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Showing papers on "Multinational corporation published in 2019"


Journal ArticleDOI
TL;DR: In this article, the authors applied a qualitative case study design involving 26 semi-structured interviews with leading members of firms, including chief digital officers and chief executive officers, and found that management desire to increase control and enable real-time performance measurement is a significant driving force behind Industry 4.0, alongside production factors.

542 citations


Journal ArticleDOI
Michael A. Witt1
TL;DR: In this article, the authors introduce two relevant theories of de-globalization from political science, liberalism and realism, and discuss the resulting opportunities in three areas of IB research: political strategies and roles of multinational enterprises (MNEs), global value chains, and the role of the national context.
Abstract: De-globalization, now a distinct possibility, would induce a significant qualitative shift in strategies, structures, and behaviors observable in international business (IB). Coming to terms with this qualitative shift would require IB research to develop a much deeper integration of politics, the key driver of de-globalization. To support such integration, this paper introduces two relevant theories of (de-)globalization from political science, liberalism and realism. Both predict de-globalization under current conditions but lead to different expectations about the future world economy: liberalism suggests a patchwork of economic linkages, while realism predicts the emergence of economic blocs around major countries. This paper discusses the resulting opportunities in three areas of IB research: political strategies and roles of multinational enterprises (MNEs), global value chains, and the role of the national context. For political strategies and roles, there is a need to explore how regular business activities and deliberate political agency of MNEs affect the political sustainability of globalization. For value chains, questions include their future reach and specialization, changes in organizational forms, and the impact of political considerations on location decisions. Research opportunities on national contexts relate to their ability to sustain globalization and their connection with economic and military power.

243 citations


Journal ArticleDOI
TL;DR: The authors argued that emerging market multinational enterprises' CSR reporting is shaped by their dual embeddedness in their home countries and the global institutional environment and examined how EM-MNEs' home country institutional voids and degree of internationalization affect their tendency to engage in such decoupling.
Abstract: Research shows that emerging market multinational enterprises (EM-MNEs) increasingly use corporate social responsibility (CSR) reporting as a global legitimation strategy. Less is known about when their CSR reporting is decoupled from their CSR performance. Drawing on neo-institutional theory, we argue that EM-MNEs’ CSR decoupling is shaped by their dual embeddedness in their home countries and the global institutional environment. We then examine how EM-MNEs’ home country institutional voids and degree of internationalization affect their tendency to engage in such decoupling. Our model receives partial support in a study of 93 MNEs from 15 emerging markets between 2005 and 2012.

193 citations


Journal ArticleDOI
TL;DR: In this paper, the authors examine the emerging constraints on multinational enterprises, imposed by a bifurcated world order, and discuss how the dynamic capabilities framework can guide scholars and managers alike to achieve new forms of evolutionary fitness.
Abstract: The rapid reshaping of the global economic order requires fundamental shifts in international business scholarship and management practice. New forms of protectionist policies, new types of internationalization motives, and new tools of techno-nationalism may lead to what we call “bifurcated governance” at the macro-level and “value chain decoupling” at the micro-level. As a result, innovation networks will require novel reconfigurations. We examine the emerging constraints on multinational enterprises, imposed by a bifurcated world order. We also discuss how the dynamic capabilities framework can guide scholars and managers alike to achieve new forms of evolutionary fitness.

175 citations


Journal ArticleDOI
TL;DR: In this paper, the link between global talent management and multinational enterprises' (MNEs) performance has not been theorized or empirically tested and a theoretical framework for how GTM links with MNE performance has been developed.

