Showing papers on "Multinational corporation published in 2005"

Toward a Theory of International New Ventures

Abstract: Organizations that are international from inception – international new ventures – form 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.

Corporate Social Responsibility (CSR) in Asia: A Seven-Country Study of CSR Web Site Reporting

Abstract: This article addresses four hypotheses: (a) that corporate social responsibility (CSR) in Asia is not homogeneous but varies among countries, (b) that the variation is explained by stages of development, (c) that globalization enhances the adoption of CSR in Asia, and (d) that national business systems structure the profile of multinational corporations’ CSR. These hypotheses are investigated through analysis of Web site reporting of 50 companies in seven Asian countries: India, Indonesia, Malaysia, the Philippines, South Korea, Singapore, and Thailand. The article concludes that CSR does vary considerably among Asian countries but that this variation is not explained by development but by factors in the respective national business systems. It also concludes that multinational companies are more likely to adopt CSR than those operating solely in their home country but that the profile of their CSR tends to reflect the profile of the country of operation rather than the country of origin.

The false developmental promise of corporate social responsibility: evidence from multinational oil companies

Abstract: Using the example of multinational oil companies, this article suggests that there are fundamental problems surrounding the capacity of private firms to deliver development and the aspiration of achieving development through Corporate Social Responsibility (CSR) may be fundamentally flawed. The article is based on an extensive twelve-month research project on the Gulf of Guinea region funded by the Nuffield Foundation. This research identified a number of constraints to a developmental role for CSR: the subservience of CSR schemes to corporate objectives; country- and context-specific issues; the failure to involve the beneficiaries of CSR; the lack of human resources; technical/managerial approaches of company staff and the lack of CSR's integration into larger development plans. But even if private companies were able to overcome practical problems, it argues that the current CSR agenda fails to address the crucial issues of governance and the negative macro-level effects that multinational companies cause in host countries. The article concludes by suggesting that a focus on CSR may divert attention from broader political, economic and social solutions for developmental problems.

Government Corruption and the Entry Strategies of Multinationals

Abstract: Multinational enterprises (MNEs) often encounter government corruption when operating in host countries; however, in the international management literature, it is typically assumed that government officials pursue national interests rather than their own. We introduce a two-dimensional framework to further the understanding of public sector corruption and identify its implications for MNEs. Using an institutional perspective, we examine how the pervasiveness and arbitrariness of corruption can affect an MNE's organizational legitimacy and strategic decision making. We apply our analysis to the mode of entry decision.

Importers, Exporters, and Multinationals: A Portrait of Firms in the U.S. That Trade Goods

Abstract: This paper provides an integrated view of globally engaged U.S. firms by exploring a newly developed dataset that links U.S. international trade transactions to longitudinal data on U.S. enterprises. These data permit examination of a number of new dimensions of firm activity, including how many products firms trade, how many countries firms trade with, the characteristics of those countries, the concentration of trade across firms, whether firms transact at arms length or with related parties, and whether firms import as well as export. Firms that trade goods play an important role in the U.S., employing more than a third of the U.S. workforce. We find that the most globally engaged U.S. firms, i.e. those that both export to and import from related parties, dominate U.S. trade flows and employment at trading firms. We also find that firms that begin trading between 1993 and 2000 experience especially rapid employment growth and are a major force in overall job creation.

The effect of alliance network diversity on multinational enterprise performance

Abstract: This paper examines the impact of alliance network diversity on multinational enterprise (MNE) economic performance. We consider competing hypotheses derived, alternatively, from transaction cost theory and network theory. Using a latent variable structural equation modeling approach on a sample of 580 large MNEs, we find that MNEs with more diverse alliance networks experience lower economic performance on average than those with less diverse alliance networks. Copyright © 2005 John Wiley & Sons, Ltd.

A 'time' space odyssey': Management control systems in two multinational organisations

Abstract: This paper analyses the effects of implementing an Enterprise Resource Planning system (ERP) upon management control in two multinational organisations. How ERP was configured in each corporation created different forms of distance and relations between headquarters and the scattered subsidiaries. The construction of spatial and temporal separations (i.e. distance) and how they were understood and managed had profound effects on management control. In one organisation the ERP reproduced existing structures and distance which permitted conventional accounting controls based on action at a distance to be maintained. The second organisation used ERP to collapse distance through real-time information in a matrix structure. This did not increase centralisation but rather produced constantly changing loci of control and managerial feelings of ‘minimalist’ control.

