Showing papers on "Multinational corporation published in 2011"

An empirical assessment of the proximity/concentration tradeoff between multinational sales and trade

Abstract: This paper examines the extent to which multinational location decisions reflect a trade-off between achieving proximity to customers and concentrating production to achieve scale economies. It finds that overseas production by multinationals increases relative to exports the higher are transport costs and trade barriers and the lower are investment barriers and scale economies at the plant level relative to the corporate level. However, it is not possible to reject a model with only country and industry effects. The evidence also suggests that multinational activity is more likely the more similar are the home and foreign markets--contrary to conventional wisdom. Copyright 1997 by American Economic Association.

Firm Exports and Multinational Activity Under Credit Constraints

Abstract: This paper provides firm-level evidence that credit constraints restrict international trade flows and affect the sectoral pattern of multinational activity Using detailed customs data from China, we show that foreign affiliates and joint ventures have better export performance than private domestic firms in financially more vulnerable sectors These results are stronger for destinations with higher trade costs and not driven by variation in firm size or by other sector determinants of FDI Our findings are consistent with multinational subsidiaries being less liquidity constrained because they can tap additional funding from their parent company and/or access foreign capital markets More broadly, they suggest that FDI can alleviate the impact of domestic financial market imperfections on aggregate growth, trade and private sector development

Predicting stakeholder orientation in the multinational enterprise: A mid-range theory

Abstract: As the reach of corporations increasingly extends across borders, a key research question is whether overseas subsidiaries adopt a shareholder-centric orientation, centered on maximizing shareholder wealth, or a stakeholder-centric orientation, centered on creating value for a broader range of stakeholders. Existing theories, addressing the corporate level of analysis, focus on forces exogenous to the firm: local resource pressures, and institutional norms. Using a combination of induction and fuzzy-set analysis, I draw on documentary evidence and 298 interviews with managers and stakeholders to build theory about the conditions that shape subsidiaries’ stakeholder orientations. Two major findings emerge. First, although theory emphasizes external stakeholders’ control over resources, internal control through the corporate parent can crowd out the voices of local stakeholders. Second, although institutional theory proposes isomorphism with local norms and standards, some corporations are subject to scrutiny by global stakeholders, and their subsidiaries face higher requirements for social engagement than their peers. These findings are the foundation of a mid-range theory that combines conventional explanations, focused on environmental factors, and an internal-stakeholder perspective, based around the roles of the parent corporation as owner and resource provider, to predict stakeholder orientation.

Obligating, Pressuring, and Supporting Dimensions of the Environment and the Non‐Market Advantages of Developing‐Country Multinational Companies

Abstract: We analyse the non-market advantages of developing-country multinational companies (DMNCs) over advanced-economy multinational companies (AMNCs) when both compete in the same host country. Non-market advantages are advantages based on resources developed by the firm to operate in a country's environment. Building on the resource-based theory and the concept of distance, we classify dimensions of a country's environment into three types (obligating, pressuring, and supporting) and argue that each type has a different impact on the advantages of DMNCs over AMNCs. First, obligating dimensions are those dimensions in which countries are not more or less developed than others; they are merely different, obligating a firm to develop particular non-market resources to operate there. In such cases, the advantage of DMNCs over AMNCs cannot be differentiated. Instead, MNCs from more distant home countries have a disadvantage compared to MNCs from less distant countries. This is the traditional conceptualization of distance in the literature. Second, pressuring dimensions are those dimensions in which countries are more or less demanding in pressuring the firm to continuously upgrade its non-market resources. For these dimensions, DMNCs face a disadvantage against AMNCs, because the latter have more sophisticated non-market resources than the former. Third, supporting dimensions are those in which countries are more or less developed in their provision of external non-market resources that support the firm's operations. In this case, DMNCs tend to enjoy an advantage over AMNCs, because the former are better at dealing with a lack of supporting resources than the latter. These last two types of dimensions challenge the commonly held ideas that distance is always directionless and always results in a disadvantage.

