scispace - formally typeset
Search or ask a question

Showing papers on "Multinational corporation published in 2020"


Journal ArticleDOI
TL;DR: In this paper, the impact of regulatory variables in attracting or deterring foreign direct investment (FDI) was examined using World Bank data for 189 economies, and the authors found that countries with stronger contract enforcement and more efficient international trade regulations attract more FDI.

120 citations


Journal ArticleDOI
TL;DR: In this paper, a review of the literature on tax avoidance by multinational corporations is presented, including transfer mispricing, international debt shifting, treaty shopping, tax deferral and corporate inversions.
Abstract: This paper reviews the rapidly growing empirical literature on international tax avoidance by multinational corporations. It surveys evidence on main channels of corporate tax avoidance including transfer mispricing, international debt shifting, treaty shopping, tax deferral and corporate inversions. Moreover, it performs a meta analysis of the extensive literature that estimates the overall size of profit shifting. We find that the literature suggests that, for the most recent year, a 1 percentage-point lower corporate tax rate compared to other countries will expand before-tax income by 1.5 percent—an effect that is larger than reported as the consensus estimate in previous surveys and tends to be increasing over time. The literature on tax avoidance still has several unresolved puzzles and blind spots that require further research.

99 citations


Journal ArticleDOI
TL;DR: In this paper, the Uppsala model is applied to a number of different IB issues, most notably the process of globalization, which is best understood as a driver of the evolution of the multinational business enterprise (MBE).
Abstract: In our award-winning 2009 article, we further developed the model that we originally presented in 1977. We observed that firms form relationships and that those relationships become networks, and thus in the end the business macro environment consists of networks of relationships between firms. Those relationships have far-reaching consequences, especially in terms of opportunity recognition and development. Since 2009, we have applied the Uppsala model to a number of different IB issues, most notably the process of globalization, which we believe is best understood as a driver of the evolution of the multinational business enterprise (MBE). We suggest that our model can still be improved further by recognizing the general psychological characteristics of managers, for instance, what makes them tend to shy away from radical change and to prefer instead an incremental approach? What does this mean for internationalization? Generally, we think that the closer our assumptions are to reality, the better the resulting model.

69 citations


Journal ArticleDOI
TL;DR: Using an in-depth qualitative case study design, focusing on a significant global technology consulting multinational enterprise's (MNEs) subsidiary in India, this article analyzed interview, docu...
Abstract: Using an in-depth qualitative case study design, focusing on a significant global technology consulting multinational enterprise’s (MNEs) subsidiary in India, this research analyses interview, docu...

63 citations


Journal ArticleDOI
TL;DR: In this paper, the authors examined the growing number of publications on multinational enterprise management of sustainability issues and found that although the literature is tending towards growing acceptance about sustainability and its challenges most researchers have focused on corporate social responsibility and investigate their own niche problem, industry, and country using their own chosen theory and do not consider the need for consolidation and integration of social, environmental and economic performance.
Abstract: This paper examines the growing number of publications on multinational enterprise management of sustainability issues. Based on an integrative literature review and thematic analysis, the paper analyses and synthesises the current state of knowledge about main issues arising. Key issues identified include the following: choice of sustainability strategies; management of the views of headquarters towards sustainability; local cultural sustainability perspectives in developed and developing host countries; MNEs with home in developing/emerging countries; and resource availability for implementing sustainability initiatives. Findings indicate that although the literature is tending towards growing acceptance about sustainability and its challenges most researchers have focused on corporate social responsibility and investigate their own niche problem, industry, and country, using their own chosen theory and do not consider the need for consolidation and integration of social, environmental and economic performance. Avenues for future research are identified which will provide a means for the ethical foundations of theory and practice to be improved.

56 citations


Journal ArticleDOI
TL;DR: The authors examined the effect of country-by-country reporting (CbCr) on corporate tax outcomes and found evidence consistent with a decline in tax-motivated income shifting, starting in 2018.
Abstract: To combat tax avoidance by multinational corporations, the Organisation for Economic Co‐operation and Development introduced country‐by‐country reporting (CbCr), requiring firms to provide tax authorities with a geographic breakdown of their profitability and activities. Treating the introduction of CbCr in the European Union as a shock to private disclosure requirements, this study examines the effect on corporate tax outcomes. Exploiting the €750 million revenue threshold for disclosure and employing regression‐discontinuity and difference‐in‐differences designs, I document a 1–2 percentage point increase in consolidated GAAP effective tax rates among affected firms. I also find evidence consistent with a decline in tax‐motivated income shifting, starting in 2018. These results suggest that, although private geographic disclosures can deter corporate tax avoidance, so far, the regulations have had a limited effect on tax‐motivated income shifting. My findings have policy implications for the global implementation of private CbCr and extend the debate on public versus private disclosure of tax information.

54 citations


Journal ArticleDOI
TL;DR: In this article, the authors explore the influence of various CSR practices on consumers, who are a key stakeholder in every CSR campaign, and empirically test how different CSR activities, and their related CSR domains, are valued by consumer when assessing their loyalty to a company.

50 citations


Journal ArticleDOI
TL;DR: In this article, the authors survey the academic literature on the MNE and corporate tax planning to examine the extent of knowledge on this topic and identify areas that stimulate interest among international business scholars for further research.