The Dynamic Between Firms¿ Environmental Strategies and Institutional Constraints in Emerging Economies: Evidence from China and Taiwan

Abstract: This paper combines institutional and political perspectives to develop a framework for analysing firms’ strategies in relation to demands for environmental protection in emerging economies. The main subjects for an examination of the framework and the issues it raises are three large-scale diversified multinational corporations (MNCs) in the chemicals sector, each with manufacturing in both China (PRC) and Taiwan. They are contrasted with four local firms in the same sector. An accommodation between MNCs’ strategies and institutional constraints is achieved through a system of dynamic relationships in which both firms and institutional agents have a stake. Institutions are found to be more pervious to corporate strategic action than has been assumed by recent institutional theory, and with consequences that are not necessarily inimical to local community interests. The study offers new insights into (1) the processes that lead to conformity in corporate environmental practices (isomorphism), (2) the need to extend the normal purview of institutional theory, and (3) the contribution of a political perspective that allows for MNC proactivity.

The determinants of MNE subsidiaries' political strategies: evidence of institutional duality

Abstract: In this study, we develop and test a model of the determinants of political strategies used by foreign subsidiaries of multinational enterprises (MNEs). Using recent theoretical advances in institutional theory that recognize that MNE subsidiaries are confronted with pressures for isomorphism within the corporation (internal legitimacy) and within the host country (external legitimacy), we integrate international business and political strategy literatures to create a multilevel model of subsidiary, host country and parent determinants of political strategy. Our hypotheses are tested using survey and archival data from Western European subsidiaries of US MNEs.

Vertical Production Networks in Multinational Firms

Abstract: In recent decades, growth of world trade has been driven largely by rapid growth of trade in intermediate inputs. Much of input trade involves multinational firms locating input processing in their foreign affiliates, thereby creating global vertical production networks. We use firm-level data on U.S. multinationals to examine trade in intermediate inputs for further processing between parent firms and their foreign affiliates. Among our main findings are that demand for imported inputs is higher when affiliates face lower trade costs, lower wages for less-skilled labor, and lower corporate income tax rates.

Language and the Circuits of Power in a Merging Multinational Corporation

Abstract: We argue in this paper that corporate language policies have significant power implications that are easily overlooked. By drawing on previous work on power in organizations (Clegg, 1989), we examine the complex power implications of language policy decisions by looking at three levels of analysis: episodic social interaction, identity/subjectivity construction, and reconstruction of structures of domination. In our empirical analysis, we focus on the power implications of the choice of Swedish as the corporate language in the case of the recent banking sector merger between the Finnish Merita and the Swedish Nordbanken. Our findings show how language skills become empowering or disempowering resources in organizational communication, how these skills are associated with professional competence, and how this leads to the creation of new social networks. The case also illustrates how language skills are an essential element in the construction of international confrontation, lead to a construction of superiority and inferiority, and also reproduce post-colonial identities in the merging bank. Finally, we also point out how such policies ultimately lead to the reification of post-colonial and neo-colonial structures of domination in multinational corporations.

Institutional theory and the cross-national transfer of employment policy: the case of ‘workforce diversity’ in US multinationals

Abstract: This paper uses a comparative institutionalist approach combined with a power/interests perspective to examine the processes whereby diversity policy is ‘internationalised’ by US multinational companies. It argues that the process of policy transfer to UK subsidiaries is complicated by incomplete and contested ‘institutionalisation’ of diversity within the US itself, and by differing conceptions of diversity between the US and the UK. The ability of actors within the UK subsidiaries to mobilise and deploy specific power resources allows them to resist the full implementation of corporate diversity policy, leading to a range of compromise accommodations. It is argued that the findings have more general implications for analysing the transfer of HR practices between national business systems.

Incomplete Contracts and the Product Cycle

Abstract: The incomplete nature of contracts governing international transactions limits the extent to which the production process can be fragmented across borders. In a dynamic, general-equilibrium Ricardian model of North-South trade, the incompleteness of international contracts is shown to lead to the emergence of product cycles. Because of contractual frictions, goods are initially manufactured in the North, where product development takes place. As the good matures and becomes more standardized, the manufacturing stage of production is shifted to the South to benefit from lower wages. Following the property-rights approach to the theory of the firm, the same force that creates product cycles, i.e., incomplete contracts, opens the door to a parallel analysis of the determinants of the mode of organization. The model gives rise to a new version of the product cycle in which manufacturing is shifted to the South first within firm boundaries, and only at a later stage to independent firms in the South. Relative to a world with only arm’s length transacting, allowing for intrafirm production transfer by multinational fi rms is shown to accelerate the shift of production towards the South, while having an ambiguous effect on relative wages. The model delivers macroeconomic implications that complement the work of Krugman (1979), as well as microeconomic implications consistent with the findings of the empirical literature on the product cycle.

