide companies with institutional capital. Building on the varieties-of-capitalism approach, it is argued that competitive advantage in high-tech industries with radical innovation may be supported by combinations of certain institutional conditions: lax employment protection, weak collective bargaining coverage, extensive university training, little occupational training, and a large stock market. Furthermore, multinational enterprises engage in “institutional arbitrage”: they allocate their activities so as to benefit from available institutional capital. These hypotheses are tested on country-level data for 19 OECD economies in the period 1990 to 2003. A fuzzy-set qualitative comparative analysis yields several interesting findings. A high share of university graduates and a large stock market are complementary institutions leading to strong export performance in high-tech. Employment protection is neither conducive nor harmful to export performance in high-tech. A high volume of cross-border mergers and acquisitions, as a form of institutional arbitrage leading to knowledge flows, acts as a functional equivalent to institutions that support knowledge production in the home economy. Implications of these findings for theory, policy, and the analysis of firm-level behavior are developed.

490 citations


Journal ArticleDOI
TL;DR: In this paper, the authors identify two higher-order dimensions of culture, socially supportive culture (SSC) and performance-based culture (PBC), and relate them to entrepreneurship rates and associated supply-side and demand-side variables available from the Global Entrepreneurship Monitor.
Abstract: This paper is a cross-national study testing a framework relating cultural descriptive norms to entrepreneurship in a sample of 40 nations. Based on data from the Global Leadership and Organizational Behavior Effectiveness project, we identify two higher-order dimensions of culture – socially supportive culture (SSC) and performance-based culture (PBC) – and relate them to entrepreneurship rates and associated supply-side and demand-side variables available from the Global Entrepreneurship Monitor. Findings provide strong support for a social capital/SSC and supply-side variable explanation of entrepreneurship rate. PBC predicts demand-side variables, such as opportunity existence and the quality of formal institutions to support entrepreneurship.

487 citations


Journal ArticleDOI
TL;DR: In this article, the authors investigate the relationship between capabilities, resources, and international performance among entrepreneurial firms in an emerging economy, and demonstrate support for the mediating role of capabilities in the relation between resources and international performances.
Abstract: This study investigates an under-researched topic: the relationships between capabilities, resources, and international performance among entrepreneurial firms in an emerging economy. We combine the resource-based view of the firm and the capability-building perspective of rent creation to shed light on the crucial role of firm-specific capabilities that transform key resources into performance outcomes. Employing a large sample of Chinese entrepreneurial firms, our investigation demonstrates that while the resources of institutional capital and managerial ties are important in the internationalization effort, their effects on international performance are channeled through each firm's adaptive capability. This adaptive capability is the firm's ability to coordinate, recombine, and allocate resources to meet the different requirements of foreign markets. Specifically, our research is able to demonstrate support for the mediating role of capabilities in the relationship between resources and international performance. The implications of these findings for theoretical development and future research are discussed.

447 citations


Journal ArticleDOI
TL;DR: In this paper, the authors investigate how formal and informal institutional features influence the likelihood that a cross-border acquisition deal will be completed, as well as the time taken for its completion after announcement.
Abstract: Based on the concepts of North's (1990) political economy of national institutions and economic behavior, we investigate how formal and informal institutional features influence the likelihood that a cross-border acquisition deal will be completed, as well as the time taken for its completion after announcement. Additionally, we study how past experience with completed acquisition deals moderates the effects of institutional differences. We focus on a relatively new context – the pre-completion stage of acquisition processes. We test our hypotheses using data from 2389 announced cross-border acquisition deals in the international business service industry (1981–2001). We find that differences in national formal and informal institutions explain part of the variation in the likelihood that an announced cross-border acquisition deal will be completed, as well as the duration of the deal-making. In addition, organizational learning moderates the effects of institutional distance: past experience with completed cross-border acquisition deals increases the likelihood of a subsequent deal completion in institutionally closer environments, but shortens the deal duration in institutionally distant environments.