168 citations


Journal ArticleDOI
TL;DR: A special issue of Small Business Economics critically examines issues concerning the governance of entrepreneurial ecosystems as discussed by the authors, focusing on identifying the relevant stakeholders like entrepreneurial firms and entrepreneurs and how they interact with other stakeholders within a more or less defined system.
Abstract: The “entrepreneurial ecosystem” metaphor is capturing attention in academia, industry, and government. The entrepreneurial ecosystem approach is used in corporate, national, or local contexts, and has grown in prominence given the vital need to transform economies around the creation of innovative ideas, products, services, and technologies. Entrepreneurial ecosystems involve a network, a system, of interactions of individuals and organizations, like financial intermediaries, universities and research institutions, suppliers and customers, multinational companies, or the government. The entrepreneurial ecosystem literature has thus mainly focused on identifying the relevant stakeholders like entrepreneurial firms and entrepreneurs and how they interact with other stakeholders within a more or less defined system. Despite the popularity of the entrepreneurial ecosystem approach, the literature has almost overlooked and largely ignored the governance of entrepreneurial ecosystems. This special Issue of Small Business Economics critically examines issues concerning the governance of entrepreneurial ecosystems.

129 citations


Journal ArticleDOI
TL;DR: Internalization theory is not a monolithic body of knowledge; instead, it has devolved into several ‘streams’, each of which focuses on the interests of particular epistemic communities, while also acting as a more generic organizing framework for those more broadly interested in its application to real-world challenges as mentioned in this paper.
Abstract: Internalization theory has provided a resilient analytical framework that explicitly or implicitly underlines much of International Business scholarship. Internalization theory is not a monolithic body of knowledge; instead, it has devolved into several ‘streams’, each of which focuses on the interests of particular epistemic communities, while also acting as a more generic organizing framework for those more broadly interested in its application to real-world challenges. Following a review of the various streams, we trace the frontiers of current research of the broader internalization framework and identify emerging themes raised by the papers in the special issue. These include transaction cost considerations in the bundling and recombination of assets across diverse contexts, the growing relevance of quasi-internalization, the theoretical challenges of (bounded) rationality for internalization theory, and the increasing disconnect between ownership, control and responsibility. These developments point to new research frontiers for scholars looking to apply or advance internalization theory.

99 citations


Journal ArticleDOI
TL;DR: In this article, the authors characterize microfoundations, discuss their relevance to the global strategy, and show how the papers in this special issue fill important microfoundational gaps in the global business literature.
Abstract: Academic Abstract The emerging microfoundations literature asserts that macro concepts and macro-outcomes, such as firm-level capabilities, performance and strategies, need to be understood in terms of the underlying actions, interactions and characteristics of micro-level entities, such as individual actors and managers. This literature has specific implications for the understanding of cross-level explanatory mechanisms; notably, it asserts that all relations between macro variables are mechanisms that involve micro variables. While the microfoundations literature has been influential in the general strategy literature, global strategy has been less impacted by it. This is paradoxical because the research challenges pointed to by the literature are often magnified in the multinational corporation and in a global strategy context. We characterize microfoundations, discuss their relevance to the global strategy, and show how the papers in this special issue fill important microfoundational gaps in the global strategy literature. For example, Google’s strategic decision in 2018 to reenter the Chinese market (macro-level analysis) is best understood through the thinking of decision-makers in the company, as well as opposition to the move from over one thousand of its employees. Managerial Summary For too long, studies of corporate strategies have focused on the firm as a unit of analysis, as if the firm could decide or think on its own, neglecting the fact that it is managers who think. The underlying motivations, interactions and characteristics of individual managers of companies have often been missing in explanations of global strategy formulation. This can especially be a lacuna in closely-held companies in emerging countries where decision-making is more concentrated in the minds of owners, top managers and family members. The microfoundations literature specifically tries to connect the thinking and backgrounds of individual managers with strategic decisions their firm makes. While the microfoundations literature has made some headway in the general strategy literature, the analysis of global strategy has been less impacted by it. This is paradoxical because the research challenges pointed to by the literature are often magnified in the multinational corporation and in a global strategy context. This introductory paper first refines and enunciates microfoundations theory, in its application to global business. It then also shows how the papers in this special issue fill important microfoundational gaps in the global strategy literature.