Global Engagement and the Innovation Activities of Firms

Abstract: Firms that export or, even more so, are part of a multinational enterprise tend to exhibit higher productivity than their purely domestic counterparts To better understand this correlation, we incorporate the perspective of industrial organization that one of the main drivers of differences in productivity is differences in knowledge We examine a new data set of several thousand UK enterprises covering all industries from 1994 through 2000 For each enterprise we have multiple detailed measures of knowledge outputs, knowledge investments, and sources of existing knowledge We find that globally engaged firms do innovate more But this is not just because globally engaged firms use more researchers It is also because they learn more from more sources such as suppliers and customers, universities, and their intra-firm worldwide pool of information We also find that the relative importance of knowledge sources varies systematically with the type of innovation

The Regional Multinationals: MNEs and 'Global' Strategic Management

Abstract: List of figures List of tables Acknowledgments 1. Introduction 2. Regional multinationals: the data 3. Two regional strategy frameworks 4. Regional and global strategies of multinational enterprises 5. Retail multinationals 6. Banking multinationals 7. Pharmaceutical and chemical multinationals 8. Automobile multinationals 9. Profits of leading multinational enterprises 10. Analysis of the regional and global strategies of large firms 11. Regional multinationals and government policy 12. Regional multinationals: the new research agenda Appendix. The 500 companies with the triad percent sales, alphabetical, 2001 Company notes Case references Academic references Author index General index.

Recent Location of Foreign-owned Research and Development Activities by Large Multinational Corporations in the European Regions: The Role of Spillovers and Externalities

Abstract: Cantwell J. and Piscitello L. (2005) Recent location of foreign-owned research and development activities by large multinational corporations in the European regions: the role of spillovers and externalities, Regional Studies39, 1-16. This paper examines the role of spillovers and externalities in influencing the recent siting of foreign-owned research and development activities in European regions. In accordance with the literature on knowledge creation in multinational corporations, the location of foreign-owned research tends to agglomerate depending upon the potential for the following different sources of spillovers and externalities: (1) intra- industry spillovers or specialization externalities associated with the presence of a wide-ranging collection of firms active in the same sector; (2) inter-industry spillovers or diversity externalities associated with the co-presence of firms working in different fields; and (3) science-technology spillovers and externalities stemming from the presence of a ...

Language and the Circuits of Power in a Merging Multinational Corporation

Abstract: We argue in this paper that corporate language policies have significant power implications that are easily overlooked. By drawing on previous work on power in organizations (Clegg, 1989), we examine the complex power implications of language policy decisions by looking at three levels of analysis: episodic social interaction, identity/subjectivity construction, and reconstruction of structures of domination. In our empirical analysis, we focus on the power implications of the choice of Swedish as the corporate language in the case of the recent banking sector merger between the Finnish Merita and the Swedish Nordbanken. Our findings show how language skills become empowering or disempowering resources in organizational communication, how these skills are associated with professional competence, and how this leads to the creation of new social networks. The case also illustrates how language skills are an essential element in the construction of international confrontation, lead to a construction of superiority and inferiority, and also reproduce post-colonial identities in the merging bank. Finally, we also point out how such policies ultimately lead to the reification of post-colonial and neo-colonial structures of domination in multinational corporations.

Local players in global games : the strategic constitution of a multinational corporation

Abstract: 1. Introduction: Multinational Corporations as Lead Agents of Globalization? PART I: LOCAL PATHWAYS TO MUTLINATIONAL ENTERPRISE 2. Associating Local Strategies of Global Reach: Horsens, Lake Mills, Eastbourne, and APV PART II: A GLOBAL GAME ENACTED BY LOCAL PLAYERS 3. Horsens: Local Strategies on a Global Stage 4. Lake Mills: Self-Limiting Strategies of a Solidaristic Plant Community 6. Lygon Place: A Corporate Headquarters at War With Itself 7. Strategic Positions and Positional Strategies PART III: MANAGERIAL CHALLENGES AND HUMAN PROMISES OF GLOBALIZATION 8. Managing the Multinational: Administrative and Human Challenges 9. The Functions of the Executive Revisited: contributions, Inducements, and Constitutional Ordering 10. Pragmatic Solutions: From Procedural Justice to Learning by Monitoring 11. Creating a Multinational Public for the Corporation 12. Conclusion: Sideshadowing the Future of Globalization

