Showing papers on "Multinational corporation published in 2000"

The institutional environment for multinational investment

Abstract: This article posits that the effect of political hazards on the choice of market entry mode varies across multinational firms based on the extent to which they face expropriation hazards from their potential joint-venture partners in the host country (the level of contractual hazards). As political hazards increase, the multinational faces an increasing threat of opportunistic expropriation by the government. Partnering with host-country firms that possess a comparative advantage in interactions with the host-country government can safeguard against this hazard. However, as contractual hazards increase, the potential benefit to the joint-venture partner of manipulating the political system for it's own benefit at the expense of the multinational increases as well, thereby diminishing the hazard-mitigating benefit of forming a joint venture. A two-stage bivariate probit estimation technique is used to test these hypotheses on a sample of 3,389 overseas manufacturing operations by 461 firms in 112 countries. Copyright 2000 by Oxford University Press.

Do Corporate Global Environmental Standards Create or Destroy Market Value

Abstract: Arguments can be made on both sides of the question of whether a stringent global corporate environmental standard represents a competitive asset or liability for multinational enterprises (MNEs) investing in emerging and developing markets. Analyzing the global environmental standards of a sample of U.S.-based MNEs in relation to their stock market performance, we find that firms adopting a single stringent global environmental standard have much higher market values, as measured by Tobin'sq, than firms defaulting to less stringent, or poorly enforced host country standards. Thus, developing countries that use lax environmental regulations to attract foreign direct investment may end up attracting poorer quality, and perhaps less competitive, firms. Our results also suggest that externalities are incorporated to a significant extent in firm valuation. We discuss plausible reasons for this observation.

Managing foreign subsidiaries: agents of headquarters, or an interdependent network?

Abstract: In this study, two different theoretical perspectives are used to develop sets of hypotheses regarding the mechanisms used to manage foreign subsidiaries of multinational corporations. First, agency theory serves as the basis for a model that predicts the use of monitoring mechanisms and incentive compensation. Then, it is argued that these mechanisms are insufficient for managing subsidiaries characterized by high levels of intra-firm international interdependence, the management of which is critical to many of today's complex global firms. A second set of hypotheses is argued, linking international interdependence to several social control mechanisms. Primary and secondary data from U.S. based multinational corporations were used to test both sets of hypotheses. The results indicate that agency theory, although a useful foundation for studies of control within MNCs, is limited in its ability to explain fully the phenomenon of foreign subsidiary control, however, the model based on intra-firm interdependence had much greater predictive ability. Copyright © 2000 John Wiley & Sons, Ltd.

Industrial Development, Globalization and Multinational Enterprises: New Realities for Developing Countries

Abstract: Globalization has changed economic realities. First, the competences of multinational enterprises (MNEs) are becoming increasingly mobile and knowledge-intensive. MNEs thus give more attention to the availability and quality of the created assets of alternative locations. Second, among developing countries there are now considerable differences between the catching-up countries (e.g. newly industrialized countries) and falling behind , less developed countries. These developments have helped change the opportunity sets of both MNEs and host countries. Foreign direct investment (FDI)-based development strategies are now commonplace among less developed countries, but there is also increased competition for the right kinds of investment. In general, the balance in bargaining power has shifted in favour of the MNE, and less developed countries increasingly need to provide unique, non-replicable created assets to maintain a successful FDI-assisted development strategy.

The Rush Hour: The Character of Leisure Time and Gender Equity

Abstract: The distribution of leisure time between the genders is contested. Becker's theory of specialization suggests that there is an underlying gender equity in leisure, while the competing view suggests that women are now bearing a "dual burden" as both family providers and family carers. Using indicators of the quantity and quality of leisure drawn from the Multinational Time Budget Data Archive and the Australian Time Use Survey, we find some support for both views. Although men and women have similar quantities of free time; when the character of leisure is considered the gap between genders reemerges.