90 citations


Journal ArticleDOI
TL;DR: The authors reviewed research from 1970 through 2016 on developed country multinational enterprises (DMNEs) entering and competing in developing economies and identified frontier issues that are understudied yet critical to both theorization and practice of DMNEs.
Abstract: This study reviews research from 1970 through 2016 on developed country multinational enterprises (DMNEs) entering and competing in developing economies. To identify the current state of knowledge of this research and push it further, we review the literature using bibliometric and qualitative content analyses covering leading journals and books. We articulate frontier issues that are understudied yet critical to both theorization and practice of DMNEs in developing economies. We discuss the findings and conclusions from prior research along five key areas: (1) entering developing economies, (2) organizing local activities, (3) managing alliances and joint ventures, (4) competing in dynamic environments, and (5) dealing with institutions, governments and society. We offer prospective insights into future agenda that have important implications for MNE strategies and decisions, and propose frontier directions that encompass strategic localization, reverse transfer and adaptation, co-evolution with local business ecosystems, reorganizing and restructuring, and strategic responses to institutional and market complexity.

87 citations


Journal ArticleDOI
TL;DR: In this paper, the authors present a paradox perspective and argue that sustainability and other business aims are not always compatible, particularly in an emerging market context, and explore how purchasing and sustainability managers within buying firms make sense of and respond to paradoxical tensions in SSCM.
Abstract: An instrumental perspective still dominates research on sustainable supply chain management (SSCM). As an alternative, this study presents a paradox perspective and argues that sustainability and other business aims are not always compatible, particularly in an emerging market context. Often, paradoxical tensions originate in conflicts between the socioeconomic environment of emerging market suppliers and their Western customers' demands for both cost competitiveness and sustainability. We argue that Western buying firms can play a key role in moderating such tensions, as experienced by emerging market suppliers. Specifically, we explore how purchasing and sustainability managers within buying firms make sense of and respond to paradoxical tensions in SSCM. We conduct an in-depth case study of a Western multinational company that sources substantially from Chinese suppliers. While we found strong evidence for a persisting instrumental perspective in the sensemaking and practices of purchasing and sustainability managers, we also observed an alternative response, primarily by sustainability managers that we labeled as "contextualizing." Contextualizing can alleviate the tensions otherwise present in SSCM by making sustainability standards more workable in an emerging market context, and it can help individual managers to move toward paradoxical sensemaking. We outline the value of paradoxical sensemaking in bringing about changes toward "true sustainability" in SSCM.

85 citations


Journal ArticleDOI
TL;DR: This paper reviewed four decades of research about the corporate governance of multinational corporations and identified and discussed three main streams of research that draw on different conceptualizations and theoretical lenses of (corporate) governance.
Abstract: We review four decades of research about the corporate governance of multinational corporations (MNCs), which we label International Corporate Governance (ICG). We identify and discuss three main streams of research that draw on different conceptualizations and theoretical lenses of (corporate) governance. After synthesizing their respective findings, we propose several avenues for future research that integrate these three streams of research with the goal of developing a more nuanced understanding of ICG. We hope this review article will inspire international business scholars to continue examining how corporate governance can be an effective tool for MNC success.

Journal ArticleDOI
TL;DR: In this paper, the authors identified the specific goals considered by Japanese manufacturing multinational enterprises as a priority when establishing or significantly expanding operations in developing countries, such as the Philippines, Indonesia, Thailand and Vietnam.


Journal ArticleDOI
TL;DR: In this paper, the impact of AMNEs and supranational organizations on the regulatory adoption of global IP protection standards was analyzed in 60 developing countries that signed the Trade-relate Aspects of Intellectual Property Rights (TRIPS) agreement of the World Trade Organization in 1994.
Abstract: International agreements and institutions affect innovation in developing countries. We analyze the impact of advanced country multinational enterprises (AMNEs) and supranational organizations on the regulatory adoption of global intellectual property protection standards. In particular, we investigate 60 developing countries that signed the Trade-relate Aspects of Intellectual Property Rights (TRIPS) agreement of the World Trade Organization in 1994. Our empirical findings show that a greater involvement of AMNEs in the domestic innovation systems of developing countries results in more stringent TRIPS adoption and convergence to advanced country IP protection standards. This relationship is positively moderated by country dependency on supranational organizations such as the International Monetary Fund. This analysis contributes to the literature on institutional change and institutional voids. It provides insights into the influence of external actors on the underlying change processes.

