Showing papers on "Multinational corporation published in 1998"
TL;DR: In this article, the relationships among the structural, relational, and cogni cation of a large multinational electronics company were examined using data collected from multiple respondents in all the business units of the company.
Abstract: Using data collected from multiple respondents in all the business units of a large multinational electronics company, we examined the relationships both among the structural, relational, and cogni...
5,621 citations
TL;DR: In the major home countries, the debate on foreign direct investment has ranged from worries that outward FDI may substitute for domestic investment and erode technology leadership, to the argument that firms must invest abroad in order to stay competitive in an increasingly international environment as mentioned in this paper.
Abstract: The operations of multinational corporations continue to stir strong emotions, both in the home countries and abroad. In the major home countries, the debate on foreign direct investment has ranged from worries that outward FDI may substitute for domestic investment and erode technology leadership, to the argument that firms must invest abroad in order to stay competitive in an increasingly international environment. The attitudes towards MNCs have also been mixed in the host countries, although the proponents of FDI seem to have gained the upper hand since the late 1980s. Most host countries have liberalized their FDI regulations since the early 1980s — many are now actively trying to encourage foreign firms to invest — and the benefits of inward FDI on capital formation, employment, exports and technology are generally considered to dominate the costs of foreign ownership of local factors of production.
2,209 citations
TL;DR: In this paper, the authors trace the changing world economic scenario for international business over the past two decades, and then examine its implications for the location of foreign direct investment and multinational enterprise activity, concluding that many of the explanations of the 1970s and early 1980s need to be modified as firm-specific assets have become mobile across natural boundaries.
Abstract: This article first traces the changing world economic scenario for international business over the past two decades, and then goes on to examine its implications for the location of foreign direct investment and multinational enterprise activity. It suggests that many of the explanations of the 1970s and early 1980s need to be modified as firm-specific assets have become mobile across natural boundaries. A final section of the article examines the dynamic interface between the value-added activities of multinational enterprises in different locations.
1,980 citations
TL;DR: This paper developed models such as the heterarchy (Hedlund, 1986) and the transnational (Bartlett and Ghoshal, 1989) to reflect the critical role played by many subsidiaries in their corporations' competitiveness.
Abstract: There has been a profound evolution in thinking about multinational corporations (MNCs) [since the late 1980s]. Traditionally, in academic models researchers assumed that ownership-specific advantages were developed at the corporate headquarters and leveraged overseas through the transfer of technology to a network of foreign subsidiaries (Vernon, 1966; Dunning, 1981). As these overseas subsidiaries grew in size and developed their own unique resources, however, it became apparent to many researchers that corporate headquarters was no longer the sole source of competitive advantage for the MNC. Scholars developed models such as the heterarchy (Hedlund, 1986) and the transnational (Bartlett and Ghoshal, 1989) to reflect the critical role played by many subsidiaries in their corporations’ competitiveness, and research attention began to shift toward understanding the new roles played by subsidiaries.
1,417 citations
TL;DR: A central theme of much of the recent literature on the strategy of the multinational corporation (MNC) is the increasingly important role played by subsidiary companies as contributors to the development of firm-specific advantages.
Abstract: A central theme of much of the recent literature on the strategy of the multinational corporation (MNC) is the increasingly important role played by subsidiary companies as contributors to the development of firm-specific advantages. Traditional academic models that viewed subsidiaries as either ‘market access’ providers or as recipients of the parent company’s technology transfers (Vernon, 1966) gave way in the 1980s to richer conceptualizations in which subsidiaries tapped into leading-edge ideas, undertook important research and development work, and became active participants in the formulation and implementation of strategy (Bartlett and Ghoshal, 1986; Hedlund, 1986; Gupta and Govindarajan, 1994). The generation of firm-specific advantages, correspondingly, shifted from being the sole concern of the parent company to a collective responsibility for the corporate network.
973 citations
TL;DR: In this paper, a model is constructed in which multinational firms arise endogenously, and it is shown that multinational firms are more important in total activity when countries are similar in incomes (size) and in relative factor endowments, and when total world income is high.