An Empirical Analysis and Extension of the Bartlett and Ghoshal Typology of Multinational Companies

Abstract: This study offers an empirical test and extension of the Bartlett and Ghoshal typology of multinational companies (MNCs) A three-fold typology of multinational companies: Global, Multidomestic and Transnational is developed from the literature. This typology is tested using data from 166 subsidiaries of 37 MNCs, headquartered in 9 different countries. Subsidiaries in the three types of MNCs are shown to differ significantly in aspects of interdependence and local responsiveness.

In Search of Centre of Excellence: Network Embeddedness and Subsidiary Roles in Multinational Corporations

Abstract: * In this paper the authors explore the role of a subsidiary as a centre of excellence within the multinational corporation (MNC). It is argued that such a role can be based on the characteristics of a subsidiary's internal resources, its relationships with the rest of the MNC and the business context of which the subsidiary is a part. Based on the perspective of an MNC as a Network the latter aspect is especially focused. Through an analysis of 98 subsidiaries the importance of the subsidiary's embeddedness, in terms of business relationships with specific customers and suppliers for its role as a centre of excellence, is investigated. Key Results * A conceptual result from this paper is that it offers a framework for analysing the role of the business context for the subsidiary's role as a centre of excellence. Productive relationships with external counterparts in the business environment can be used by the subsidiary to enhance its role as a centre of excellence. An empirical result is that the external embeddedness of the subsidiary is an important and significant explanatory variable of the subsidiary's possibilities to be considered important to the MNC as well as a prerequisite to influence the future behaviour of the MNC. Introduction In traditional foreign direct investment theory it is assumed that firms base their internationalisation on specific advantages created and located at home. These firm-specific advantages make it possible to overcome the disadvantages associated with carrying out the business activities in foreign markets (Hymer 1976, Kindleberger 1969, Vernon 1966, Buckley/Casson 1976, Johanson/Vahlne 1977, Caves 1982, Hennart 1982, Dunning 1988). But in some of the recent literature about internationalisation, it has been argued that the firm-specific advantage can be located at different places in the organisation, not only in the parent-country (Kogut 1983, Hedlund 1986, Bartlett/Ghoshal 1989, Forsgren 1989). Having different assets in different industrial and commercial contexts is an important driving force for internationalisation as such (Cantwell 1991, 1995, Dunning 1996, Zander/Zander 1997). This new approach to foreign direct investment and the internationalisation process also gives rise to a reformulation of how we look at the structure of the multinational enterprise. Within the former "centre-periphery" view, the firm specific advantages of the multinational corporation (MNC) are developed and controlled by the parent company, while the foreign subsidiaries exploit these advantages in the local markets. According to the new perspective, MNCs are considered "multi-centre" structures, where firm-specific advantages also can be located in different subsidiaries (Forsgren et al. 1992). Sometimes the concept "centre of excellence" has been used to describe this new subsidiary role (Surlemont 1996). However, even if the received theory today recognises the existence of "centres of excellence" within the MNC, it tells us very little about why and how they emerge. It has been argued elsewhere that it is difficult to give the concept "centre of excellence" in relation to MNCs a precise definition (Forsgren/Pedersen 1998). For instance, in the literature about product mandates, the possibility for a subsidiary to operate as a full-fledged unit with its own export and R&D is focused (Dhavan et al. 1981, Eteman/Dulude 1986, D'Cruz 1986). Although there is no undisputed definition of what characterises a subsidiary with a product mandate (Fratocchi 1994), most of the literature on product mandate seems to emphasise autonomy rather than interdependence vis-a-vis the rest of the MNC as the crucial factor (Roth/Morrison 1992, Birkinshaw/Morrison 1995). A subsidiary which can function as a quasi-firm in the MNC, because of the independence and completeness of its resources, can also, according to this view, be called a centre of excellence within the corporate family. …