Journal ArticleDOI
TL;DR: In this paper, the authors examine the changes in disclosure practices on compliance and the fight against corruption at Siemens AG, a large German multinational corporation, over the period 2000-2011 during which a major corruption scandal was revealed.
Abstract: In the current study, we examine the changes in disclosure practices on compliance and the fight against corruption at Siemens AG, a large German multinational corporation, over the period 2000–2011 during which a major corruption scandal was revealed. More specifically, we conduct a content analysis of the company’s annual reports and sustainability reports during that period to investigate the changes of Siemens’ corruption and compliance disclosure using both quantitative and qualitative methods. Through the lens of legitimacy theory, stakeholder analysis, and organizational facades, we find evidence that Siemens changed its compliance and corruption disclosure practices to repair its legitimacy in the wake of the 2006 corruption scandal. We analyze these strategies more closely by using the rational, progressive, and reputation facades framework (Abrahamson and Baumard in The Oxford Handbook of Organizational Decision Making, pp 437–452, 2008). Our primary findings suggest that the annual reports show peaks of disclosure amounts on corruption and compliance disclosures earlier than sustainability reports, which can be partly explained by analyzing the disclosures made about—and to—the different stakeholder groups. We find that the annual report focuses more on internal stakeholders such as employees, while the sustainability report focuses more on external stakeholders such as suppliers. We also find that the company uses the facades differently depending on which report is being analyzed.

Journal ArticleDOI
TL;DR: In this paper, a moderated mediating framework is proposed to describe the relationships among international diversification, technological capability, market orientation and emerging market multinational enterprises' new product performance, which is more salient for firms entering more developed markets than those entering less developed markets.

Journal ArticleDOI
TL;DR: A game‐theoretic model shows that investment in social brands helps avoid irresponsible practices across the MNE network, thereby inducing subsidiaries to “walk the talk” and challenging the view of CSR as insurance against lapses of responsible conduct.
Abstract: Research Summary: Multinational enterprises (MNEs) invest significant resources in corporate social responsibility (CSR), but their attempts to build a global “social brand” may clash with the execution of operational strategies at a subsidiary level. Using a game‐theoretic model, this research addresses the complex interplay of different contingencies that shape the coordination and control challenges facing MNEs when they implement global CSR strategies, including brand spillovers, the risk of public scandals caused by irresponsible behavior, the size of the MNE network, as well as the roles played by nongovernmental organizations and altruistic managers. Challenging the view of CSR as insurance against lapses of responsible conduct, our model shows that investment in social brands helps avoid irresponsible practices across the MNE network, thereby inducing subsidiaries to “walk the talk.” Managerial Summary: Global social brands are increasingly valuable to multinational enterprises (MNEs), which makes the control and coordination of responsible behavior across their network of foreign subsidiaries a relevant managerial challenge. Indeed, lapses of responsible conduct at the subsidiary level often generate reputational damage at the multinational level. This research explores several mechanisms that help MNEs manage this coordination and control challenge. First, it shows under what conditions MNEs can leverage their investments in social brands to induce responsible practices across their global network. Second, it illustrates how MNEs can exploit collaborations with nongovernmental organizations to reduce the costs of coordinating and controlling their subsidiaries. Finally, it identifies conditions under which MNEs benefit from hiring altruistic managers to run their subsidiaries.