Agency Perspectives on Corporate Governance of Multinational Enterprises

Abstract: This paper argues for a greater focus on an agency theory (AT) perspective in understanding corporate governance in multinational enterprises (MNEs) since, despite recent developments, the traditional internalization theory approach limits our understanding of the behaviour of these firms. We analyse the contribution of an AT perspective to understanding various aspects of corporate governance in MNEs: internationalization, international joint ventures (IJVs), headquarters–subsidiary relationships, and new forms of global business groups. From this analysis, we suggest that even with the emerging AT literature's focus on the role of ownership as a key governance factor, there is substantial need for research on several key corporate governance mechanisms; namely, the role and nature of dominant owners, the composition of boards of directors, the separation of CEOs and board chairs, executive remuneration, and the role of the market for corporate control. There is scope to examine further the implications of different institutional environments for AT perspectives on the behaviour of MNEs.

A new era of sustainability in emerging markets? Insights from a global CEO study by the United Nations Global Compact and Accenture

Abstract: Purpose – As a multi‐speed recovery from the downturn accelerates progress towards a multi‐polar world in which economic power is more widely dispersed, the emerging markets will play a critical role in the future success of multinational companies. The imperatives faced by companies seeking to secure their future competitiveness can be better appreciated through an understanding of the sustainability landscape, and this paper seeks to examine perspectives on environmental, social and governance issues from CEOs in the emerging markets.Design/methodology/approach – The paper is based on extensive conversations with business leaders, both through the authors' work with leading multinational companies and their survey of over 800 global CEOs conducted in partnership with the United Nations Global Compact – the largest CEO study on sustainability to date. In the spirit of contributing to the debate on corporate sustainability, the paper presents the findings not as an academic submission, but rather as a ref...

Crafting State-Nations: India and Other Multinational Democracies

Abstract: Political wisdom holds that the political boundaries of a state necessarily coincide with a nation's perceived cultural boundaries Today, the sociocultural diversity of many polities renders this understanding obsolete This volume provides the framework for the state-nation, a new paradigm that addresses the need within democratic nations to accommodate distinct ethnic and cultural groups within a country while maintaining national political coherence First introduced briefly in 1996 by Alfred Stepan and Juan J Linz, the state-nation is a country with significant multicultural-even multinational-components that engenders strong identification and loyalty from its citizens Here, Indian political scholar Yogendra Yadav joins Stepan and Linz to outline and develop the concept further The core of the book documents how state-nation policies have helped craft multiple but complementary identities in India in contrast to nation-state policies in Sri Lanka, which contributed to polarized and warring identities The authors support their argument with the results of some of the largest and most original surveys ever designed and employed for comparative political research They include a chapter discussing why the US constitutional model, often seen as the preferred template for all the world's federations, would have been particularly inappropriate for crafting democracy in politically robust multinational countries such as India or Spain To expand the repertoire of how even unitary states can respond to territorially concentrated minorities with some secessionist desires, the authors develop a revised theory of federacy and show how such a formula helped craft the recent peace agreement in Aceh, Indonesia Empirically thorough and conceptually clear, Crafting State-Nations will have a substantial impact on the study of comparative political institutions and the conception and understanding of nationalism and democracy

Multinational Oil Companies and the Adoption of Sustainable Development: A Resource-Based and Institutional Theory Interpretation of Adoption Heterogeneity

Abstract: Sustainable development is often framed as a social issue to which corporations should pay attention because it offers both opportunities and challenges. Through the use of institutional theory and the resource-based view of the firm, we shed some light on why, more than 20 years after sustainable development was first introduced, we see neither the adoption of this business model as dominant nor its converse, that is the total abandonment of the model as unworkable and unprofitable. We focus on multinational corporations (MNCs) because they were among the organizations first called to take action. In order to illustrate the institutional pressures MNCs face and their strategic response to these pressures, we analysed four major oil and gas multinationals subject to similar sustainable development pressures – climate change, biodiversity, renewable energy development and social investment. We argue that normative and coercive isomorphism does not occur at the global level because sustainable development is largely a stakeholder-driven rather than a broad social pressure. That is, host country interpretation of sustainable development pressures varies across an MNC’s subsidiary network. Based on the analysis of the four major MNCs’ annual reports from 2000 to 2005, we argue that mimetic isomorphism may occur, but since it implies the use of complex and intangible resources, mimetic processes are slow, rare and discretionary.