888 citations
TL;DR: In this article, the authors examine the patterns of communication and control in international companies and find that local and international adaptors both focus their communication on their internal corporate network; and international creators have strong internally and externally oriented networks of relationships.
Abstract: This paper addresses issues of global innovation in multinational corporations by examining the patterns of communication and control in international RD (2) local and international adaptors both focus their communication on their internal corporate network; and (3) international creators have strong internally and externally oriented networks of relationships. The implications for the management of global innovation are discussed. © 1998 John Wiley & Sons, Ltd.
583 citations
TL;DR: This paper found that cultural distance between the home base of the investor and the target country (or perhaps political risk) exerts a powerful influence on ownership of subsidiaries, but cultural characteristics of the home-base do not.
Abstract: This paper tests the proposition that national origin affects the strategies of multinational enterprises by looking at the determinants of the choice they make between entering the United States through partially versus wholly owned subsidiaries. We pool entries into the United States made by firms based in two countries, Japan and Finland, which differ both in their cultural characteristics and in their cultural distance to the United States. After carefully controlling for the known firm and industry-level determinants of subsidiary ownership strategies, we find that cultural distance between the home base of the investor and the target country (or perhaps political risk) exerts a powerful influence on ownership of subsidiaries, but cultural characteristics of the home base do not.
568 citations
TL;DR: In this article, the authors report the results of an empirical investigation of the degree of influence of eight corporate attributes on the extent of mandatory disclosure and reporting of 49 listed companies in Zimbabwe.
496 citations
TL;DR: In this article, the authors establish a conceptual understanding of the implications of multinational composition for group functioning and the association between corporate policies and the use of MNGs, and close the paper with a proposed research agenda on multinational groups.
Abstract: International companies are rapidly increasing their use of multinational groups (MNGs), sometimes with great success and sometimes severe frustration. The purpose of this paper is to establish a conceptual understanding of the implications of multinational composition for group functioning. Moving across units of analysis, we focus first on the individual group member's characteristics as a reflection of his or her nationality, then on the effects of multinational diversity on group functioning and performance, and finally on the association between corporate policies and the use of MNGs. We close the paper with a proposed research agenda on multinational groups.
412 citations
TL;DR: In this paper, the authors show that multinational firms may increase their systematic risk owing to an increase in the standard deviation of cash flows from internationalization, which offsets the lower correlation associated with diversification.
Abstract: Previous literature suggests that multinational firms decrease their systematic risk owing to the diversification benefit of having cash flows in different countries. It is posited in this article that multinational firms may increase their systematic risk owing to an increase in the standard deviation of cash flows from internationalization, which offsets the lower correlation associated with diversification. Evidence of a significant positive relationship between the level of systematic risk in a firm and the degree of that firm's internationalization is presented. This analysis is consistent with observed practitioner usage of higher discount rates in evaluating international projects.
TL;DR: In this article, the authors discuss the "nationality effect" in the management of HRM by multinational companies and find evidence of the Anglo-Saxonization of international HRM in these companies, but it appears to be taking place in a distinctively German manner.
Abstract: This paper discusses the 'nationality effect' in the management of HRM by multinational companies (MNCs). After reviewing relevant literature in the institutionalist tradition and on 'national business systems', it assesses the elements of national environments that are most likely to influence MNC behaviour. It explores the tensions arising between the requirements of 'globalized' operations and the characteristics MNCs have adopted from their home environment. It is suggested that MNCs respond to such tensions by adopting various adaptation strategies, the most important of which may be termed 'Anglo-Saxonization': a convergence of MNC behaviour around a model typical of highly internationalized British or US MNCs. The argument is illustrated by findings from two German case studies, one of a large manufacturer, the other of a major bank; evidence is found of the Anglo-Saxonization of international HRM in these companies, but it appears to be taking place in a distinctively German manner.
Posted Content•
TL;DR: In this paper, the authors use case studies and input-output tables to calculate the level and growth of vertical-specialization-based trade, which they define as the amount of imported inputs embodied in goods that are exported.