Journal ArticleDOI
TL;DR: This article used historical evidence to challenge a common misperception about internalization theory and reveal evidence of how entrepreneurs and firms with multinational activity faced with market imperfections changed the design of their headquarters and their organizational structures.
Abstract: This article engages in a methodological experiment by using historical evidence to challenge a common misperception about internalization theory. The theory has often been criticized for maintaining that it assumes a hierarchically organized MNE based on knowledge flowing from the home country. This is not an accurate description of how global firms operate in recent decades, but this article shows it has never been true historically. Using longitudinal data on individual firms from the nineteenth century onwards, it reveals evidence of how entrepreneurs and firms with multinational activity faced with market imperfections changed the design of their headquarters and their organizational structures.

Journal ArticleDOI
12 Feb 2019
TL;DR: In this article, the authors examine how multinational companies from five industries can adapt to what they call Supply Chain 4.0, the supply chain created as a result of the new digital era brought by the internet.
Abstract: The aim of this paper is to examine how multinational companies from five industries can adapt to what we call Supply Chain 4.0; the supply chain created as a result of the new digital era brought ...

Journal ArticleDOI
TL;DR: The authors theorize that foreign multinationals wield a particularly significant competitive weapon in host markets: as outsiders, they can pinpoint social schisms in host labor markets and exploit them to gain competitive advantage.
Abstract: We theorize that foreign multinationals wield a particularly significant competitive weapon in host markets: as outsiders, they can pinpoint social schisms in host labor markets and exploit them fo...

Journal ArticleDOI
TL;DR: In this article, the authors used confidential UK corporate tax returns data to explore whether there are systematic differences in the amount of taxable profits that multinational and domestic companies report, and they found that the ratio of the taxable profits to total assets reported by foreign multinational subsidiaries is one-half that of comparable domestic standalones.
Abstract: In this paper, I use confidential UK corporate tax returns data to explore whether there are systematic differences in the amount of taxable profits that multinational and domestic companies report. I find that the ratio of taxable profits to total assets reported by foreign multinational subsidiaries is one-half that of comparable domestic standalones. The majority of the difference is attributable to the fact that a higher proportion of foreign multinational subsidiaries report zero taxable profits. I document how the estimated difference is related to profit shifting and show that using accounting data leads to much smaller estimates of the difference.

Journal ArticleDOI
TL;DR: In this article, a hierarchical regression analysis of 211 suppliers of multinational enterprises (MNEs) in China, which is an emergent country characterized with the world's largest supplier base servicing MNEs, demonstrates that relational ties including reciprocity, cooperation, and interaction at the corporate level have mediation and moderation effects on the formal control-CSR practices implementation link for these suppliers.

Journal ArticleDOI
01 Aug 2019
TL;DR: In this article, the authors evaluated the causes of political conflict and its consequences for investments by multinational enterprises (MNEs) and found that a decrease in subjective well-being can motivate citizens to engage in acts of civil resistance.
Abstract: Over the last few years, the world has been shocked by a new wave of political conflict, including the events of the Arab Spring and the conflict in Ukraine. This dissertation evaluates the causes of political conflict and its consequences for investments by multinational enterprises (MNEs). The studies that are part of this thesis aim to improve our understanding of the relationships between political conflict, investment and ultimately human prosperity. These three concepts are interdisciplinary in nature and the different chapters included in this thesis reflect this. By combining conceptual frameworks and methodologies from economics and business research, they shed light on the increasing levels of political conflict and the reaction of firms to this development. In the first part of this thesis, the causes of non-violent political conflict are examined. The findings demonstrate that a decrease in subjective well-being (i.e. happiness) can motivate citizens to engage in acts of civil resistance. In the second part, the consequences of armed political conflict for Foreign Direct Investment (FDI) are examined. The effect of political violence on greenfield FDI is heterogeneous across types of violence, sectors and firms, falsifying the claim that all FDI flows are negatively affected by political violence. In addition, the results indicate that similar to international conflict, internal wars can disturb existing relationships between the MNEs’ home and host country.