Understanding Global Trade

Abstract: Global trade is of vital interest to citizens as well as policymakers, yet it is widely misunderstood. This compact exposition of the market forces underlying international commerce addresses both of these concerned groups, as well as the needs of students and scholars. Although it contains no equations, it is almost mathematical in its elegance, precision, and power of expression. It provides a thorough explanation of what shapes the international organization of production and distribution and the resulting trade flows. It reviews the evolution of knowledge in this field from Adam Smith to today as a process of theoretical modeling, accumulation of new empirical data, and then revision of analytical frameworks in response to evidence and changing circumstances. It explains the sources of comparative advantage and how they lead countries to specialize in making products which they then sell to other countries. While foreign trade contributes to the overall welfare of a nation, it also creates winners and losers, and the author describes mechanisms through which trade affects a country's income distribution. The book provides a clear and original account of the revolutions in trade theory of the 1980s and the most recent decade. It shows how scholars shifted the analysis of trade flows from the sectoral level to the business-firm level, to elucidate the growing roles of multinational corporations, offshoring, and outsourcing in the international division of labor. The author's explanation of the latest research findings is essential for an understanding of world affairs

The Governance of the Multinational Enterprise: Insights from Internalization Theory

Abstract: The objectives of this paper are to outline the contribution of internalization theory to our understanding of the governance of the MNE, and to highlight aspects of the theory that we believe have received insufficient attention in the literature. In particular, we suggest two promising lines of future research. The first focuses on the internal transaction costs associated with the governance and organization of the activities within the MNE, and here we highlight the costs of information acquisition and transmission, the costs of coordination, and the costs of aligning the interests of different stakeholders within the MNE. The second addresses the implications of different assumptions about the risk propensity of the MNE.

Internal Embeddedness, Headquarters Involvement, and Innovation Importance in Multinational Enterprises.

Abstract: For organizations upgrading their competitive base, innovation is crucial for survival and prosperity (Baumol, 2002). In the field of international business and management, innovation is considered strategically important for the ability of multinational enterprises (MNEs) to build and sustain competitive advantage, thus creating value (Franko, 1989; Hitt et al., 1996). Given these premises, and in line with recent studies, such as the one made by Garcia-Pont et al. (2009) which suggests that researchers have devoted limited attention to the effects of internal embeddedness on the organizational scope of subsidiary initiatives and competitive advantage, we investigate how subsidiary internal embeddedness, pertinent to innovation-developing activities, affects head-quarters involvement in the development process and how these two factors influence the impact and the importance of the innovation.

The effects of perceived organizational support, perceived supervisor support and intra‐organizational network resources on turnover intentions: A study of Chinese employees in multinational enterprises

Abstract: Purpose – The purpose of this study is to investigate the impact of perceived organizational support (POS), perceived supervisor support (PSS) and intra‐organizational network resources on the turnover intentions of the Chinese employees of multinational enterprises.Design/methodology/approach – The study utilized structured equation modeling to analyze survey data from 437 Chinese employees of five multinational enterprises operating in the Chinese service sector.Findings – The study found that POS was positively related to affective organizational commitment, which in turn was negatively related to turnover intentions. A direct relationship was revealed between PSS and turnover intentions, as well as a mediated relationship through POS. In contrast, the relationship between intra‐organizational network resources and turnover intentions was fully mediated through POS.Research limitations/implications – The cross sectional design is a limitation of the study. Another limitation regards the generalisabilit...

Globalization and poverty in Senegal: a worst case scenario?

Abstract: There is no consensus about how globalisation – trade and foreign investments – affects poverty reduction. Using household survey data, this study contributes to the empirical literature on globalisation and poverty by analysing the household-level implications of increased foreign investments and trade in the horticulture sector in Senegal. In many aspects this represents what many would consider a ‘worst-case scenario’. Stringent rich country standards are imposed on exports and the supply chain is controlled by a single multinational company with extreme levels of supply base consolidation and vertical integration and complete exclusion of smallholder suppliers. We analyse and quantify income and poverty effects under these ‘worstcase conditions’ and find significant positive welfare impacts through employment creation and labour market participation.