418 citations


Journal ArticleDOI
TL;DR: Li et al. as discussed by the authors found that when managers perceive that the legal system can protect their firm's interests, they tend to use explicit contracts rather than relational reliability to safeguard transactions involving risks (i.e., asset specificity, environmental uncertainty, and behavioral uncertainty).
Abstract: Building on institutional and transaction cost economics, this article proposes that legal enforceability increases the use of contract over relational reliability (e.g., beliefs that the other party acts in a non-opportunistic manner) to safeguard market exchanges characterized by non-trivial hazards. The results of 399 buyer–supplier exchanges in China show that: (1) when managers perceive that the legal system can protect their firm's interests, they tend to use explicit contracts rather than relational reliability to safeguard transactions involving risks (i.e., asset specificity, environmental uncertainty, and behavioral uncertainty); and (2) when managers do not perceive the legal system as credible, they are less likely to use contracts, and instead rely on relational reliability to safeguard transactions associated with specialized assets and environmental uncertainty, but not those involving behavioral uncertainty. We further find that legal enforceability does not moderate the effect of relational reliability on contracts, but does weaken the effect of contracts on relational reliability. These results endorse the importance of prior experience (e.g., relational reliability) in supporting the use of explicit contracts, and alternatively suggest that, under conditions of greater legal enforceability, the contract signals less regarding one's intention to be trustworthy but more about the efficacy of sanctions.

Journal ArticleDOI
TL;DR: The authors found that uncertainty avoidance and individualism dimensions of national culture explain managers' earnings discretion across countries, and that this association varies with the strength of investor protection, and the influences of these factors on earnings discretion are conditional on each other.
Abstract: This study hypothesizes and tests whether the degree to which managers exercise earnings discretion relates to their value system (i.e., culture) as well as the institutional features (i.e., legal environment) of their country. We find that uncertainty avoidance and individualism dimensions of national culture explain managers' earnings discretion across countries, and that this association varies with the strength of investor protection. This study extends prior literature by documenting that both national culture and institutional structure are important factors that explain corporate managers' earnings discretion practices around the world, and that the influences of these factors on earnings discretion are conditional on each other.

Journal ArticleDOI
TL;DR: In this paper, the authors investigate how a subsidiary's past initiatives contribute to its bargaining power, and how headquarters' response through granting attention or monitoring affects the realization of the subsidiary's goals.
Abstract: The phenomenon of subsidiary initiative has received increasing attention in recent years, but the consequences of initiatives and the associated dynamics of headquarters–subsidiary relationships have received much less research attention. Building on resource dependence theory and self-determination theory we argue that two basic goals subsidiary managers pursue are to achieve autonomy vis-a-vis corporate headquarters, and influence over other units. We investigate how a subsidiary's past initiatives contribute to its bargaining power, and how headquarters’ response – through granting attention or monitoring – affects the realization of the subsidiary's goals. Using structural equation modeling, our hypotheses are tested by drawing on a sample of 257 subsidiaries located in three different countries (Australia, Canada and the United Kingdom). Our results show that subsidiaries are not able to increase their influence through initiatives unless they get headquarters’ attention. We also find that subsidiary initiatives have a direct effect on subsidiary autonomy, but the caveat is that initiatives also evoke headquarters monitoring, which in turn decreases the subsidiary's autonomy. In addition to providing insights into how subsidiaries can achieve their goals, the paper also sheds light on the critical role headquarters plays in leveraging initiatives, and the influence of individual subsidiaries in the multinational enterprise.

Journal ArticleDOI
TL;DR: This article examined the impact of ownership structures of emerging market firms, which are shaped by local institutions, on the decision of these firms to undertake outward FDI and found that family firms and firms with concentrated ownerships are less likely to invest overseas, and that strategic equity holding by foreign investors facilitates inward FDI.
Abstract: This paper examines the impact of ownership structures of emerging-market firms, which are shaped by local institutions, on the decision of these firms to undertake outward FDI. Our results suggest that family firms and firms with concentrated ownerships (both ubiquitous in emerging markets) are less likely to invest overseas, and that strategic equity holding by foreign investors facilitates outward FDI. We conclude that organisational forms such as family firms, which are optimal outcomes of institutions prevailing in emerging markets, may be suboptimal in a changing business environment in which outward FDI is necessary for access to resources and markets.

