Showing papers in "Management International Review in 2008"

Enhancing the Trustworthiness of Qualitative Research in International Business

Abstract: Reliability, validity, generalisability and objectivity are fundamental concerns for quantitative researchers. For qualitative research, however, the role of these dimensions is blurred. Some researchers argue that these dimensions are not applicable to qualitative research and a qualitative researcher’s tool chest should be geared towards trustworthiness and encompass issues such as credibility, dependability, transferability and confirmability. This paper advocates the use of formalised and software-based procedures for the analysis and interpretation of qualitative interview data. It is argued that International Business research, with a focus on international datasets, equivalence issues, multiple research environments and multiple researchers, will benefit from formalisation. The use of software programmes is deemed to help to substantiate the analysis and interpretation of textual interview data.

Historic and Emergent Trends in Chinese Outward Direct Investment

Abstract: A substantial body of literature has grown on the prominence of China as a recipient of foreign direct investment (FDI) and its consequences for national economic development and management practice (Branstetter and Lardy, 2006). By contrast, much less attention has been paid to China’s position as an FDI source. Given that China attracted an annual average FDI inflow of around US$29bn (or more than 7% of the world’s total) in the 1990s, but contributed less than US$2.5bn (around 0.6%) to global outflows, this is perhaps not surprising (UNCTAD, 2006). However, the sharp growth in Chinese outward direct investment (ODI) evident since 2002 (illustrated in Figure 7.1) combined with a number of recent high profile attempts by Chinese enterprises to acquire North American and European firms have brought into relief China’s rising status and potential as an investor nation. This potential is recognised in a recent UNCTAD survey of investment promotion agencies which predicts that China will become a ‘top three’source country for FDI before the end of 2008 (UNCTAD, 2005). It is also highlighted by the Director-General of UNIDO, Kandeh Yumkella, who suggests that annual flows of Chinese outbound investment are likely to reach US$60bn by 2010 (MOFCOM, 2006). If growth rates in Chinese ODI continue and these predictions are realised, China’s contribution to global FDI flows is likely to approximate current outflows of the leading industrialised countries.

The importance of language in international knowledge transfer

Abstract: and Key Results In this article, we examine the effects of language on the transfer of knowledge within multinational companies. We unbundle language from the culture box and use the basic communication model to show how language affects all stages. We also examine a range of influences — cost, transfer medium, teams, networks, trust, staff movements and motivation — on international knowledge transfer to demonstrate how language effects their operation. We develop the concept of language as a “reconfiguration agent” to explain its extensive, pervasive, on-going and system-altering characteristics.

Factors affecting perceptions of the choice between acquisition and greenfield entry: The case of Western FDI in an emerging market

Abstract: and Key Results • This study provides a comprehensive account of foreign establishment mode strategies of firms investing in Turkey. The results of the logistic regression modeling provide support to the hypothesized relationships that take into account the impact of host country specific motives of MNEs on their choice between acquisitions and greenfield investments. • The host country motives quality of inputs and market potential have significant negative coefficients, indicating that an MNE will favor the acquisition mode over a greenfield mode as the relative importance of both motives increases. • The host country motive of investment risk has a significant positive coefficient, which increases the likelihood of the venture being a greenfield investment. • Our results also show that the main investing firm specific and subsidiary level determinants of FDI modal choice identified in prior research also influence the establishment mode choice of Western MNEs when investing in Turkey. Parent diversity, previous commercial association, ownership pattern and resource-intensiveness of the target industry have the expected impact on the foreign investor’s choice between a greenfield investment and an acquisition. • No support is found, however, for the impact of cultural distance and foreign parent size on establishment mode choice. Similarly, the control variables of home region of the investing firm, timing of entry and industrial sector of investment do not affect modal choice.

Home Country Image, Country Brand Equity and Consumers’ Product Preferences: An Empirical Study

Abstract: This study applies the construct of brand equity in a country context, and measures the value-added with which the name of a country endows a product or a brand as perceived by the individual consumer.

A new perspective on the regional and global strategies of multinational services firms

Abstract: and Key Results We explore the differences in international strategy between multinational enterprises (MNEs) in services and manufacturing, especially in terms of their international diversification, as measured by their sales and asset dispersion. Our longitudinal data show that the largest MNEs in services have a much stronger home-region orientation than manufacturing MNEs. Large MNEs in the services sector average 83.9 percent of their sales in their home region, which is significantly higher than large manufacturing firms at 65.6 percent. We explore the possible reasons for the relative lack of globalization of services firms. The two main reasons are: the difficulty of adapting separately upstream activities and downstream activities in high distance host environments, and the difficulty of selecting activity locations as a function of supply side criteria. We offer a refinement of regional strategy theory applicable to services MNEs.