Abstract: The world's economies have become increasingly integrated and increasingly global. Among the most important and often cited features of the rise in globalization is the enormous growth in the export and import shares of GDP since World War II. In the United States, international trade-- that is, exports plus imports-accounted for 23.9 percent of GDP in 1996, up from 9.2 percent in 1962.1 Worldwide, the merchandise export share of production has more than doubled over the last forty-five years, while the manufactured export share of production has almost quadrupled (Chart 1). Most countries-emerging nations as well as highly developed economies-have experienced increases in their export share of GDP (Chart 2). Clearly, a greater number of countries are trading more today than in the past. Another significant feature of increased globalization is the internationalization of production. Rather than concentrate production in a single country, the modern multinational firm uses production plants-operated either as subsidiaries or through arm's-length relationships-in several countries. By doing so, firms can exploit powerful locational advantages, such as proximity to markets and access to relatively inexpensive labor. There are currently more than 39,000 parent firms and 279,000 foreign affiliates worldwide, with a total foreign direct investment (FDI) stock equal to $2.7 trillion in 1995, compared with $1.0 trillion in 1987. Moreover, the value added of foreign affiliates-that is, their sales less materials costs-- accounted for 6 percent of world GDP in 1991, a 300 percent increase from 1982 (United Nations Conference on Trade and Development 1996). Increased international production, however, does not always lead to increased international trade. For instance, if a country's firms serve markets abroad through production facilities in each country-rather than through exports from the home country-trade may actually decrease as international production rises. International production will be associated with increased trade when countries are vertically linked-that is, when international production prompts countries to specialize in particular stages of a good's production. In that case, a sequential mode of production arises in which a country imports a good from another country, uses that good as an input in the production of its own good, and then exports its good to the next country; the sequence ends when the final good reaches its final destination. We use the term "vertical specialization" to describe this mode of production.2 By comparison, in a horizontal-specialization scenario, countries trade goods that are produced from start to finish in just one country. In this article, we shed light on the globalization of international production and trade by demonstrating the increasingly important role vertical specialization plays in international trade. We use case studies and input-output tables to calculate the level and growth of vertical-specialization-based trade, which we define as the amount of imported inputs embodied in goods that are exported. The case studies-the United States-Canada Auto Agreement of 1965, Mexico's maquiladora trade with the United States, electronics trade between Japan and Asia, and trade involving Opel's subsidiary in Spainallow us to quantify the amount of vertical-specializationbased trade.3 In all of the case studies, our findings indicate that vertical specialization has increased sharply in recent years: in the Japan-Asia electronics trade, for example, it increased 900 percent between 1986 and 1995. To show that the results of our case studies can be generalized, we use input-output tables to calculate estimates of vertical-specialization-based trade in ten developed countries from the Organization for Economic Cooperation and Development (OECD). We find that by the beginning of the present decade, 14.5 percent of all trade in these countries was vertical-specialization-based-a 20 percent increase from the late 1960s and early 1970s. …
TL;DR: In this paper, it has become almost axiomatic that business success depends on expanding the global reach of an organization Moreover, the adoption of the transnational organizational model for a multinational enterprise is widely acknowledged as the preferred means of going global Designing effective transnational organizations depends on the effective deployment of advanced information technologies.
Abstract: Executive Overview It has become almost axiomatic that business success depends on expanding the global reach of an organization Moreover, the adoption of the transnational organizational model for a multinational enterprise is widely acknowledged as the preferred means of going global Designing effective transnational organizations depends on the effective deployment of advanced information technologies Because globalization requires employees and business partners to be geographically and temporally distant from one another, deploying information technologies within a virtual organization is an obvious choice for overcoming spatial and temporal boundaries
TL;DR: In this article, the authors use 15 structured field interviews with management and public relations personnel from multinational corporations to show that effective change communication campaigns tend to reveal rather than conceal, reduce uncertainty through collective planning, and proactively establish and maintain trust.