Journal ArticleDOI
TL;DR: This article examined the complex relationship between the embeddedness of multinational enterprises (MNEs) in host-country political networks and their long-run competitive positions in host emerging markets and reported the findings of a longitudinal study of the Chinese automobile sector from the early 1980s to the mid 2000s.
Abstract: This paper examines the complex relationship between the embeddedness of multinational enterprises (MNEs) in host-country political networks and their long-run competitive positions in host emerging markets. We report the findings of a longitudinal study of the Chinese automobile sector from the early 1980s to the mid 2000s. Using data from 142 interviews over 11 years, and a wide range of secondary sources, we explore the process through which the value of political embeddedness changed over time in the face of profound and rapid changes in host-country business environments. On the basis of this longitudinal study, the paper unravels the underlying mechanisms that lead to the declining, and even negative, value of deep political embeddedness by MNEs in a politically stable emerging economy.

Journal ArticleDOI
TL;DR: This paper found that there are significant systematic biases in managers' reporting of fund performance and that these biases depend on the accounting and legal environment in a country, and on proxies for the degree of information asymmetry between institutional investors and PE fund managers.
Abstract: To obtain more funds from the institutional investors, private equity (PE) fund managers may report inflated valuations of private investee companies that are not yet sold. However, such overvaluations may result in a reputational cost when those investments are realized. Using evidence from 39 countries, we show that there are significant systematic biases in managers' reporting of fund performance. We find that these biases depend on the accounting and legal environment in a country, and on proxies for the degree of information asymmetry between institutional investors and PE fund managers.

Journal ArticleDOI
TL;DR: This article examined the features of the institutional environment that influence venture capital firms' foreign market entry decisions, and how their effect changes as firms acquire experience, finding that firms gain more international experience, they are more likely to overcome constraints related to these institutions.
Abstract: In recent years, venture capital firms have increasingly turned to foreign countries in search of investment opportunities. The cross-border expansion of venture capital firms presents an interesting case of internationalization, because they are at variance with both conventional portfolio and direct investment models. Given the specific nature of venture capital investing, a new theoretical perspective is needed to understand foreign venture capital investments. This paper contributes to international business research by examining the features of the institutional environment that influence venture capital firms’ foreign market entry decisions, and how their effect changes as firms acquire experience. We report results on 216 American venture capital firms potentially investing in 95 countries during the 1990–2002 period. We find that venture capital firms invest in host countries characterized by technological, legal, financial, and political institutions that create innovative opportunities, protect investors’ rights, facilitate exit, and guarantee regulatory stability, respectively. We also find that as firms gain more international experience, they are more likely to overcome constraints related to these institutions.

Journal ArticleDOI
TL;DR: In this article, the authors argue that both national and organizational cultural differences and cultural integration in the form of cultural convergence and cross-vergence affect knowledge transfer in acquisitions and develop specific hypotheses concerning the nature of these effects, and test their hypotheses with data on international acquisitions carried out by Finnish corporations.
Abstract: In spite of the proliferation of research on cultural differences in international mergers and acquisitions, we lack systematic analyses of the impact of cultural factors on knowledge transfer. In this paper, we argue that both national and organizational cultural differences and cultural integration in the form of cultural convergence and crossvergence affect knowledge transfer in acquisitions. We develop specific hypotheses concerning the nature of these effects, and test our hypotheses with data on international acquisitions carried out by Finnish corporations. The analyses performed show that national cultural differences provide great potential for knowledge transfer in international acquisitions. Furthermore, organizational cultural convergence and crossvergence have a significant positive impact on knowledge transfer. In particular, convergence and crossvergence moderate the impact of national cultural differences on knowledge transfer.

Journal ArticleDOI
TL;DR: In this article, two related but conceptually distinct capability upgrading constructs, knowledge capability upgrading and network capability upgrading, are identified to serve as mediating mechanisms that link entrepreneurial proclivity and LAN-related performance.
Abstract: In spite of a notable interest surrounding the learning advantages of newness (LAN), centered on the emergent international entrepreneurship literature, we have only limited understanding of how young international new ventures (INVs) acquire learning advantages and avoid the liabilities of newness and foreignness in order to achieve LAN-related performance from early internationalization. In this article, two related but conceptually distinct capability upgrading constructs – knowledge capability upgrading and network capability upgrading – are identified to serve as mediating mechanisms that link entrepreneurial proclivity and LAN-related performance. Our findings from a sample of 436 young INVs from China provide supporting evidence for the mediating effect of capability upgrading, particularly among relatively larger new ventures and those operating with cost/price advantages in the international marketplace. This study fills a gap in the under-researched area of literature surrounding INVs from emerging economies, and demonstrates how young international venturing firms can leverage the entrepreneurial dynamics of learning to achieve growth opportunities from early internationalization.