Knee Deep in the Big Muddy: The Survival of Emerging Market Firms in Developed Markets

Abstract: This study of Latin American banks located in the United States employs a resource-based framework to explain how subunits of emerging market firms can overcome the challenges of operating in a developed market.

Corporate governance and international business

Abstract: In a broad sense, corporate governance is about how firms should be governed so that they are run effectively and efficiently. This paper takes a broad perspective on corporate governance mechanisms and considers possible synergies between corporate governance and international business (IB) research.We summarize the papers included in this Focused Issue, and draw out their main contributions to the literature. In so doing, we compare and contrast the four theoretical perspectives concerning corporate governance and IB adopted in the five papers: i.e. transaction cost economics, the resource-based view, agency theory, and institutional theory.Finally, we highlight five research themes (international diversification, business groups, entry modes, subsidiary mandates, and new international ownership structures) where future work explicitly addressing governance issues may prove fruitful.

An Evolutionary Stage Model of Outsourcing and Competence Destruction: A Triad Comparison of the Consumer Electronics Industry

Abstract: and Key Results • Outsourcing has gained much prominence in managerial practice and academic discussions in the last two decades or so. Yet, we still do not understand the full implications of outsourcing strategy for corporate performance. No general explanation has so far been provided for how outsourcing could lead to deterioration in a firm’s competence base. We longitudinally analyze three cases of major consumer electronics manufacturers, Emerson Radio from the U.S., Japan’s Sony and Philips from the Netherlands to understand the dynamic process related to their sourcing strategies. • We develop an evolutionary stage model that relates outsourcing to competence development inside the firm and shows that a vicious cycle may emerge. The evolutionary stage model helps managers understand for which activities and under which conditions outsourcing across borders is not a viable option. • Results suggest that each of these firms had faced a loss of manufacturing competitiveness in its home country, to which it responded by offshoring and then outsourcing production. When a loss of competences occurred, some outsourcing decisions were reversed.

The influence of human capital investment on the exports of services and goods: An analysis of the top 25 services outsourcing countries

Abstract: and Key Results With the rise of the global service economy, and understanding of the export competitiveness of nations is critical for managers seeking offshore export locations, and for government policy makers who wish to bolster the attractiveness of their nation as an exporting location. Services globalization — reflected in the growth of outsourcing and offshoring — calls into question the role of human capital investment, whose effect in past studies has been mixed. Drawing on human capital theory, we developed three propositions and analyzed the effect of human capital investment, infrastructure, and the business environment on the export of services and goods from 25 countries from 1989 to 2003. Human capital did have a significant effect on the exports of goods and services. However, contrary to the expectations of human capital theory, human capital was not significantly more important for services exports than for goods exports. In line with expectations of human capital theory, human capital investment had a greater effect in emerging Asia than in developed countries. These findings have important implications for managers and future research.

Rethinking the paradigm of service internationalisation: Less resource-intensive market entry modes for information-intensive soft services

Abstract: and Key Results The service sector is becoming increasingly important in the global economy; this is especially true for ‘soft’ services involved in providing information and knowledge-based solutions. It has been suggested that soft service firms are restricted to internationalising through market entry modes requiring substantial resource commitment, such as wholly owned subsidiaries and equity based joint ventures. We argue that this assessment is based on overly simplistic assumptions regarding the characteristics of these information-intensive soft service firms. Focusing on the nature of the value-adding activities and operations of these firms, an information transformation model is proposed to describe the value creation process for information-intensive soft service firms. Using the model to represent different types of internationalisation situations yields 10 lower-involvement approaches available to information-intensive soft service firms seeking to enter foreign markets.

How much distance do we need? Revisiting the “National cultural distance paradox”

Abstract: and Key Results This study revisits the “national cultural distance paradox” based on a sample of Japanese foreign direct investment (FDI) in 53 countries and regions over 30 years. Earlier studies on cultural distance assumed linear relationships and showed mixed results. We examine nonlinear relationships between cultural distance (CD) and entry mode and between CD and performance. Results suggest that there is a nonlinear (inverted U-shape) relationship between CD and the choice of a joint venture as the preferred market entry mode, and between CD and performance. We also found that the relationship between CD and performance is moderated by entry mode choice: the nonlinear relationship between CD and performance is stronger for joint ventures than for wholly owned subsidiaries.