Book
Anju Mary Paul1
31 Jan 2019
TL;DR: Multinational Maids as discussed by the authors investigates the international migrations of Filipina and Indonesian domestic workers in a series of overseas countries to improve their lives and, in some cases, seek permanent residence in another country.
Abstract: Multinational Maids offers an in-depth investigation into the international migrations of Filipino and Indonesian migrant domestic workers. The author taps on her rigorous study of more than 1,200 subjects' migration trajectories to reveal how these migrants work in a series of overseas countries to improve their lives and, in some cases, seek permanent residence in another country. Challenging the portrayal of Asian migrant domestic workers as victims of globalization, Multinational Maids reveals migrants' agency and strategic thinking under conditions of constraint. At the market level, the establishment of guestworker programmes for migrant domestic workers in multiple countries has created a global labor market. A transnational diaspora shapes migrants' evolving destination imaginaries, while manpower recruitment and placement agencies create transnational mobility structures. In addition, differing destination hierarchies and degrees of access to resources lead to the adoption of divergent stepwise trajectories. Written in an accessible manner, Multinational Maids appeals to migration scholars, policymakers, activists and students.

Dissertation
01 Jan 2019
TL;DR: In this paper, an actor-centered approach is used to study the potential and limitations of international business in a paradoxical world of economic globalization and political fragmentation, focusing on an entrepreneur originating from a small country but transcending boundaries.
Abstract: By looking through the lens of a global entrepreneur, this dissertation provides insight into a crucial period in world history: the First Global Economy (1870-1914). To tackle the broader issue of the opportunities and limitations in a paradoxical world of economic globalization and political fragmentation, I take an actor-centered approach. The history of the business empire of the Belgian Edouard Empain (1852-1929) elucidates a complex era characterized by globalization and nation-state formation. By focusing on an entrepreneur originating from a small country but transcending boundaries, the possibilities and risks for international business in this period can be studied. Starting in 1880, the business group of Edouard Empain developed into one of the largest in Belgium and became a global player active on four continents. The Empain group mainly invested in public utilities such as transportation and electricity production as well as in electrical engineering. Within this context, this dissertation answers the following question: What strategies did a multinational enterprise from a small country adopt to seize the opportunities and handle the risks of a world characterized by both economic integration and geopolitical rivalry at a global scale? I argue that, to understand the development of international business in the First Global Economy, we need to acknowledge the importance of the following three domains: the geographical and sectoral strategy, the corporate structure, and the business-government relations. To address these issues, this dissertation uses a wide array of archival sources and secondary literature. It combines a comprehensive approach of the more than eighty Empain companies with selected case studies to understand the dynamics of international business. This allows me to argue that Empain developed strategies in the three abovementioned domains to transform the global economic and political challenges into opportunities. First, his investments were the result of an entrepreneurial logic combined with the pursuit of economies of scale and scope. Secondly, the business group form had many advantages, making it an efficient device for investments in the First Global Economy. Thirdly, thanks to the complex interplay between the multinational enterprise, the home country and the host countries, an entrepreneur from a small country could exploit the international political frictions of the late nineteenth-century world to develop a global business empire.

Journal ArticleDOI
TL;DR: In this paper, the authors argue that the changing nature of the multinational enterprise (e.g., its improved ability to fine-slice the value chain and disperse it geographically) makes it increasingly important to rethink current tax policies.
Abstract: The taxation of the multinational enterprise (MNE) has been a continuing concern for policymakers. We argue that the changing nature of the mobile MNE (e.g., its improved ability to fine-slice the value chain and disperse it geographically) makes it increasingly important to rethink current tax policies. First, there should be more focus on the inefficiencies that arise when taxation leads to the inefficient location of MNE activities. Thus, MNEs may shift activities to low-tax jurisdictions that offer lucrative pecuniary and non-pecuniary incentives, but do not enable their investments to maximize their contribution to global value creation. Second, international tax regimes should ensure that MNEs pay for their consumption of local public goods, and public finance scholars have long known that the taxation-based distortions are minimized when the tax objects are immobile. However, the bulk of current tax policies are aimed at corporate profits that are both poor proxies for the consumption of local public goods as well as extremely mobile. Integrating theory from international business, public finance and economic geography, our analysis demonstrates that moving the incidence of taxation from corporate profits to dividends and consumption would unambiguously improve both wealth creation and efficiency.