Characteristics of Foreign Subsidiaries in Industry Clusters

Abstract: It is well established that the roles of foreign-owned subsidiary companies (i.e. the activities that they have responsibility for in the multinational corporation) vary according to such contingencies as the local environment (Ghoshal and Nohria, 1989), the structural context imposed by the parent (Gupta and Govindarajan, 1991), and the entrepreneurial capacity of subsidiary management (Birkinshaw, 1997), to name some of the most well-known factors. In this paper we examine another potentially important predictor of varying subsidiary roles – the membership (or not) of a leading-edge industry cluster. An industry cluster can be defined broadly as an aggregation of competing and complementary firms that are located in relatively close geographical proximity. In this paper we focus on those ‘leading-edge’ clusters identified by Porter (1990, 1998) and operationalised in terms of high export intensity.

Transnational firms and the changing organisation of innovative activities

Abstract: It is suggested that a transition is taking place towards new modes of organising transnational corporations’ innovative activities. First, different units of multinational firms, including foreign-based subsidiaries, are increasingly involved in the generation, use and transmission of knowledge. Secondly, multinationals are developing external networks of relationships with local counterparts, through which foreign affiliates gain access to external knowledge sources and application abilities. As a result of this evolutionary process, multinationals’ organisation is subject to both centripetal and centrifugal forces. Considerable efforts are then necessary to innovate coordination procedures and mechanisms, in order to enhance the generation, circulation and use of knowledge. A number of empirical works are reviewed, providing some evidence of the evolutionary process discussed in the paper. 1. Transnational companies as networks of innovators Economists have long viewed innovation as being primarily generated by firms in their home countries. Classic contributions in the economics of multinational corporations have consolidated this view. Referring mainly to the US-based multinationals, Vernon (1966), Kindleberger (1969) and Stopford and Wells (1972) theorised a quasi-colonial relationship between the parent company and foreign subsidiaries, wherein the latter are in charge of replicating the former’s activities abroad, with strategic decisions—including R&D and innovation strategies—being rigidly centralised. Particularly, Vernon emphasised that coordinating international innovative activities would be too costly, owing to the difficulties of collecting and controlling relevant information across national borders. Host countries and foreign subsidiaries would then play a role almost exclusively in the adoption and diffusion of centrally created technology. This view was supported mainly by US economists and based on US evidence from the early post-World War II period, but it was very influential for the development of studies on the economics of transnational companies (TNCs) and the internationalisation of

National Culture, Networks, and Individual Influence in a Multinational MAnagement Team

Abstract: Individual influence is thought to shape team performance. However, empirical studies of its potential determinants in multicultural teams, including national culture, are lacking. A network study ...

Multinational Corporations and the Location of Technological Innovation in the UK Regions

Abstract: CANTWELL J. and IAMMARINO S. (2000) Multinational corporations and the location of technological innovation in the UK regions, Reg. Studies 34, 317‐332. In a rapidly globalizing economy, and particularly in the face of a process of economic integration such as that occurring in the European Union, regions forge an increasing number of linkages with other locations within and across national boundaries through the local technological development efforts of multinational corporations (MNCs). By using patents granted to the largest industrial firms ‐ arranged by the region host to the research facility responsible ‐ the paper explores the location of innovative activities in MNCs, and the relationship between the profiles of technological specialization of foreign-owned and indigenous companies in the UK regions. The results are consistent with the hypothesis that the pattern of MNC networks for innovation conforms to a hierarchy of regional centres, and that the pattern of technological specialization of fo...

The Globalization of Competition and the Localization of Competitive Advantage: Policies towards Regional Clustering

Abstract: Two seemingly competing tendencies, the globalization of economic activity and the localization of industries, have captured the interest of scholars, economic development professionals, and policy-makers in recent years. While trends towards globalization of industries and companies appear to reduce the importance and distinctiveness of (subnational) regions, a tendency towards localization of certain industries and economic activities appears to do exactly the opposite. The simultaneous globalization and localization tendencies have created policy challenges for national and local governments. One response to these challenges has been a dramatic proliferation of regional development policies based on regional clusters of firms and industries.