Institutional Explanations of Cross-border Alliance Modes: The Case of Emerging Economies Firms

Abstract: Using a sample of 628 cross-border alliances established by emerging economies firms across 25 manufacturing and service industries in 64 host countries in the period 1995-2004, we investigate the effect of institutional factors on the adoption of equity alliance mode. The findings of this study contribute to empirical research in institutional theory, institutional explanations of cross-border alliances and strategic behavior of emerging economies firms. We find support for institutional explanations of the adoption of equity alliance mode by emerging economies firms. We also find that institutional effects are contingent on the alliance location. When emerging economies firms establish alliances in developed host countries, their governance choice is most influenced by the normative pillar, followed by the cognitive pillar, with the regulatory pillar having a negligible effect. When the host countries are emerging economies, the regulatory pillar has the strongest influence followed by the cognitive pillar, with the normative pillar having an insignificant effect.

Learning through International Acquisitions: The Process of Knowledge Acquisition in China

Abstract: and Key Results Research on the process of knowledge learning and absorption in acquisition context has emerged recently. Yet relatively less attention has been paid to the process of knowledge transfer and learning and its impact on successful acquisitions. This paper adopts a process perspective’ to investigate this issue. Based on four international acquisitions in China, it generates new theoretical propositions as well as practical managerial implications. Results reveal the types of knowledge acquired and how it is transferred and learnt to contribute to the success of international acquisitions. The knowledge acquisition and learning process in international context involve three stages: knowledge assessment, knowledge sharing and knowledge assimilation. Foreign acquirers tend to acquire complementary knowledge from local targets, adopt dual management structure and facilitate communications with local personnel in order to achieve the success of acquisitions and future operations.

Innovation in multinational firms: Does cultural fit enhance performance?

Abstract: and Key Results Using a dataset of 139 R&D laboratories located in 21 countries, this study empirically tests whether a fit among R&D laboratory mission and national culture impacts R&D performance. Specifically, we assume that some cultures possess a natural advantage when it comes to capability augmenting tasks, while other cultures are better suited to host capability exploiting tasks. Where the mission of the laboratory is capability exploiting, our results support a positive effect of culture-mission alignment. However, no relationship between mission-culture alignment and performance can be found in case of capability augmenting laboratories.

Performance implications of capability exploitation and upgrading in international joint ventures

Abstract: and Key Results This study investigates (1) how capability exploitation and capability upgrading are associated with IJVs’ financial and competitive outcomes in an emerging market, and (2) how environmental dynamism (the key construct characterizing an emerging market) and interpartner cooperation (the key construct describing an IJV) moderate the effect of capability exploitation and upgrading on IJV performance. Results suggest that IJVs in a foreign emerging market tend to perform better in both financial and competitive terms when they possess greater abilities to exploit current resources contributed by foreign and local partners and to continuously upgrade and develop new capabilities. The contribution of capability exploitation and upgrading to IJV performance is stronger when IJVs operate in a more dynamic environment. When interpartner cooperation is superior, capability exploitation plays a bigger role in improving performance.

Performance of Multinational Firms’ Subsidiaries: Influences of Cumulative Experience

Abstract: In this study, we examine the impact of cumulative experience that arise from a series of sequential entries on the performance of foreign subsidiaries of multinational firms. Drawing upon the literature on organizational learning, we propose that multinational firms acquire different types of experience at the firm level, including general entry experience, entry specific experience, and exporting experience, which exert different influences on their performance. We also investigate the effect of experience on performance at the subsidiary level. Using a dataset of 245 subsidiaries of 81 large U.S. firms in China, we find that firms’ entry specific experience, exporting experience, and subsidiary level experience exhibit significant effects on the return on sales of foreign subsidiaries. Further, the effect of exporting experience gets weaker as firms accumulate more entry specific experience. Firms’ general entry experience, however, is not related to subsidiary performance.