Analytical differences in the economics of geography: the case of the multinational firm

Abstract: In this paper we argue that the various discussions of the regional location behaviour of the multinational firm by the different fields of analysis which deal with these issues are all rather at a tangent to each other. Only economic geography and regional economics discuss firm-location behaviour at the subnational regional level, whereas international trade theory and traditional international business analysis focus only on firm locations at the level of a country. Where subnational regional locations have recently been discussed in international business analysis, this has been done primarily by incorporating the Porter ‘clusters' literature. However, by adopting a transactions-costs approach, we show that such a ‘clusters' concept is unable to distinguish between whether a multinational enterprise should or should not locate in a particular region. In addition, we use this approach to point to directions of research fruitful for reconciling these various different traditions of location analysis.

Dual Paths to Performance: The Impact of Global Pressures on MNC Subsidiary Conduct and Performance

Abstract: Over the last decade, the international business literature has placed ever-greater emphasis on the role that learning and innovation play in determining multinational and multinational subsidiary performance The present research seeks to understand the organizational paths leading to such desirable outcomes as greater learning, increased innovation, and improved performance Using a model tested with data collected through a survey of managers in subsidiaries of multinational firms, we find dual, independent paths to improved performance-one through networking and inter-unit learning and the second through subsidiary autonomy and innovation A particular feature of these findings is that they can be shown to be robust after controlling for a wide range of environmental pressures and firm and industry factors However, in the absence of environmental controls the dual path finding is rejected These conflicting findings support the imperative to test models that include a diverse range of environmental pressures so that the true effects of organizational factors on learning, innovation, and performance can be identified

The Influence of Competitive Intensity and Market Dynamism on Knowledge Management Capabilities of Multinational Corporation Subsidiaries

Abstract: The authors use the environment–strategy–performance theoretical framework to examine the direct influence of the environmental market conditions of competitive intensity and market dynamism on knowledge management capabilities of multinational corporation (MNC) subsidiaries and resultant subsidiary performance. The results of a survey of the managers of Croatian subsidiaries of foreign MNCs indicate that though both competitive intensity and market dynamism individually influence knowledge management capabilities, when examined jointly, market dynamism is a more influential environmental market condition than competitive intensity. The authors also find a significant, positive relationship between a subsidiary's knowledge management capabilities and its performance. The findings indicate the importance of understanding local market conditions and developing proper strategic configurations for MNC subsidiaries.

Dual paths to performance: the impact of global pressures on MNC subsidiary conduct and performance

Abstract: Over the last decade, the international business literature has placed ever-greater emphasis on the role that learning and innovation play in determining multinational and multinational subsidiary performance The present research seeks to understand the organizational paths leading to such desirable outcomes as greater learning, increased innovation and improved performance Using a model tested with data collected through a survey of managers in subsidiaries of multinational firms, we find dual, independent paths to improved performance – one through networking and inter-unit learning and the other through subsidiary autonomy and innovation A particular feature of these findings is that they can be shown to be robust after controlling for a wide range of environmental pressures and firm and industry factors However, in the absence of environmental controls the dual path finding is rejected These conflicting findings support the imperative to test models that include a diverse range of environmental pressures so that the true effects of organizational factors on learning, innovation and performance can be identified

Enacting Ecological Sustainability in the MNC: A Test of an Adapted Value-Belief-Norm Framework

Abstract: Undoubtedly, multinational corporations must play a significant role in the advancement of global ecological ethics. Our research offers a glimpse into the process of how goals of ecological sustainability in one multinational corporation can trickle down through the organization via the sustainability support behaviors of supervisors. We asked the question “How do supervisors in a multinational corporation internalize their corporation’s commitment to ecological sustainability and, in turn, behave in ways that convey this commitment to their subordinates?” In response, we created a theoretical framework for supervisor sustainability support behavior based on Stern et al., Human Ecology Review 6(2), 81-97 (1999) value-belief-norm (VBN) theory. We then tested our framework by performing a survey-based field study of supervisors in a multinational pharmaceutical company that has publicly professed a goal of ecological sustainability.

