Showing papers on "Multinational corporation published in 1994"

Toward a theory of international new ventures

Abstract: The formation of organizations that are international from inception—international new ventures—is an increasingly important phenomenon that is incongruent with traditionally expected characteristics of multinational enterprises A framework is presented that explains the phenomenon by integrating international business, entrepreneurship, and strategic management theory That framework describes four necessary and sufficient elements for the existence of international new ventures: (1) organizational formation through internalization of some transactions, (2) strong reliance on alternative governance structures to access resources, (3) establishment of foreign location advantages, and (4) control over unique resources

Interunit Communication in Multinational Corporations

Abstract: In this paper we investigate some of the organizational factors that influence subsidiary-headquarters and intersubsidiary communication in multinational companies. Our study is based on data collected from 164 senior managers working in 14 different national subsidiaries within the consumer electronics division of Matsushita, a Japanese company, and 84 senior managers working in nine different national subsidiaries within the same business of N.V. Philips, the Holland-based competitor of Matsushita. We show that while subsidiary autonomy has no discernable influence on interunit communication, interpersonal relationships developed through lateral networking mechanisms such as joint work in teams, taskforces, and meetings have significant positive effects on the frequency of both subsidiary-headquarters and intersubsidiary communication. The findings are consistent in the two companies, one Japanese and the other European, and the underlying theoretical propositions appear applicable across borders.

The effect of national culture on the choice between licensing and direct foreign investment

Abstract: This paper argues that national differences in levels of trust impact perceptions of transactions costs and thereby influence the desirability of internalization and the choice of foreign market entry mode. The paper tests this framework on industry level data from the United States Commerce Department's Benchmark Survey of operations of U. S. -based manufacturing multinational corporations in 1977 and 1982, and shows that cultural differences in trust do influence perceptions of transaction costs and the preference for direct foreign investment across countries.

International human resource policies and practices in japanese, european, and united states multinationals

Abstract: This article presents the results of a survey comparing international human resource policies and practices in Japanese, European, and United States multinational companies. The survey focused on the use of expatriates over local nationals in overseas management positions, adoption of nonethnocentric policies, and incidence of international human resource management problems. Regression analysis using the entire sample indicated that ethnocentric staffing and policies are associated with higher incidence of international human resource management problems. Also, Japanese companies as a group are shown to have more ethnocentric staffing practices and policies, and they experience more international human resource management problems than do American and European firms.

International Investment and Colonial Control: A New Interpretation

Abstract: The impact of economic factors on colonial imperialism in the late nineteenth century has long been a topic of debate. This article examines the expected relationship between different forms of international investment and different patterns of political ties between developed and developing countries. Drawing on the literature on relational contracts and collective action, it argues that direct colonial control was likely to be associated with cross-border investments whose rents were particularly easy to seize or protect, and whose protection did not require multilateral action. Where such rents were difficult to seize or protect unilaterally, colonialism is expected to be less likely. The most common example of the former sort of investment is primary (raw-materials or agricultural) investment; of the latter, multinational manufacturing affiliates. The argument is weighed against both a survey of the qualitative evidence and some simple quantitative evaluations. The approach also has potential applications to more general problems of international conflict and cooperation.

Teams between hierarchy and commitment: change strategies and the ‘internal environment’*

Abstract: The main objective of the article is to put forward a broader resource-based view, outlining the influence exercised by the ‘internal environment’on the conception and implementation of teamworking strategies in two multinational automobile companies. While the influence of various external contingent factors — industry, product, technological environment — is often considered in the literature, the role of a firm's internal resources is mostly neglected. the publicity of greenfield-site teamwork arrangements and the concurrent lack of ‘grounded’research has nurtured the idea that within the same industry environment, a best model of teamwork can be identified. One implication of the resource-based view presented here is that a best model of teamwork may have little relevance for many established companies, where the choice to embrace such a model does not exist. the article analyses companies’approaches to accommodating business policy objectives within their existing structural and historical constraints, including traditional modes of control, management style, and company culture. the article thus identifies firm-specific rather than nation-specific variations within the same industry environment.

Cultural values and the championing process

Abstract: This study examines the relationship between national culture and national preferences for innovation championing strategies using a sample of 24 national offices of a financial services company. T...