The impact of entry mode choice on foreign affiliate performance: The case of foreign MNEs in South Korea

Abstract: and Key Results This study examines the performance impacts of entry mode choice based on the perceptions of managers of a large sample of foreign MNEs in South Korea. Using an extended transaction costs model, an evaluation of performance relative to predicted entry mode is carried out. We find that affiliate performance is a multidimensional and complex phenomenon, which may be properly explained by multiple factors, including the coordination and control of the affiliate by the MNE, that go beyond initial entry mode choices. Foreign MNEs following the entry mode predicted by the extended transaction costs model showed poorer performance than non-followers in respect of non-financial performance. However, no significant differences were found for financial performance. The findings appear to reinforce a recent call to re-examine transaction costs theory and lend further support for incorporating additional potentially important determinants of affiliate performance.

Regional economic integration and foreign direct investment: The case of NAFTA

Abstract: and Key Results We examine the impact of NAFTA on FDI into the region and the individual member countries. The literature on FDI and regional economic integration suggests that the implementation of NAFTA makes the entire area a more desirable investment location. However, insofar as individual member countries are concerned, the a priori effects are not necessarily unambiguously positive. We find that the implementation of NAFTA had a generally positive effect on inward FDI into the entire region, with the benefits accruing only to the United States and Canada.

Market Size, Legal Institutions, and International Diversification Strategies: Implications for the Performance of Multinational Firms

Abstract: Recognizing that country-specific resources are generally difficult to imitate or diffuse across national boundaries, we propose that home country conditions are key determinants of firms’ strategic choices. By embracing insights from both institutional economics and resource-based view, we identify two country-level environmental constituents – domestic market size and legal institutions – to examine how these resources influence multinational firms’ international diversification strategies. We further propose that home country legal institutions moderate the link between geographic diversification and firm performance. These hypotheses are tested with historical data on 435 multinational firms based in 13 developed economies. Results suggest that a multinational firm’s degree of international diversification has a U-shaped relationship with the size of the firm’s domestic market; firms from civil law countries are more likely to pursue international diversification than their counterparts from common law countries; and the effect of international diversification on firm performance was more pronounced among MNCs from civil law countries.

The Financial and Operating Performance of Chinese Family-Owned Listed Firms

Abstract: and Key Results While existing studies often use sector-level data to explain the phenomenal growth of the Chinese private sector, this paper complements the literature by using firm-level data to conduct a comparative study of performance between family-owned and state-owned firms in China. Taking a population comprising listed firms for the period 1999–2004, we analyze financial and operating performance with reference to five measures: (1) revenue per employee, (2) revenue per unit of cost, (3) net profit per employee, (4) return on assets, and (5) market-to-book ratio. Having controlled for other firm characteristics, such as size, leverage, firm age, sales volatility, innovation and marketing, institutional environment and industry, our results confirm that family-owned firms achieve significantly better performances than state-owned enterprises. These results support the general consensus that China is increasingly reliant on private companies as an engine for economic growth and an employment hub.

Multinational networks during times of economic crisis versus stability

Abstract: and Key Results From a network view of multinational enterprises, we argue that foreign subsidiaries in multinational networks have access to resources in heterogeneous institutional environments, and that by taking advantage of these linkages they can capitalize on the latent flexibility that resides in being part of a multinational network. We compare the performance of subsidiaries during times of economic crisis versus stable periods to determine the environments in which intra- and inter-firm organizational linkages matter most. Results indicate that the enhanced flexibility associated with intra- and inter-firm organizational linkages is more likely to increase the performance of subsidiaries operating in crisis rather than economically stable environments.

Service Multinationals: Their Past, Present, and Future

Abstract: and Key Results This focused issue underscores the growing importance of service sector in the global economy and attempts to fill in the lacunae of research in internationalization of service industries. We stress the need for more systematic research both at the conceptual and empirical level to extend the frontiers of knowledge on service multinationals. Given the rising importance of service sector, it is imperative that international business scholars examine the internationalization of service firms in both developed and developing nations. The focused issue presents papers that delve into different aspects on service multinationals, namely surveying recent academic work on non-manufacturing sector, internationalization and performance, determinants of exports for service firms, regional versus global strategies for service firms, offshoring propensity in information technology industry, and value transformation model for location-intensive and information-intensive software services. Each paper offers a distinct insight into the services sector.

Opening the ‘Non-Manufacturing’ envelope: The next big enterprise for international business research

Abstract: and Key Results This study surveys recent work, published in four International Business journals, that has focused on the non-manufacturing sector which includes the ‘services’ sector. It documents the nature of scholarship in this area, identifies opportunities for future work, highlights some important challenges of undertaking such work, and suggest a few starting points for a more systematic study of this vital sector of the economy. Our findings highlight a largely barren academic landscape vis-a-vis recent academic work pertaining to the non-manufacturing sector in general and services sector per se in particular. Therein lies a monumental opportunity for our discipline as a whole.