Entrepreneurship, Innovation, and Economic Development

Abstract: Entrepreneurship and innovation are two of the most pervasive concepts of our times, yet there are still gaps in our understanding of the interactions between entrepreneurship and innovation, particularly in developing countries. This book is an attempt to fill this gap. It focuses on the entrepreneurship-innovation-development nexus, drawing heavily on empirical evidence from developing countries. Cross-country and individual country experiences cover nations as diverse as Ethiopia, India, Turkey, Vietnam, and also examine lessons from advanced economies such as Finland. Three sets of questions are addressed. What is the impact of entrepreneurship and innovation on growth and development? What determines the innovative performance of entrepreneurs in developing countries? What role does the institutional environment play in shaping the extent and impact of innovative activities? A key message is that entrepreneurial innovation, whether through small firms, large national firms, or multinational firms, is often vibrant in developing countries, but does not always realise its full potential. This is due to institutional constraints, the absence of the appropriate mix of different types of small and large and domestic and foreign firms, and insufficiently developed firm capabilities. The contributions provide a better understanding of the determinants and impacts of innovation in developing countries and the policies and institutions that support or hinder innovation.

Regulating for corporate human rights abuses : the emergence of corporate reporting on the ILO’s human rights standards within the global garment manufacturing and retail industry

Abstract: Despite the ubiquitous nature of the discourse on human rights there is currently little research on the emergence of disclosure by multinational corporations on their human rights obligations or the regulatory dynamic that may lie behind this trend. In an attempt to begin to explore the extent to which, if any, the language of human rights has entered the discourse of corporate accountability, this paper investigates the adoption of the International Labour Organisation's (ILO) human rights standards by major multinational garment retail companies that source products from developing countries, as disclosed through their reporting media. The paper has three objectives. Firstly, to empirically explore the extent to which a group of multinational garment retailers invoke the language of human rights when disclosing their corporate responsibilities. The paper reviews corporate reporting media including social responsibility codes of conduct, annual reports and stand-alone social responsibility reports released by 18 major global clothing and retail companies during a period from 1990 to 2007. We find that the number of companies adopting and disclosing on the ILO's workplace human rights standards has significantly increased since 1998 – the year in which the ILO's standards were endorsed and accepted by the global community (ILO, 1998). Secondly, drawing on a combination of Responsive Regulation theory and neo-institutional theory, we tentatively seek to understand the regulatory space that may have influenced these large corporations to adopt the language of human rights obligations. In particular, we study the role that International Governmental Organisation's (IGO) such as ILO may have played in these disclosures. Finally, we provide some critical reflections on the power and potential within the corporate adoption of the language of human rights.

Ethnic Innovation and U.S. Multinational Firm Activity

Abstract: This paper studies the impact that immigrant innovators have on the global activities of U.S. firms by analyzing detailed data on patent applications and on the operations of the foreign affiliates of U.S. multinational firms. The results indicate that increases in the share of a firm's innovation performed by inventors of a particular ethnicity are associated with increases in the share of that firm's affiliate activity in their native countries. Ethnic innovators also appear to facilitate the disintegration of innovative activity across borders and to allow U.S. multinationals to form new affiliates abroad without the support of local joint venture partners. Thus, this paper points out that immigration can enhance the competitiveness of multinational firms.

Global strategy and the collaboration of MNEs, NGOs, and governments for the provisioning of collective goods in emerging markets

Abstract: The global business environment is increasingly characterized by dynamic collaborations among public as well as private for-profit and not-for-profit actors for the provision in emerging markets of such local public goods as health, education, transportation, and utilities whose supply has received scant attention in international business research. Drawing from, and expanding on, transaction-cost economics and institutional theory, we analyze the choice of collaborative arrangements among the three parties for the local supply of these public goods—here, called a ‘collective goods’ via contracting, alliance, internationalization or assistance—the latter a governance mode hitherto overlooked in transaction-cost economics but essential in dealing with collective goods and nonmarket actors. We discuss the implications of these arrangements for multinational enterprise nonmarket strategies within the realm of global strategy.