Journal ArticleDOI
TL;DR: In this article, the authors investigate the relationship between a firm's high-level political connections and earnings forecasts made by financial analysts, an important group of financial intermediaries, and find that after controlling for other determinants of forecast accuracy, analysts experience greater difficulty in predicting the earnings of firms with political connections than those of no such connections.
Abstract: The international business (IB) literature has widely recognized political forces as major factors that complicate the strategic decisions of multinational enterprises (MNEs). Analyses by financial intermediaries can help to reduce the risk of information asymmetry caused by such factors. Using firm-level data from 17 jurisdictions between 1997 and 2001, this study investigates the association between a firm's high-level political connections and earnings forecasts made by financial analysts, an important group of financial intermediaries. We find that, after controlling for other determinants of forecast accuracy, analysts experience greater difficulty in predicting the earnings of firms with political connections than those of firms with no such connections. However, in jurisdictions in which corruption level is relatively high, earnings forecast accuracy is influenced more by a firm's political connections. Our findings contribute to the IB literature by demonstrating that political connections exacerbate the information asymmetry between investors and managers, and also that anti-corruption measures can curb the adverse effect of political connections on the corporate information environment. These findings bear the practical implication that MNEs must consider political issues when making resource allocation decisions.

Journal ArticleDOI
TL;DR: A critical summary review of the debate about the Global Leadership and Organizational Behavior Effectiveness (GLOBE) study in JIBS and other journals between November 2006 and the present issue is given in this paper.
Abstract: This is a critical summary review of the debate about the Global Leadership and Organizational Behavior Effectiveness (GLOBE) study in JIBS and other journals between November 2006 and the present issue. Several contributors did not realize that GLOBE used three essential constructs taken from my publications in a sense entirely different from mine: values, practices, and organizational culture. Not recognizing the ensuing confusion, they had no answer for the question in my 2006 review: what did GLOBE really measure? If you do not know what you are talking about, you can continue arguing for ever. Beyond the fuzziness of what is measured, the debate leaves us with an even more fundamental question: what is the use of the GLOBE dimensions?

Journal ArticleDOI
TL;DR: This article examined how national culture affects corporate dividend policies and found that Conservatism is positively related and Mastery negatively related to dividend payouts for a sample of 27,462 firm-years from 21 countries between 1995 and 2007.
Abstract: This interdisciplinary study examines how national culture affects corporate dividend policies. The dividend puzzle is one of the most studied, yet unresolved, issues in financial economics. Prior theoretical and empirical research has suggested several explanations of the dividend puzzle that are rooted mainly in agency, asymmetric information, “bird in hand”, and pecking order theories. The main intuition behind our analysis is that dividend policy may be determined not only by an objective assessment of the severity of agency and asymmetric information problems within a firm, but also by management's and investors’ subjective perceptions of these problems, which hinge on their national culture. Using Schwartz's national culture dimensions, Conservatism and Mastery, we find that Conservatism is positively related and Mastery negatively related to dividend payouts for a sample of 27,462 firm-years from 21 countries between 1995 and 2007. These effects are robust to controls for a wide variety of other determinants of dividend policy – including investor protection, stock market performance, financial system configuration, tax advantage, economic development, and dividend catering premium – and to alternative culture proxies and sub-period windows. Our findings that national culture affects perceptions of and responses to agency and information asymmetry have important implications for policymakers and multinational enterprises.

Journal ArticleDOI
TL;DR: In this article, the authors investigated the impact of returnee entrepreneurs, foreign direct investment intensity and inter-firm employee mobility on innovation in Chinese high-tech firms, and found that the presence of a returnee entrepreneur positively affects innovation and there are significant knowledge spillover effects associated with returnees and multinational enterprise employee mobility.
Abstract: Using panel data analysis, this paper investigates the impact of returnee entrepreneurs, foreign direct investment (FDI) intensity and inter-firm employee mobility on innovation in Chinese high-tech firms. International technology spillovers and internal R&D efforts are found to jointly determine the innovation performance of Chinese high-tech firms, and we report that the presence of returnee entrepreneurs positively affects innovation. In addition, there are significant knowledge spillover effects associated with returnees and multinational enterprise (MNE) employee mobility, and the effects of these two components of international human mobility on local firms' innovation are mutually reinforcing. We also present the distinctive result that FDI intensity in an industry has a negative impact on local innovation. The findings have important implications for practitioners and policymakers.