Journal ArticleDOI
TL;DR: In this article, uncertainty is a key contextual factor that affects the decision-making of multinational corporations on many types of international operation, and the variety of ways in which uncertainty has...
Abstract: Uncertainty is a key contextual factor that affects the decision-making of multinational corporations on many types of international operation. However, the variety of ways in which uncertainty has...

Journal ArticleDOI
TL;DR: In this paper, a qualitative study of Unilever, an exemplary case of a transnational, found that in the period 2000-2012 the company evolved into a very different organizational form with a distinct set of characteristics.
Abstract: Bartlett and Ghoshal’s transnational ‘solution’ for managing the MNC remains popular among scholars and practitioners alike. However, our in-depth qualitative study of Unilever, an exemplary case of a transnational, found that in the period 2000–2012 the company evolved into a very different organizational form with a distinct set of characteristics. We call this the neo-global corporation. In explaining how and why this transformation occurred, we turn to organizational evolutionary theory, and use our case to generate a multi-cycle process model of MNC evolution. Given the dynamism of the MNC and its environments, we anticipate that the neo-global will also eventually transform, and call for more organization-level case studies of MNCs in future international business research.

Journal ArticleDOI
TL;DR: This study focuses on two ways Japanese multinational firms invest incrementally in the context of foreign expansion—by limiting the equity stake or the size of investment in their foreign affiliates—and analyzes when such incremental strategies create valuable growth options that translate into market value.
Abstract: Research Summary One of the motivations for multinational firms' investment in foreign affiliates in uncertain environments is the future growth opportunities the investment may bring. We argue that whether firms derive growth option value from their multinational investment is determined by the interaction between market uncertainty and firms' incremental investment strategy. We show evidence that multinational investment creates growth option value for firms operating affiliates in host countries with high market uncertainty. In such uncertain environments, however, incremental investment strategies—limiting the equity stake or the size of investment in affiliates, across all countries or within each country—prove critical to the value of growth options. Creating growth option value therefore requires an alignment of firms' incremental investment strategy to the uncertain country environments they confront. Managerial Summary Managers have long recognized the importance of taking an incremental approach to strategy making, but evidence on whether and when strategic incrementalism is valuable to firms remains scarce. This study focuses on two ways Japanese multinational firms invest incrementally in the context of foreign expansion—by limiting the equity stake or the size of investment in their foreign affiliates—and analyzes when such incremental strategies create valuable growth options that translate into market value. We find that these strategies, whether implemented across all host countries or within each country, do create significant growth option value, provided that market uncertainty is high. The findings highlight the importance of aligning firms' incremental strategy to the environmental uncertainties they confront, in line with the core notion of “fit” in strategic management.

Journal ArticleDOI
TL;DR: In this article, the authors argue that the tax avoidance motive of multinational enterprises can incentivize managers to locate profits in low-tax jurisdictions without affecting the locations of their real operations, and they also argue that proposals to tax shareholders and consumers rather than corporate profits face significant theoretical and practical obstacles.
Abstract: The international tax regime in relation to multinational enterprises (MNEs) is ineffective and a rethink is required. We illustrate that the tax avoidance motive of MNEs can incentivize managers to locate profits in low-tax jurisdictions without affecting the locations of their real operations. We also argue that proposals to tax shareholders and consumers rather than corporate profits face significant theoretical and practical obstacles. Finally, we extend a recently proposed model to tax MNEs using a sales-based allocation of consolidated worldwide profits. This aims to prevent MNEs shifting profits to low-tax jurisdictions and reduces incentives for tax competition between countries.