Overcoming the Liability of Foreignness
TL;DR: In this article, the authors addressed the question of whether firms in a competitive, globally integrated environment face a "liability of foreignness" and to what extent either importing home-country organizational capabilities or copying the practices of successful local firms can help them overcome this liability.
Abstract: This study addressed the question of whether firms in a competitive, globally integrated environment face a “liability of foreignness” and to what extent either importing home-country organizational capabilities or copying the practices of successful local firms can help them overcome this liability. Predictions were tested with a paired sample of 24 foreign exchange trading rooms of major Western and Japanese banks in New York and Tokyo. Results support the existence of a liability of foreignness and the role of a firm's administrative heritage in providing competitive advantage to its multinational subunits. They also highlight the difficulty firms face in copying organizational practices from other firms.
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TL;DR: The Uppsala internationalization process model was revisited in the light of changes in business practices and theoretical advances that have been made since 1977 as mentioned in this paper, and the change mechanisms in the revised model are essentially the same as those in the original version, although they add trust-building and knowledge creation, the latter to recognize the fact that new knowledge is developed in relationships.
Abstract: The Uppsala internationalization process model is revisited in the light of changes in business practices and theoretical advances that have been made since 1977. Now the business environment is viewed as a web of relationships, a network, rather than as a neoclassical market with many independent suppliers and customers. Outsidership, in relation to the relevant network, more than psychic distance, is the root of uncertainty. The change mechanisms in the revised model are essentially the same as those in the original version, although we add trust-building and knowledge creation, the latter to recognize the fact that new knowledge is developed in relationships.
3,700 citations
TL;DR: In this paper, the authors examine organizational legitimacy in the context of the multinational enterprise (MNE) and explore its effects on MNE legitimacy, including internal versus external legitimacy and positive and negative legitimacy spillovers.
Abstract: We examine organizational legitimacy in the context of the multinational enterprise (MNE). After discussing three types of complexity (of the legitimating environment, the organization, and the process of legitimation) that MNEs typically face, we explore their effects on MNE legitimacy. In particular, we distinguish between the legitimacy of the MNE as a whole and that of its parts, and we develop propositions that include issues of internal versus external legitimacy and positive and negative legitimacy spillovers.
2,685 citations
TL;DR: In this article, the authors argue that an institution-based view of international business strategy has emerged and is positioned as one leg that helps sustain the "strategy tripod" (the other two legs consisting of the industry- and resource-based views).
Abstract: Leveraging the recent research interest in emerging economies, this Perspective paper argues that an institution-based view of international business (IB) strategy has emerged. It is positioned as one leg that helps sustain the “strategy tripod” (the other two legs consisting of the industry- and resource-based views). We then review four diverse areas of substantive research: (1) antidumping as entry barriers; (2) competing in and out of India; (3) growing the firm in China; and (4) governing the corporation in emerging economies. Overall, we argue that an institution-based view of IB strategy, in combination with industry- and resource-based views, will not only help sustain a strategy tripod, but also shed significant light on the most fundamental questions confronting IB, such as “What drives firm strategy and performance in IB?”
2,675 citations
01 Jan 2008
TL;DR: In this article, the authors argue that rational actors make their organizations increasingly similar as they try to change them, and describe three isomorphic processes-coercive, mimetic, and normative.
Abstract: What makes organizations so similar? We contend that the engine of rationalization and bureaucratization has moved from the competitive marketplace to the state and the professions. Once a set of organizations emerges as a field, a paradox arises: rational actors make their organizations increasingly similar as they try to change them. We describe three isomorphic processes-coercive, mimetic, and normative—leading to this outcome. We then specify hypotheses about the impact of resource centralization and dependency, goal ambiguity and technical uncertainty, and professionalization and structuration on isomorphic change. Finally, we suggest implications for theories of organizations and social change.
2,134 citations
TL;DR: In this paper, the authors draw on a variety of cognate literatures to discuss the field-level structural characteristics and organizational attributes that shape institutional complexity and explore the repertoire of strategies and structures that organizations deploy to cope with multiple, competing demands.
Abstract: Organizations face institutional complexity whenever they confront incompatible prescriptions from multiple institutional logics. Our interest is in how plural institutional logics, refracted through field-level structures and processes, are experienced within organizations and how organizations respond to such complexity. We draw on a variety of cognate literatures to discuss the field-level structural characteristics and organizational attributes that shape institutional complexity. We then explore the repertoire of strategies and structures that organizations deploy to cope with multiple, competing demands. The analytical framework developed herein is presented to guide future scholarship in the systematic analysis of institutional complexity. We conclude by suggesting avenues for future research.
2,129 citations
Cites background from "Overcoming the Liability of Foreign..."
...Most analyses of blended hybridization concern attempts to combine and layer “practices” taken from different logics into a single organization (eg, Binder, 2007 ; Chen & O'Mahoney, 2011 ; D'Aunno et al, 1991 ; Lounsbury & Crumley, 2007 ; Pache & Santos, 2011 ; Rao et al, 2003 ; Smets et al, forthcoming ; Weaver et al, 1999 ; Zaheer, 1995 ; Tracey et al, 2011 )....
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...…and layer “practices” taken from different logics into a single organization (e.g., Binder, 2007; Chen & O’Mahoney, 2011; D’Aunno et al., 1991; Lounsbury & Crumley, 2007; Pache & Santos, 2011; Rao et al., 2003; Smets et al., forthcoming; Weaver et al., 1999; Zaheer, 1995; Tracey et al., 2011)....