The Nature of the transnational firm

Abstract: 1. The (Theory of the) Transnational Firm: the 1990s and Beyond Christos Pitelis and Roger Sugden 2. A Survey of Theories of International Production John Cantwell 3. A Critical Re-evaluation of Hymer's Contribution to the Theory of the Transnational Corporation Mohammad Yamin 4. Transaction Costs Theory and the Multinational Enterprise Jean-Francois Hennart 5. The Eclectic Paradigm of International Production: A Personal Perspective John H. Dunning 6. The Resource-based Approach to Multinational Enterprise Neil Kay 7. Strategic Mangement and Transnational Firm Behaviour: A Formal Approach Edward M. Graham 8, An All-Weather Company: The (theory of the) Transnational Corporation and the Role of the Demand Side Christos Pitelis 9. Divide and Rule by Transnational Corporations James Peoples and Roger Sugden.

Internationalization and Organizational Growth: The Impact of Internet Usage and Technology Involvement Among Entrepreneur-led Family Businesses:

Abstract: For many years, large, multinational corporations were thought to dominate international business. It was recently recognized that a number of entrepreneurial and family firms are active in the international arena (Oviatt & McDougall, 1994). Using data from a U.S. survey of entrepreneur-led family businesses, this paper examines the extent to which certain entrepreneurial characteristics, Internet usage, and investments in information technology influence internationalization and organizational growth among such firms. The results of regression analyses identify variables leading to success in the emerging global economy and their differential impact on these performance outcomes.

The Causes of Globalization

Abstract: The most important causes of globalization differ among the three major components of international market integration: trade, multinational production, and international finance. The information t...

Perceived effectiveness of influence tactics in the United States and China.

Abstract: A cross-cultural study was conducted with managers from the United States and China to investigate differences in influence behavior. Managers rated the effectiveness of different influence tactics for several representative situations. Significant differences were found between American and Chinese managers in a large, multinational company with facilities in both countries. The results were replicated for a second sample consisting of several organizations in each country. Rational persuasion and exchange were rated as more effective by American managers than by Chinese managers. Coalition tactics, upward appeals, and gifts were rated more effective by Chinese managers than by American managers. The influence tactics accurately predicted nationality for 94% of the respondents.

Current status of diversity initiatives in selected multinational corporations

Abstract: The purpose of this study was to provide information on the status of diversity initiatives in selected multinational corporations, to report on the dimensions of the diversity initiatives, and to interpret the dynamics of the corporate response to workforce diversity. Eight multinational corporations headquartered in the United States were selected for the study. Two methods of data collection were used: semistructured face-to-face interviews and document analysis. Diversity manager-directors were asked to provide information on their diversity initiatives; on the planning, implementation, and evaluation of diversity initiatives; and on plans for future diversity initiatives. The study revealed that multinational corporations are planning, implementing, and evaluating a large number and variety of diversity initiatives not only in the United States but also internationally. © 2000 by Jossey-Bass, A Publishing Unit of John Wiley & Sons, Inc.