Abstract: Ineffective strategies of communicating about organizational change (e.g., corporate restructuring, mergers, downsizing) are earmarked by the presence of pervasive rumors that flourish in a climate of uncertainty. Using 15 structured field interviews with management and public relations personnel from multinational corporations, this article posits that successful programs of change communication hinge upon the proper management of uncertainty associated with change. Two detailed case studies are highlighted as opposing illustrations of change communication tactics that succeeded and failed. Effective change communication campaigns tend to reveal rather than conceal, reduce uncertainty through collective planning, and proactively establish and maintain trust. 1
TL;DR: This paper investigated the effects of country origins on HR practices of firms from the United States, Great Britain, Japan and Hong Kong operating in Hong Kong and found that country origin moderated relationships of HR practices with firm performance; in general, relationships of structural training and development and retention oriented compensation were stronger for Hong Kong firms.
Abstract: Drawing from a cultural values perspective, we investigate the effects of country origins on HR (human resource) practices of firms from the United States, Great Britain, Japan and Hong Kong operating in Hong Kong. In general, results supported hypothesized differences in HR practices of firms from different countries. In addition, results indicated that HR practices, specifically structural training and development and retention-oriented compensation, were related to various measures of firm performance. Of further interest was the finding that country origin moderated relationships of HR practices with firm performance; in general, relationships of structural training and development and retention-oriented compensation were stronger for Hong Kong firms. Implications of the results are discussed.
TL;DR: In this article, the authors investigate attitudes that underlie international strategy processes and propose survey scales of these attitudes and describe tests that support their reliability and validity as measures of constructs that researchers have used for many years in case analyses of international strategy and organization.
Abstract: This article investigates attitudes that underlie international strategy processes. We propose survey scales of these attitudes and describe tests that support their reliability and validity as measures of constructs—including integration, responsiveness, and coordination—that researchers have used for many years in case analyses of international strategy and organization. We also propose and validate scales to capture the perceived alignment with firms' international objectives of key business policies that affect individuals, including accountability for global results, career opportunity and a globally shared meaning system that informs communication and discussion about change. Our discussion of these tests offers an assessment of how changing patterns of association among the measures over time conform to expectations generated by the case-based empirical literature. We argue that these patterns document a process of organizational learning that can link managers' mind-sets with senior managers' intentions in the course of proactive international strategic change. The analysis relies on survey responses taken in 1992 and 1995 from 370 managers in 13 country affiliates and the head office of a U.S.-based diversified multinational corporation (DMNC). © 1998 John Wiley & Sons, Ltd.
TL;DR: In this paper, the authors assess the determinants of Foreign Direct Investment (FDI) in China and its effects on the whole economy and conclude that FDI affects China's growth through the diffusion of ideas.
Abstract: This paper attempts to assess the determinants of Foreign Direct Investment (FDI) in China and its effects on the whole economy. After presenting the main theoretical contributions and the previous works done about China’s inward-FDI, an empirical study has been implemented extending the previous ones with a different data set (more recent) and with different methodologies. The traditional determinants of FDI seem to be relevant for China: domestic market size, cost advantages and openness to the rest of the world. Concerning the consequences of FDI on the Chinese economy, our empirical evidence supports the view that FDI affects China’s growth through the diffusion of ideas. Through the introduction of new ideas, multinational firms develop technical progress and hence long-run economic growth. The transmission of ideas seems to have had a positive effect on the Chinese growth.
Book•
12 Jul 1998TL;DR: The book "Multinational Corporate Evolution and Subsidiary Development, edited by Julian Birkinshaw and Neil Hood, sets out to bring together a good sample of contemporary research on multinational subsidiary management and remedy a gap in the literature as mentioned in this paper.
Abstract: The book “Multinational Corporate Evolution and Subsidiary Development,” edited by Julian Birkinshaw and Neil Hood, sets out to bring together a good sample of contemporary research on multinational subsidiary management (or “development”) and, thus, remedy a gap in the literature. Birkinshaw and Hood position the subsidiary as a viable unit of analysis for researchers and provide an important resource for researchers and managers in the field.
TL;DR: In this article, the authors examined what factors affect the location choice of Japanese multinational financial institutions and found that Japanese financial institutions choose their locations at least partially based on the local banking opportunity in the host countries.