Politics and Power in the Multinational Corporation: The Role of Institutions, Interests and Identities

Abstract: List of figures List of tables Foreword Ram Mudambi Part I. Introduction: 1. Politics and power in the multinational corporation: an introduction Mike Geppert and Christoph Dorrenbacher Part II. Politics and Power in MNCs: Institutions, Social Embeddedness and Knowledge: 2. Resource dependence and construction, and macro and micro politics in transnational enterprises and alliances: the case of jet engine manufacturers in Germany Arndt Sorge and Katja Rothe 3. Bargained globalisation: employment relations providing robust 'tool kits' for socio-political strategizing in MNCs in Germany Karen Williams and Mike Geppert 4. Bridging roles, social skill and embedded knowing in multinational organisations Mark Fenton-O'Creevy, Paul Gooderham, Jean-Luc Cerdin and Rune Ronning Part III. Politics and Power in MNCs: Headquarters-Subsidiary Relations: 5. Conflict in headquarters-subsidiary relations: a critical literature review and new directions Susanne Blazejewski and Florian Becker-Ritterspach 6. Intra-organizational turbulences in multinational corporations Andreas Schotter and Paul W. Beamish 7. Conflicts in headquarters-subsidiary relationships: headquarters-driven charter losses in foreign subsidiaries Christoph Dorrenbacher and Jens Gammelgaard 8. Headquarters-subsidiary relationships from a social psychological perspective: how perception gaps concerning the subsidiary's role may lead to conflict Stefan Schmid and Andrea Daniel Part IV. Politics and Power in MNCs: Role of National Identities and Identity Work: 9. Subsidiary manager socio-political interaction: the impact of host country culture Christopher Williams 10. Unequal power relations, identity discourse, and cultural distinction drawing in MNCs Sierk Ybema and Hyunghae Byun 11. National identities in times of organizational globalization: a case study of Russian managers in two Finnish-Russian organizations Alexei Koveshnikov 12. Contesting social space in the Balkan region: the social dimensions of a 'Red' joint venture Mairi Maclean and Graham Hollinshead Part V. Conclusions: 13. Reflections on the macro-politics of micro-politics Glenn Morgan Index.

Managing industrial service offerings in global business markets

Abstract: Purpose – Despite the increased focus on industrial services in manufacturing companies, little research to date has focused on understanding the roles of local and central organizations in global ...

The Global Reserve Army of Labor and the New Imperialism

Abstract: In the last few decades there has been an enormous shift in the capitalist economy in the direction of the globalization of production. Much of the increase in manufacturing and even services production that would have formerly taken place in the global North—as well as a portion of the North’s preexisting production—is now being offshored to the global South, where it is feeding the rapid industrialization of a handful of emerging economies. It is customary to see this shift as arising from the economic crisis of 1974–75 and the rise of neoliberalism—or as erupting in the 1980s and after, with the huge increase in the global capitalist labor force resulting from the integration of Eastern Europe and China into the world economy. Yet, the foundations of production on a global scale, we will argue, were laid in the 1950s and 1960s, and were already depicted in the work of Stephen Hymer, the foremost theorist of the multinational corporation, who died in 1974.This article can also be found at the Monthly Review website, where most recent articles are published in full.Click here to purchase a PDF version of this article at the Monthly Review website.

A Global Mining Corporation and Local Communities in the Lake Victoria Zone: The Case of Barrick Gold Multinational in Tanzania

Abstract: This case explores a Canadian mining corporation, Barrick Gold Corporation (Barrick), and the way it engages with the local communities that surround its mining activities in the Lake Victoria Zone, Tanzania. Following recent organized tensions within several local communities and heightened criticism from those communities [examples of recent discontent from local communities and workers at Barrick Gold Corp in Tanzania: http://www.protestbarrick.net/article.php?id=214 ; http://www.protestbarrick.net/article.php?list=type&type=12 ; http://www.reuters.com/article/marketsNews/idUSN1247233520081212 ; http://www.corpwatch.org/article.php?id=15263 ; http://www.miningwatch.ca/index.php?/Tanzania_en/What_Really_Happened (accessed Feb- ruary 25, 2009)], as well as from local media, social lobbyists, and local not-for-profit organizations (NFOs), the case examines the way Barrick has responded to this situation by implementing global corporate social responsibility (CSR) policies in an attempt to strike a balance between its international business capabilities and its localization strategies. In spite of these efforts, tension between Barrick and the local communities within the company’s zone of operations has not abated. This issue has left Barrick’s senior management wondering what more the company could reasonably do to resolve the situation.