Does multinational activity displace trade

Abstract: KIMBERLY A. CLAUSING [*] Using two-panel data sets on the operations of U.S. multinational firms abroad and the operations of foreign multinational firms in the United States, this article examines the empirical relationship between international trade and multinational activity. The evidence supports the conclusion that multinational activity and trade are complementary activities, particularly multinational activity and intrafirm trade. This empirical result is consistent with the theoretical reasons one might expect a complementary relationship between the two activities and is also robust to different approaches and specifications. (JEL F23) I. INTRODUCTION In recent years, foreign direct investment (FDI) has become an increasingly important part of world integration. Flows of FDI have been increasing faster than trade flows, which in turn have been growing faster than income. [1] In addition, multinational firms play a very large role in world trade. For the United States, 83% of exports in 1994 were either intrafirm shipments between multinational parents and their affiliates (36%) or arms-length trade between multinationals and unaffiliated buyers (47%). [2] Although it is clear that multinational firms have an important role in world trade, it is certainly less clear what the relationship is between production abroad and trade for multinational firms. The popular press often assumes that multinational investment by U.S. firms replaces U.S. exports, and in fact some economists have assumed that the rapid growth of foreign direct investment in recent years implies that multinational activity will eventually displace trade. [3] This article examines the empirical relationship between multinational activity and trade and finds that there is evidence that multinational activity complements, rather than displaces, trade. The article utilizes two-panel data sets constructed from aggregate survey data published by the Bureau of Economic Analysis (BEA); the data vary by country and over time. The first data set is used to study the relationship between U.S. exports and the activities of U.S. affiliates abroad; this data set is constructed from data describing the operations of U.S. multinational firms in 29 host countries between 1977 and 1994 together with data on U.S. exports (both intrafirm and arms length). The second data set is used to study the relationship between U.S. imports and the activities of foreign affiliates operating in the United States; it uses data describing operations in the United States by foreign affiliates of firms based in 29 home countries between 1977 and 1994 together with data on U.S. imports (both intrafi rm and arms length). Most previous studies of this question have examined the relationship between multinational activity and trade for a cross-section of countries. By using data that also vary over time, it is possible to explore more thoroughly the relationship between multinational activity and trade and how this relationship evolves. It is also possible to control for fixed country effects that may be influencing the observed relationships. Previous studies have tended to focus on the relationship between outward multinational activity and exports; this article looks as well at the relationship between inward multinational activity and imports. Finally, this article considers the question of complementarity between multinational activity and trade in two ways. In addition to looking at the relationship between the quantities of multinational activity and trade, the article also studies complementarity much as one might think of complementarity in a demand study, by considering cross-price effects. In particular, the article includes an analysis of the relationship between price variables that measure the cost of multinational activity abroad and exports. Since the "price" of operating abroad is negatively related to exports, this is further evidence of a complementary relationship between trade and multinational activity. …

Industrializing English Law: Entrepreneurship and Business Organization, 1720–1844

Abstract: Between the passage of the Bubble Act in 1720 and the sweeping reforms of the General Incorporation Act of 1844, the legal framework of business organization in England remained remarkably stagnant despite the profound economic and structural changes wrought by the Industrial Revolution. Originally published in 2000, this book analyzes why this discrepancy occurred, especially when other nations of that time, whose economies were far less developed, were evolving more permissive laws of business organization. Employing extensive primary source archival material, Ron Harris shows how the institutional development of major forms of business organization - the business corporation, the partnership, the trust, the unincorporated joint-stock company - evolved and how English law finally took account of these developments.

Regional Clusters and Multinational Enterprises: Independence, Dependence, or Interdependence?

Abstract: This article outlines a model of regional cluster development in which the clusters and foreign multinational enterprises (MNEs) are interdependent. Such clusters are characterized by a strong or d...

No place like home? The embeddedness of innovation in a regional economy

Abstract: Two views have come to dominate the debate on the globalization of innovation in the emerging knowledge-based economy. The first contends that globalization reduces the significance of the home base as the primary site for innovation, as firms increasingly source and apply their innovations on a global basis. The second view as articulated in the innovation systems approach contends that the institutionally embedded nature of the innovation process, which is a central feature of the new economy, demands a continued, and even accentuated, role for the local context. In this article, we seek to contribute to the debate by evaluating the extent to which the institutional context and local setting play an important role in determining the innovative behaviour of manufacturing firms in Ontario, Canada. Specifically, we compare the practices of 242 indigenous and multinational establishments with respect to in-house technological capabilities, innovative processes, external sources of innovative ideas, and the ...