Abstract: There are many studies investigating the location choice of foreign direct investment (FDI) of US banks. Nigh et al. (Journal of International Business Studies 17 (1986) 59–72) find that the choice does not depend on local banking opportunity. This paper examines what factors affect the location choice of Japanese multinational financial institutions. Our results are consistent with previous studies analyzing US banks in that the FDI of the manufacturing industry is an important determinant of the location choice of Japanese financial institutions. However, our results differ from Nigh et al., in that Japanese financial institutions choose their locations at least partially based on the local banking opportunity in the host countries.
TL;DR: In this article, the authors analyze the interactions between international environmental policy and multinational corporate strategy and build a new conceptual framework to analyze the type of corporate strategy developed in the presence of both national an international environmental regulations.
Abstract: This paper analyzes the interactions between international environmental policy and multinational corporate strategy. The main contribution is building a new conceptual framework to analyze the type of corporate strategy developed in the presence of both national an international environmental regulations. This framework distinguishes between firm-level compliance with environmental obligations and the development of resource-based green capabilities. It also classifies major environmental regulations and incorporates a discussion of public policy.
TL;DR: In this paper, a comparative analysis of the productive efficiency of foreign-owned and US-owned multinational commercial banks operating in the US is conducted. And the results indicate that foreign-owning multinational banks operating operating in US are significantly less efficient than their US-own counterparts and that large multinational banks in holding company networks carrying fewer foreign assets tend to be more efficient.
Abstract: This paper conducts a comparative analysis of the productive efficiency of foreign-owned and US-owned multinational commercial banks operating in the US. A multiproduct translog stochastic-cost frontier model approach is used to estimate cost inefficiency scores. Ordinary Least Squares and Tobit regressions are used to identify the key factors associated with inefficiency. The results indicate that foreign-owned multinational banks operating in the US are significantly less efficient than their US-owned counterparts and that large multinational banks in holding company networks carrying fewer foreign assets tend to be more efficient.
Book•
30 Nov 1998
TL;DR: In this paper, a rough take-off for the multinational enterprises in a system of nation-states is described, and the challenge of accommodating multinationals and nation states is addressed.
Abstract: Part 1 Setting the context - multinational enterprises in a system of nation-states: a rough take-off for the multinationals calibrating the multinationals' importance multinationals' behaviour in international markets the challenge - accommodating multinationals and nation-states. Part 2 Tensions in the background - conflict between multinational enterprises and nation-states: the nation-states' struggle for jobs taxing multinationals security for the nation-state conflicts of jurisdiction, culture and principle. Part 3 Inside the emerging economies - high stakes for nation-states and multinational enterprises: Latin America fading stars of Asia transitional economics - from Hungary to China India conclusions. Part 4 Inside the industrialized economies - new sources of tension: the case of Europe the case of the United States the case of Japan common problems, common responses. Part 5 The struggle over open markets - the gathering clouds: ambivalencce in the United States and Europe multinationals and the struggle for public resources uncertainties in the international political climate. Part 6 Righting the balance - possible policy responses: the search for global principles bilateral agreements industry-centred agreements regional agreements possible new initiatives unilateral measures reprise.
TL;DR: This article reviewed and integrated representative literature on the exceptionally broad topic of multinational enterprises (MNEs) and public policy towards them and made projections ahead to the relevance of this literature for the year 2020, which is the target date set by the 18 members of the Asia-Pacific Economic Cooperation Forum (APEC) for the realisation of full trade and foreign direct investment (FDI) liberalisation.
Abstract: In this chapter we attempt to review and integrate representative literature on the exceptionally broad topic of multinational enterprises (MNEs) and public policy towards them. To help us in this difficult task we build upon the insights offered by Richard Caves (1982) in Chapter 10 (on ‘public policy’) in his critically acclaimed advanced textbook, Multinational Enterprise and Economic Analysis. This book was first published in 1982 and substantially revised in a second edition in 1996. Our specific task is to consider the literature on MNEs and public policy as it has emerged since 1970 and make projections ahead to the relevance of this literature for the year 2020, which is the target date set by the 18 members of the Asia-Pacific Economic Cooperation Forum (APEC) for the realisation of full trade and foreign direct investment (FDI) liberalisation. Such liberalisation has already been implemented in the European Union (15 member states), and it will further expand as new countries are accepted as EU members in the 21st century.