Government's Dilemma: The Role of Government in Imitation and Innovation

Abstract: We consider the role of government in the process of technological development, showing that the role of government regarding technological development varies over the development process. When a country is far from the technological frontier, the government can spur economic development through the centralization of economic and political control, but as the economy approaches the technological frontier, government's role must change considerably, political and economic freedom being necessary. In addition, domestic business groups can act as substitutes for governmental intervention, and multinational corporations can supplement governmental efforts.

Speaking in Tongues : The Importance of Language in International Management Processes

Abstract: This paper considers recent research on language effects in some international management situations, specifically, intraorganizational interactions, such as interunit communication and subsidiary autonomy, and in postmerger integration. Within the multinational corporation (MNC), the need for control and coordination has driven the move toward language standardization, in the form of a common corporate language, with widespread effects on management processes. Our analysis indicates that, while important, language issues have been relatively ignored but may offer a rewarding research avenue regarding the functioning of the MNC, with potentially important implications for management.

Location-Level Links Between Diversity and Innovative Climate Depend on National Power Distance

Abstract: In this study, we examined the relationship between the demographic diversity and innovative climates of 248 organizational locations of a multinational company in 24 countries. Supporting a status characteristics perspective, multilevel analyses revealed that diversity in the more task-oriented demographic attributes of organizational tenure and functional background was negatively related to these locations' innovative climates in high-power-distance countries but positively related to the locations' innovative climate in low-power-distance countries. These interactive effects were not found for the more relations-oriented demographic attributes of age and gender.

Foreign Entry Mode and Performance: The Moderating Effects of Environment*

Abstract: As the trend toward economic globalization increases, the internationalization of small and medium-sized enterprises (SMEs) has become an important topic. Research on the performance outcomes of foreign market entry strategies has been primarily considered from the perspective of the multinational corporations. In this paper hierarchical regression analyses were conducted on archival data of 123 publicly held manufacturing SMEs based in the United States to test a contingency model that hypothesizes more of the performance variance is explained when the foreign market entry mode is aligned strategically with domestic and foreign environmental factors. The results indicate that firms will have a higher rate of international revenue growth using no-equity-based (exporting) foreign market entry modes in growing domestic environments. International revenue growth is higher for equity-based modes when foreign market risks are high. The findings should provide managers of SMEs with contextual evidence for making successful foreign market entry decisions.

The ‘new generation of African entrepreneurs’: networking to change the climate for business and private sector-led development

Abstract: This paper discusses the entrepreneurial landscape in Africa and locates a new generation of African entrepreneurs and their business networks within it. Unlike others in that landscape (i.e. micro- or small-scale informal sector vendors, and traditional or multinational large-scale formal sector firms), the ‘new generation’ entrepreneurs are business globalists who organized a system of business enterprise networks consisting of national, regional, and pan-African organizations. The study analyses interview data from 57 men and women network members from 10 countries (Botswana, Ethiopia, Ghana, Kenya, Mali, Senegal, South Africa, Uganda, Zambia, and Zimbabwe). Some defining characteristics of these entrepreneurs are interactive social and business relationships, use of modern management methods and information technology, trust among fellow members, transparent business practices, advocacy on behalf of the private sector, and commitment to increasing intra-African commerce. Their mission is to improve the climate for private sector business in Africa and to promote regional economic integration. They pursue cross-national commercial ventures, maintain official observer status at established regional economic organizations, sign memoranda of understanding with multilateral agencies, establish venture capital funds, and help to change government policies. The paper identifies characteristics of the ‘new generation’ entrepreneurs, evaluates goals and achievements of their networks, and concludes that despite limitations, these entrepreneurs and their organizations have created intra- and cross-national networks that strengthen private-sector-led economic growth in Africa.

Unraveling home and host country effects: an investigation of the HR policies of an American multinational in four European countries

Abstract: This article argues that the institutional "home" and "host" country effects on employment policy and practice in multinational corporations (MNCs) need to be analyzed within a framework which takes more account both of the multiple levels of embeddedness experienced by the MNC, and processes of negotiation at different levels within the firm. Using in-depth case study ana- lysis of the human resource (HR) structure and industrial relations and pay policies of a large U.S.-owned MNC in the IT sector, across Germany, Ireland, Spain, and the United Kingdom, the article attempts to move towards such a framework.