Journal ArticleDOI
TL;DR: In this paper, the authors compare the Uncertainty Avoidance (UA) dimension of national culture across the Hofstede and GLOBE models, looking at relationships in both data and analysis.
Abstract: This paper compares the Uncertainty Avoidance (UA) dimension of national culture across the Hofstede and GLOBE models, looking at relationships in both data and analysis. Rather than mutual support, we detail major differences and anomalies across the studies. We show how these anomalies are resulting in contradictory explanations in research on national differences across a range of individual-, firm- and country-level phenomena. We clarify the UA measurement in both Hofstede and GLOBE, and find that the two models are measuring different components of the UA construct. We propose a two-component model of UA, namely, UA-stress and UA-rule orientation, and confirm its validity with national culture data from the Hofstede and GLOBE studies, and economic data from the World Bank. We also explain the negative GLOBE UA practices–values relationship using motivational theories. A way forward in future UA-related research is suggested. The Hofstede UA index, the GLOBE UA practices scores and the GLOBE UA values scores should be used within the specific domains that they represent: that is, stress, rule orientation practices and rule orientation aspirations, respectively. Resolving the contradictions in UA between and within Hofstede and GLOBE will help cross-cultural researchers develop more robust theories and more practical recommendations for international business management.

Journal ArticleDOI
TL;DR: The authors integrated the resource-, institution-, and industry-based views to investigate the determinants of export propensity and export intensity, and examined performance outcomes of firms' export behaviors using the longitudinal data of 18,644 domestic private enterprises and foreign wholly owned subsidiaries in China from 2001 to 2005.
Abstract: We integrated the resource-, institution-, and industry-based views to investigate the determinants of export propensity and export intensity, and examined performance outcomes of firms’ export behaviors using the longitudinal data of 18,644 domestic private enterprises and foreign wholly owned subsidiaries in China from 2001 to 2005. We found that institutional environment has significant effects on export behaviors above and beyond the impact of firm competencies and industry factors. Furthermore, firm competencies have differential effects on firms’ export behaviors. Those firms that do not possess distinct firm competencies and those that have cost leadership competencies only do not benefit financially from exporting.

Journal ArticleDOI
TL;DR: This paper examined how the two distinct periods of market-oriented institutional change, institutional friction and institutional convergence, affect business-group affiliated firms and independent firms in their ability to profit from international diversification.
Abstract: Viewing market-oriented institutional change as a two-staged process, we propose that the effects of market-oriented institutional change on two organizational forms – business-group-affiliated and independent firms – are different, depending on the stage of institutional change. Specifically, we examine how the two distinct periods of market-oriented institutional change – that is, institutional friction and institutional convergence – affect business-group-affiliated firms and independent firms in their abilities to profit from international diversification. Using data on 140 Korean manufacturing multinational firms from 1993 to 2003, we find that emerging-economy firms face an international diversification discount – a negative relationship between international diversification and firm performance. We also find that business group affiliation affects the international diversification discount differently during the two periods of market-oriented institutional change, particularly when firm performance is measured by the market-to-book value (MBV). The moderating effect of business group affiliation on the relationship between international diversification and MBV is negative during the institutional frictions period, but becomes positive during the institutional convergence period in the later stage of institutional change. Our findings warn against viewing market-oriented institutional change as a discrete event, highlighting the importance of recognizing the qualitatively distinctive nature of different periods of market-oriented institutional change in future research.