Posted Content•
TL;DR: In this article, the authors analyze a model where a multinational firm can use its superior technology in a foreign subsidiary only after appropriate training of local managers, and show that under certain circumstances the multinational firm might find it optimal to resort to export instead of foreign direct investment to avoid dissipation of its intangible assets.
Abstract: We analyze a model where a multinational firm can use its superior technology in a foreign subsidiary only after appropriate training of local managers. Technological spillovers from foreign direct investment arise when such managers are later hired by a local firm. Benefits for the host economy may also take the form of the rent that trained managers receive by the foreign affiliate to prevent them from moving to local competitors. We study conditions under which technological spillovers occur. We also show that under certain circumstances the multinational firm might find it optimal to resort to export instead of foreign direct investment, to avoid dissipation of its intangible assets.
TL;DR: In this paper, the authors analyzed the impact of political risk on investors' required return and the multinational corporation's cost of capital on foreign direct investment using the basic diversifiable-nondiversifiable dichotomy of portfolio theory.
Abstract: This note analyzes the impact of political risk on investors' required return and the multinational corporation's cost of capital on foreign direct investment using the basic diversifiable-nondiversifiable dichotomy of portfolio theory. Whether or not a particular political risk affects the value of a multinational corporation through its cost of capital depends on whether the risk is related to investors' relevant market portfolios. We provide a numerical example that illustrates the potential impact of political risk on required return.
Book•
02 Jun 1998
TL;DR: The case in point and management challenge features as discussed by the authors give a realistic look into decision making and allow you to follow real discussions as managers make difficult decisions and develop and perfect their management skills with the Multinational Management Skills Builder.
Abstract: With coverage of the global economy and the impact of managerial decisions, this management text shows you how to assess the strengths and weaknesses of competitors and how to adapt organizational practices. Features such as Case in Point and Management Challenge give you a realistic look into decision making and allow you to follow real discussions as managers make difficult decisions. Develop and perfect your management skills with the Multinational Management Skills Builder found at the end of each chapter
TL;DR: In this paper, the determinants of HRM strategy in a random sample of firms operating in Korea and Taiwan were investigated, including staffing, employee influence, employee rewards and employee autonomy.
Abstract: This paper investigates the determinants of HRM strategy in a random sample of firms operating in Korea and Taiwan. Both indigenous and foreign-owned firms are studied. HRM strategy is measured in terms of the company's reliance on high-performance, versus more traditional, HRM policies and practices in several different areas, including staffing, employee influence, employee rewards and employee autonomy. Independent variables include the firm's country or region of origin (USA, Japan, Europe, Korea or Taiwan), the host country (Korea or Taiwan) and the internal culture of the firm, as measured by upper management's perception that human resources constitute a significant source of value for the organization. Pronounced differences are found across countries of origin and between the two host countries. Managerial values and various organizational characteristics that serve as control variables are also found to impact on HRM strategy.
TL;DR: In this article, the authors report the findings of a case study into human resource management (HRM) policies and practices of the Scottish subsidiary of an American multinational firm, and support the argument that multinational companies' management practices are more prone to local cultural influences.
Abstract: This paper reports the findings of a case study into human resource management (HRM) policies and practices of the Scottish subsidiary of an American multinational firm. The study is discussed within the debate on transfer of HRM practices between nations, and on subsidiary - parent company relationships. The paper makes a distinction between HRM policy on the one hand, and HRM practice on the other. It will be argued that whereas companies might find it feasible to have company-wide policies , they might find it unavoidable to be responsive to local conditions when it comes to HRM practices . Further, it will be argued that some practices can be transferred across nations almost without any change from one country to another. Some must be modified to become workable in another setting. And some are more deeply culture-specific and may not always be transferable. The findings of the study support the argument that multinational companies' management practices are more prone to local cultural influences th...