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References
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TL;DR: In this article, the authors examined the link between firm resources and sustained competitive advantage and analyzed the potential of several firm resources for generating sustained competitive advantages, including value, rareness, imitability, and substitutability.
46,648 citations
"Overcoming the Liability of Foreign..." refers background in this paper
...Resource-based views of strategy (Lippman and Rumelt, 1982; Barney 1991; Winter, 1991) have also stressed the importance of firm-specific resources and organizational capabilities in providing sustainable competitive advantage to firms....
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TL;DR: In this paper, the authors argue that rational actors make their organizations increasingly similar as they try to change them, and describe three isomorphic processes-coercive, mimetic, and normative.
Abstract: What makes organizations so similar? We contend that the engine of rationalization and bureaucratization has moved from the competitive marketplace to the state and the professions. Once a set of organizations emerges as a field, a paradox arises: rational actors make their organizations increasingly similar as they try to change them. We describe three isomorphic processes-coercive, mimetic, and normative—leading to this outcome. We then specify hypotheses about the impact of resource centralization and dependency, goal ambiguity and technical uncertainty, and professionalization and structuration on isomorphic change. Finally, we suggest implications for theories of organizations and social change.
32,981 citations
TL;DR: In this article, the bias that results from using non-randomly selected samples to estimate behavioral relationships as an ordinary specification error or "omitted variables" bias is discussed, and the asymptotic distribution of the estimator is derived.
Abstract: Sample selection bias as a specification error This paper discusses the bias that results from using non-randomly selected samples to estimate behavioral relationships as an ordinary specification error or «omitted variables» bias. A simple consistent two stage estimator is considered that enables analysts to utilize simple regression methods to estimate behavioral functions by least squares methods. The asymptotic distribution of the estimator is derived.
23,995 citations
Posted Content•
TL;DR: In this paper, the authors developed an evolutionary theory of the capabilities and behavior of business firms operating in a market environment, including both general discussion and the manipulation of specific simulation models consistent with that theory.
Abstract: This study develops an evolutionary theory of the capabilities and behavior of business firms operating in a market environment. It includes both general discussion and the manipulation of specific simulation models consistent with that theory. The analysis outlines the differences between an evolutionary theory of organizational and industrial change and a neoclassical microeconomic theory. The antecedents to the former are studies by economists like Schumpeter (1934) and Alchian (1950). It is contrasted with the orthodox theory in the following aspects: while the evolutionary theory views firms as motivated by profit, their actions are not assumed to be profit maximizing, as in orthodox theory; the evolutionary theory stresses the tendency of most profitable firms to drive other firms out of business, but, in contrast to orthodox theory, does not concentrate on the state of industry equilibrium; and evolutionary theory is related to behavioral theory: it views firms, at any given time, as having certain capabilities and decision rules, as well as engaging in various ‘search' operations, which determines their behavior; while orthodox theory views firm behavior as relying on the use of the usual calculus maximization techniques. The theory is then made operational by the use of simulation methods. These models use Markov processes and analyze selection equilibrium, responses to changing factor prices, economic growth with endogenous technical change, Schumpeterian competition, and Schumpeterian tradeoff between static Pareto-efficiency and innovation. The study's discussion of search behavior complicates the evolutionary theory. With search, the decision making process in a firm relies as much on past experience as on innovative alternatives to past behavior. This view combines Darwinian and Lamarkian views on evolution; firms are seen as both passive with regard to their environment, and actively seeking alternatives that affect their environment. The simulation techniques used to model Schumpeterian competition reveal that there are usually winners and losers in industries, and that the high productivity and profitability of winners confer advantages that make further success more likely, while decline breeds further decline. This process creates a tendency for concentration to develop even in an industry initially composed of many equal-sized firms. However, the experiments conducted reveal that the growth of concentration is not inevitable; for example, it tends to be smaller when firms focus their searches on imitating rather than innovating. At the same time, industries with rapid technological change tend to grow more concentrated than those with slower progress. The abstract model of Schumpeterian competition presented in the study also allows to see more clearly the public policy issues concerning the relationship between technical progress and market structure. The analysis addresses the pervasive question of whether industry concentration, with its associated monopoly profits and reduced social welfare, is a necessary cost if societies are to obtain the benefits of technological innovation. (AT)
22,566 citations
Book•
01 Nov 1980
TL;DR: In his book Culture's Consequences, Geert Hofstede proposed four dimensions on which the differences among national cultures can be understood: Individualism, Power Distance, Uncertainty Avoidance and Masculinity as mentioned in this paper.
Abstract: In his bestselling book Culture's Consequences, Geert Hofstede proposed four dimensions on which the differences among national cultures can be understood: Individualism, Power Distance, Uncertainty Avoidance and Masculinity. This volume comprises the first in-depth discussion of the masculinity dimension and how it can help us to understand differences among cultures. The book begins with a general explanation of the masculinity dimension, and discusses how it illuminates broad features of different cultures. The following parts apply the dimension more specifically to gender (and gender identity), sexuality (and sexual behaviour) and religion, probably the most influential variable of all. Hofstede closes the book with a synthesizing statement about cultural values as they are linked to sexuality, gender and religion.
19,826 citations