The Tortoise Evolution of the Multinational Corporation: Foreign Technological Activity in Swedish Multinational Firms, 1890-1990

Abstract: The tortoise evolution of the multinational corporation : foreign technological activity in Swedish multinational firms 1890-1990

Multinational enterprises, political economy and institutional theory: domestic embeddedness in the context of internationalization

Abstract: There is rising interest in placing the study of the multinational enterprise (MNE) at the core of political economy scholarship. This article attempts to locate the MNE in its outer institutional environments. MNEs are embedded in networks of relations with a number of important external actors, not only governments. These networks manifest marked differences between nations and regions, with differential implications for production and managerial arrangements within the firm, public policy choices and the constellation of MNE‐government relationships. In the distribution of wealth and power, MNEs are situated at the interface of domestic structures in national and regional political economies, and the process of internationalization within global political economic structures. A research agenda for the 1990s should, therefore, incorporate a political economy of the MNE in structures of global competition and cooperation that have institutional underpinnings. This study seeks to address elements...

Home Country Effects of Foreign Direct Investment: Evidence from Sweden

Abstract: This paper examines two broad issues related to foreign investment by Swedish multinationals: first the effects of outward foreign direct investment on domestic investment, exports, and employment, and second, the effects on the domestic economy from the increasing division of labor between the parents and foreign affiliates of Swedish MNCs. The paper summarizes and synthesizes the existing empirical evidence on these matters (much of which has hitherto only been available in Swedish) and discusses some possible long run effects that have not received much attention in the literature.

Alternative Policies for International Transfers of Managers

Abstract: The Policy Problem Should MNCs use expatriates or nationals in management positions or rather what is the appropriate mix of nationalities? This question has been given a lot of attention by both researchers and practitioners[1]. The discussion has revolved around the pros and cons of the different organiza ideals identified by Perlmutter[2] which seem to guide the actions of MNCs and in particular their international transfer of managers. The implications of the ideal for management transfers is in short that an ethnocentric company will tend to use expatriates in key positions abr A polycentric company will use nationals wherever possible and a geocentric MNC will use a mixture of nationals, expatriates and third country nationals. Most MNC managers claim they hold a geocentric ideal and a number of companies have also tried to design a transfer policy which is consistent with this ideal. The management of one MNC in the heavy manufacturing industry, for instance, decided that approximately 10% of the managers of all the companies in the group should be non nationals. It was consistent with top management's attempt to implement a new organizational ideal. One did not succeed, however, to establish the close cooperation between the different personnel departm which was a prerequisite for realizing the objective. The attitudes toward receiving managers from other countries were not at all as favorable as one had expected. In addition the compensation plan did not equalize the after tax income which made certain types of transfers very uneconomical from the individual's point of view. In addition expatriate service was not particularly stressed as a ground for development and promotion. Many managers thus saw expatriate service as too risky in view of their career aspirations. In short the company had not been able to translate the organizational ideal into more specific purposes which could motivate individual managers and groups to engage in transfers. In another MNC, a large petroleum company, one had for a long time been transferring managers on the belief that expatriate service was a good broadening experience. The international transfers had not really been under much scruteny as to their role in the company. Under pressures of economy the company started to analyze the costs and use of international transfers more closely. One came to the conclusion that there were two viable motives for transfers -- getting a job done and staff development. In view of the high costs involved one proposed a better-control system. One required an assessment by the individual's present management of his potential, a clear statement of their career plans for him and, in particular, as definite a statement as possible of the responsibilities which he will assume when the overseas assignment is over. In addition one requires a clear definition of the individual's development/training needs, defined in terms of his present experience and knowledge and what he needs to develop his career as planned. There is a request to consider alternative means of staff development. Through the new control system the company expects to be able to use transfers more effectively. The company did not explicitly relate their use of transfers to an overall organizational ideal. They were hence not able to see the potential of transfers in this broader perspective. During our interviews with a number of MNCs we encountered examples of more specific dilemmas or issues in the international transfer of managers. The length of time for an expatriate assignment was one such dilemma. Some managers felt that two years was a reasonable period of time in order for an individual to get a sufficient experience of the foreign working situation. Others, however, preferred a longer time period in order to minimize transfer costs and get a higher return on the investment in the fixed cost of a transfer. Many expatriates felt that "out of sight, is out of mind" and wanted to return to their home country after a fairly short time. …

Strategic Bridging: A Role for the Multinational Corporation in Third World Development

Abstract: The traditional lending paradigms adopted by international development funding agencies have not been very successful in fostering genuine economic development at the grassroots level in developing Third World countries. Despite good intentions on the part of these multilateral agencies, they sometimes lack perspectives on the unique social, cultural, and ecological conditions affecting development in these countries. Multinational corporations with a more permanent presence and long-term commitment of resources in these countries have egoistic interests in long-term relationship building with stakeholders in host Third World countries. They can provide collaborative mechanisms for partnering international development funding agencies to foster grassroots development efforts in developing countries. Collaboration theory and the concept of strategic bridging as a unique form of collaboration are used as frameworks to analyze a case study involving the role of a multinational firm as an unofficial strategic...