The development and sharing of knowledge by Centres of Excellence and transnational teams: A conceptual framework

Abstract: This paper develops a conceptual framework addressing the development and sharing of knowledge by Centres of Excellence and transnational teams, which are important organisational mechanisms used b ...

Internationalization of retail banks: A micro-level study of the multinationality-performance relationship

Abstract: and Key Results This study discusses the underlying reasons for the variant nature of the relationship between multinationality and firm performance in the context of service firms. To date, this line of research has mostly used evidence from manufacturing firms, despite the ever-increasing contribution of service firms to national and global economies. We conduct an exploratory study using case analyses of large European retail banks. We argue that the nature of the multinationality-performance relationship for services is moderated by industry characteristics, market-based factors and firm-specific factors. We conclude that the shape of the curve depicting the multinationality-performance relationship of retail banks experiences substantial variations on a single case level. Our exploratory study of retail banks shows that the multinationality-performance relationship varies significantly depending on banks’ strategic decisions regarding branch network configurations, product portfolios, branding strategies, organizational architecture (HQ-subsidiary relationship), and social networks. Any generalization of the relationship is difficult and prone to error.

FDI Ownership Strategy: A Japanese-US MNE Comparison

Abstract: Much of the extant literature characterizes international joint venture (IJV) as a less stable and less successful form of organization. In this view, the IJV is considered a suboptimal ownership strategy, one where the firm lacks control over its operations, compared to wholly-owned subsidiary (WOS). We tested this widespread view on IJV and WOS by analyzing a large, longitudinal sample of Japanese MNEs, comparing our results to those from US MNEs reported in Desai et al. (2004a) and Gomes-Casseres/Jenkins (2003). Japanese MNEs showed a stronger preference for IJVs over the last two decades as compared to US MNEs. IJV performance exceeded WOS among Japanese firms in most sample years, while WOSs outperformed IJVs among US subsidiaries in all sample years. Clear boundaries exist along the line of country-of-origin, with respect to the generalizability of the extant view toward IJVs.

Entry Modes for Manufacturers’ International After-Sales Service: Analysis of Transaction-specific, Firm-specific and Country-specific Determinants

Abstract: This paper investigates which criteria influence a company’s entry mode choice for its after-sales service in a foreign country. With a focus on the decision between integrative and cooperative entry modes, an empirical study of 80 foreign entry mode decisions by German manufacturing companies identified determinants of particular importance for after-sales service. Country-specific variables exert a dominant influence on entry mode choice. Country risk, fluctuations in demand, and the availability of suitable service partners increase the probability of choosing a cooperative entry mode. Cultural distance from the host country leads to integrative modes. As transaction-specific variables, a difficult service quality evaluation is shown to increase the likelihood of establishing wholly-owned subsidiaries, as are high resource requirements. Service as competitive advantage also leads to the internalization of the service-function. The companies surveyed are highly satisfied with the entry mode chosen for their after-sales service in foreign markets, which implies that managerial implications can be drawn from the results.

Erroneous Learning from the West? A Narrative Analysis of Chinese MBA Cases Published in 1992, 1999 and 2003

Abstract: The last two decades have witnessed an unprecedented transfer of Western management education theories and pedagogies into China and most Chinese MBA programs are now being modeled on their Western counterparts. To gauge the impact of this infusion of Western methods and theories on China’s management educational system, we have conducted a narrative analysis of Chinese MBA teaching cases published before and after this transfer. The holistic approach to management, prevalent in early Chinese MBA cases and typical of traditional Chinese culture, has largely disappeared and Chinese cases now exhibit many of the same weaknesses and deficiencies that have been documented in Harvard Business School cases.

The Drunkard's Search: Looking for 'HRM' in All the Wrong Places

Abstract: and Key Results • Specific concerns have been raised about the ontologies and epistemologies that have dominated HRM research and the concomitant ubiquity of positivistic research methodologies. These concerns have also given rise to calls for more pioneering research framed within alternative paradigms. This paper considers the theoretical and practical value of alternative approaches to the study of HRM. • Results show, drawing on interpretive studies of HRM rooted in different epistemologies, ontologies, and methodologies that a composite body of HRM scholarship is needed, where dominant and emerging approaches to the study of HRM are mutually supportive.