Journal ArticleDOI
TL;DR: In this paper, the authors argue that interstate military conflict and security alliances, as two central features of interstate security relations, often change both government policies toward international business and investor expectations of political risk.
Abstract: Although multinationals operate under cross-border jurisdictions, the relevance of interstate security relations to international business has received little attention. Despite the impressive accumulation of knowledge in international business and international relations, the two intellectual communities have largely ignored the insights from each other. In this article, we seek to bridge this gap. We argue that interstate military conflict and security alliances, as two central features of interstate security relations, often change both government policies toward international business and investor expectations of political risk. From the perspectives of both states and investors, military conflict should reduce bilateral investment whereas security alliances increase it. Our empirical analysis applies the system GMM estimator to a gravity model of bilateral investment flows for 1117 directed dyads among 58 countries from 1980 to 2000. Among 18 countries whose per capita real incomes remain consistently above 12,000 constant dollars, the security factors do not affect bilateral investment; in the high-income/low-income dyads, interstate military conflict and security alliances significantly influence bilateral investment as expected. The findings depict two separate realms in which international politics does and does not interfere with international business, helping us improve political risk assessments and understand the interactions between states and firms.

Journal ArticleDOI
TL;DR: In this paper, the authors show that institutional hazards are more negatively related to vertical foreign activity than to horizontal foreign activity, while cultural hazards can be reduced or resolved once they materialize while governance hazards cannot.
Abstract: Prior studies have shown that institutional hazards in the form of formal governance deficiencies and informal cultural distance are both negatively related to the amount of foreign multinational activity in countries We argue that the strength of these negative relationships varies systematically with the type of foreign activity (horizontal or vertical) and the type of institutional hazard (governance or cultural) Because institutional hazards striking vertical affiliates generally also have negative consequences for other parts of a multinational enterprise (MNE) while those striking horizontal affiliates do not, we hypothesize that institutional hazards are more negatively related to vertical foreign activity than to horizontal foreign activity Since cultural hazards can generally be reduced or resolved once they materialize while governance hazards cannot, we also hypothesize that the impact of governance hazards on each type of foreign activity is more negative than the impact of cultural hazards on that type of activity A panel data analysis of sales by US foreign affiliates to affiliated and local unaffiliated customers over the period 1996–2004 lends support to these hypotheses Our findings thus show that the impact of institutional hazards on foreign MNE activity is more complex than previously assumed

Journal ArticleDOI
TL;DR: In this paper, the authors conceptualized terrorism in relation to international business and developed a theoretical grounding for terrorism research by drawing on the literature from IB, economics, political science, and other fields.
Abstract: Terrorism threatens international business (IB) through its direct and indirect effects. As governments tighten security at public sites, businesses have become more attractive terrorist targets, with important implications for the operations and performance of multinational firms. While terrorism has been substantially studied in other fields, there has been little scholarly research to address terrorism and the distinctive challenges that it poses for IB. In this article we conceptualize terrorism in relation to IB. We provide background on the dimensions and effects of terrorism, and develop a theoretical grounding for terrorism research by drawing on the literature from IB, economics, political science, and other fields. After discussing findings from the literature review, we offer a comprehensive agenda for future research regarding the relationship between terrorism and IB. Our agenda emphasizes the effects of terrorism, organizational preparedness, company strategy and performance, global supply chain and distribution channels, and human resource issues. Our review helps establish a baseline for future empirical research. Consistent with the early stages of research, IB scholars are encouraged to offer useful perspectives and effective solutions that shed needed light on terrorism and help reduce its destructive effects for IB and multinational firms.

Journal ArticleDOI
TL;DR: The authors examined the boundaries of real options logic with an application to joint ventures (JVs) and found that only exogenous uncertainty will have the impact predicted by real options theory on a foreign investor's choice of how large an equity share to take in a JV.
Abstract: This paper examines the boundaries of real options logic, with an application to joint ventures (JVs). We distinguish between forms of uncertainty that are resolved endogenously and those that are resolved exogenously, and theorize that only exogenous uncertainty will have the impact predicted by real options theory on a foreign investor's choice of how large an equity share to take in a JV. We theorize that macroeconomic and institutional variables generate exogenous uncertainty whereas, by contrast, cultural distance and choices pertaining to corporate scope and product or process development activities involve endogenous sources of uncertainty that investors can both assess and act upon without having to “wait and see”. Using a sample of 6472 Sino-foreign JVs, we find support for our predictions. We discuss and implement proper methods to test for the existence of null effects, as is relevant to establish the boundaries of a theory such as real options theory. We draw implications for research and practice on JVs – specifically equity share decisions, which deserve more attention – and real options, including suitable uses and desirable extensions of the concept.