Multinational Companies and Human Resource Management: an Overview of Research Issues1

Abstract: Anthony Ferner, who is Principal Research Fellow in the Industrial Relations Research Unit at the University of Warwick, uses a wide range of literature and recent empirical research to examine the consequences for HRM of central facets of multinational companies – corporate structure and strategy, country of operation and country of origin How, for example, do they impact on the degree of cross-national coordination of human resource policies? Are there distinct ‘national’ cultures that infuse these policies? How does ‘corporate culture’ interact with national management cultures of ‘host’ countries? In considering the implications of the discussion for a future research agenda, he emphasises the need to redress the overwhelming concentration in the existing literature on US and Japanese companies

CEO perspectives on scanning the global hotel business environment.

Abstract: Reports on the first survey of chief executive officers of multinational hotel chains, sponsored by the International Hotel Association. The purpose of the survey was to assess the environmental scanning practices in those hotel firms and to learn how their executives view the uncertainty of the global business environment.

Multinational Enterprises and Industrial Organization: The Case of India

Abstract: Introduction Government Policy and Foreign Direct Investment in India Foreign Enterprises in Indian Industry Overall and Sectoral Shares Determinants of Foreign Shares in Indian Manufacturing A Test of the Internalization Theory Discriminating Characteristics of Foreign and Local Enterprises in Indian Manufacturing Determinants of Profitability of Foreign and Local Enterprises in Indian Manufacturing Export Behaviour of Foreign and Local Enterprises in Indian Manufacturing Summary and Conclusions Postscript Foreign Direct Investment, Technology Acquisition and Exports A Comment on Policy /f003Appendix: The Database: Sources, Methodology and Definitions

New management practices in a multinational corporation: the restructuring of worker representation and rights?

Abstract: This article addresses the strategy of a multinational corporation's approach to implement new management practices within its European operating units. It explores how certain elements of an industrial relations system can facilitate the development of these practices. It argues that a foundation for labour may be being constructed which can condition eventual outcomes.

Taxes, Technology Transfer, and the R&D Activities of Multinational Firms

Abstract: Multinational firms that use domestic technologies in foreign locations are required to pay royalties from foreign users to domestic owners. Foreign governments often tax these royalty payments. High royalty tax rates raise the cost of imported technologies. This paper examines the effect of royalty taxes on the local R&D intensities for foreign affiliates of multinational corporations, looking both at foreign-owned affiliates in the United States and at American-owned affiliates in other countries. The results indicate that higher royalty taxes are associated with greater R&D intensity on the part of affiliates, suggesting that local R&D is a substitute for imported technology.

Beyond free trade : firms, governments, and global competition

Abstract: "Beyond Free Trade" grew from the conviction of David B. Yoffie and some of his colleagues that current debates about world trade are missing the depth and complexity of the tremendous changes taking place in the international economy. In looking at firms that actually move goods, services and capital around the world, the authors incorporate research on industries that cut across all spectrums: high-tech (telecommunications, computers and semiconductors); low-tech (bearings, automobiles and construction equipment); services (insurance); manufacturing; and raw materials. They argue that the invisible hand of Adam Smith and David Ricardo is being replaced by the guiding hands of multinational corporations and governments. As a result, politicians and firms now have the opportunity to structure global competition in new ways.

The Comparative Performance of U.S. and European Multinational Enterprises, 1970-1979

Abstract: Introduction This paper applies the new theory of the multinational enterprise (MNE) to examine the performance of European and U.S. based multinationals. The new theory of the MNE is called the theory of internalization and it has been developed most recently in a book on the internal markets of MNEs, see Rugman (1981). In the next section the essential features of internalization theory are reviewed. This is followed by a discussion of the relevance of internalization compared to non-equity forms of foreign involvement, especially in the European context. Next there is an empirical section which contrasts the (profit) performance of U.S. and European based multinationals. As the European multinationals are found to be somewhat less profitable than their American counterparts the final section develops in more detail an analysis of the reasons for the difference in profitability between European and U.S. MNEs. This includes consideration of the non-economic nature of many state-owned enterprises in Europe and the degree of regulation of European multinationals. The Theory of Internalization The first premise of this study is that a theory of the multinational enterprise (MNE) should be as applicable to European MNEs as to the MNEs based in other home nations such as the United States or Japan. The second premise is that the empirical propositions of a modern theory of the MNE should also apply equally well across the MNEs of all nations. What then is the modern theory of the MNE which can be applied at both a theoretical and empirical level to help explain the performance of European based MNEs? Developed mainly in North America and England, the theory of internalization has been shown by a growing number of scholars to be a suitable explanation of the MNE. The theory integrates elements from industrial organization and international economics. From industrial economics it recognizes the existence of transactions costs and market failure. Under certain conditions, as first demonstrated by Coase (1937) it is more efficient for a firm to create and use an internal market, rather than incur the prohibitive transactions costs of an outside market. Indeed, in some cases of market failure such a regular market may not exist, for example, in the pricing of proprietary information generated within a firm but taking on the attributes of a public good. The assignment of property rights to a firm, and the firm's use of an internal market to monitor and control the use of such a firm specific advantage in knowledge is the essence of internalization. The natural market imperfection cited above (in the failure of a market to price a public good) is one of many such imperfections. In addition, there exist frequently many restrictions on the use of a market. Such restrictions are often imposed by governments and take the forms of regulations, taxes, controls and so on. These serve to distort market prices and again act as an incentive for the firm to create an internal market. When either natural or unnatural market imperfections exist across nations, for example in the case of restrictions on trade such as tariffs, then there is an incentive for the MNE to create an internal market, in the same manner as a domestic firm responds to market failure and regulation. Indeed, as there are many more regulations between nations than within them, there is an even greater incentive for the MNE to have an internal market. The first application of the market imperfections approach in an international context was by Hymer in his 1960 dissertation, subsequently published in Hymer (1976). He identifies imperfections in factor and goods markets, such as monopoly control of raw materials or managerial and research skills, any one of which has led to the development of a firm specific advantage for the MNE. The notion of internalization itself was coined by Buckley and Casson (1976) and it has become a central tenet of the theory of the MNE developed by economists associated with the University of Reading in England. …

The Rise of multinationals in continental Europe

Abstract: Part 1: Continental European multinationals 1850-1992, Geoffrey Jones continuity and change - German foreign direct investment 1850-1990, Harm G. Schroter Swiss multinational enterprise in historical perspective, Harm G. Schroter outward bound - the rise of Dutch multinationals, B.P.A. Gales securing the markets - Swedish multinationals in a historical perspective, Ulf Olsson the multinational companies of Norway, Fritz Hodne. Part 2: the German electrotechnical industry in the Italian market before the Second World War, Peter Hertner the internationalization of West German banks, 1945-1987, Richard Tilly the development of Pirelli as an Italian multinational 1872-1992, A. Montenegro Agfa-Gevaert and Belgian multinational enterprise, Greta Devos.

UK International Joint Ventures: An Analysis of Patterns of Activity and Distribution

Abstract: Over the past decade or so there has been an increased interest by academic observers in inter-firm collaboration, largely fuelled by the apparent growing incidence of such collaboration as a form of corporate strategy (see, for example, the contributions to Contractor and Lorange, 1988a). Joint ventures are not in fact a new phenomenon, but have long been used by firms to move into new businesses and tap new markets, particularly where firms were expanding overseas. For instance entry by large UK or US multinational firms into overseas markets often required them to take local firms as partners. This was especially so within developing nations and socialist countries where, in order to penetrate the market, companies had to form joint ventures with domestic firms to satisfy host Government regulations. From the late 1970s, however, there has been an increased incidence of joint venture activity within industrial free market economies. Firms in Europe, the USA and Japan have formed joint ventures on a voluntary basis as a deliberate strategy in preference to undertaking an activity on their own behalf or through a fully owned subsidiary. It is increasingly the case today that companies are willing to entertain the possibility of cooperation as part of their strategic planning (Harrigan, 1988, p. 142; Lyons, 1991).