45 citations


Journal ArticleDOI
TL;DR: In this paper, the authors developed a model showing the interplay of multiple tensions and management approaches to address them in a Latin American Multinational Hybrid Organization (MLMHO). And they added to the literature on hybridity in multinational organizations by pointing out how regional differences between units of a single organization unfold.
Abstract: While all multinational organizations face the challenge of managing tensions between local integration and global responsiveness, they are increasingly required to pursue additional, often paradoxical, objectives – such as social and commercial goals. However, we know little about how these tensions at the core of the MNC strategy interact. Based on an inductive qualitative study of four headquarters–subsidiary relationships in a Latin American Multinational Hybrid Organization, we develop a model showing the interplay of multiple tensions and management approaches to address them. This allows us to contribute to research on subsidiary roles, which we found to differ depending on how multiple tensions are addressed. Furthermore, we add to the literature on hybridity in multinational organizations by pointing out how regional differences between units of a single organization unfold. Finally, we provide some practical recommendations for the management of multinational hybrid organizations.

43 citations


Journal ArticleDOI
TL;DR: Based on empirical evidence of four Chinese firms' outward mergers and acquisitions (M&As) to European countries, the authors examines previously neglected key success factors in post-acquisition reverse capability transfer.

39 citations


Journal ArticleDOI
TL;DR: In this paper, the authors reveal the financial performance implications of the speed at which Chinese multinational enterprises (CMNEs) expand into intra-regional versus interregional host countries, and propose a framework that integrates internationalization speed and home regionalization literatures.
Abstract: Our study reveals the financial performance implications of the speed at which Chinese multinational enterprises (CMNEs) expand into intra-regional versus inter-regional host countries. In doing so, we propose a framework that integrates internationalization speed and home regionalization literatures. Using data from 767 publicly listed CMNEs from the years 2002 to 2014, we discover that the faster the intra-regional internationalization, the better the firm’s financial performance, whereas faster inter-regional internationalization demonstrates a poorer financial performance. We also find that fast-mover CMNEs’ technological and marketing resources are valuable in intra-regional host countries, but vulnerable in inter-regional host countries. We discuss the implications of these findings for studies of the Uppsala internationalization process model and regional MNEs.

Journal ArticleDOI
TL;DR: In this paper, tax law changes under the Tax Cuts and Jobs Act (TCJA), considering the nature of their effects on profit shifting, are discussed, and the effects of the global minimum tax (GILTI) on the location of taxable profits.
Abstract: In recent years, profit shifting by multinational companies has generated substantial revenue costs to the U.S. government. The Tax Cuts and Jobs Act (TCJA) changed the climate for profit shifting in several important ways: the lower U.S. corporate rate should lower the incentive to shift profits away from the United States, while “territorial” tax treatment (of some income) and the removal of tax upon repatriation should raise the incentive to shift profits abroad. In addition, two novel base protection measures, the GILTI and the BEAT, aim to reduce profit shifting. This paper discusses tax law changes under the TCJA, considering the nature of their effects on profit shifting. The paper also evaluates the effects of the global minimum tax (GILTI) on the location of taxable profits. Once adjustment to the legislation is complete, estimates suggest that the GILTI should reduce the corporate profits of U.S. multinational affiliates in haven countries by about 12 to 16 percent, modestly increasing the tax base in both the United States and in higher-tax foreign countries. Of note, a per-country minimum tax would generate much larger increases in the U.S. tax base; a per-country tax at the same rate reduces haven profits by 23 to 31 percent, resulting in larger gains in US revenue.

BookDOI
TL;DR: State-owned enterprises make up roughly 10 percent of the world economy, yet they are woefully understudied as discussed by the authors, and they are used in both developed and developing countries and offer an insight into complex and fascinating organizations such as the German municipal conglomerates or the multinational companies owned by states.
Abstract: State-owned enterprises make up roughly 10 percent of the world economy, yet they are woefully understudied. This handbook offers the first synthesis of the topic since the 1980s and offers a comprehensive reference for a generation. The authors provide a detailed explanation of the theory that underpins the expansion of state-owned enterprises in the 21st century. Each chapter delivers an overview of current knowledge, as well as identifying issues and relevant debates for future research. The authors explain how state-owned enterprises are used in both developed and developing countries and offer an insight into complex and fascinating organizations such as the German municipal conglomerates or the multinational companies owned by states. New modes of governance and regulation have been invented to make sure they act in the public interest. This handbook brings together a wealth of international scholars, offering multiple theoretical perspectives to help shape a brave new world. It will be of interest to teachers and students of Economics, Public Administration and Business, academics, established researchers and PhD students seeking rigorous literature reviews on specific aspects of SOEs, as well as practitioners and decision makers in international organizations.

Journal ArticleDOI
TL;DR: In this paper, the relationships among corporate accountability, reputation, and tax behavior are investigated as a corporate social responsibility issue and the authors provide empirical examples of corporate reputation and corporate tax behaviors using a sample of large, U.S.-based multinational companies.
Abstract: In this paper, we consider the relationships among corporate accountability, reputation, and tax behavior as a corporate social responsibility issue. As part of our investigation, we provide empirical examples of corporate reputation and corporate tax behaviors using a sample of large, U.S.-based multinational companies. In addition, we utilize corporate tax controversies to illustrate possibilities for aggressive corporate tax behaviors of high-profile multinationals to become a reputation threat. Finally, we consider whether reputation serves as an accountability mechanism for corporate tax behaviors among other mechanisms for holding firms accountable for corporate tax behaviors. Our conceptual work points to a complicated relationship among shareholder, stakeholder, and civic responsibilities in the development and execution of firm’s corporate tax strategies. Building on those insights, our empirical illustration considers corporate reputation data alongside data which reflects corporate tax behavior. Based on this work, we find no clear trend or pattern indicating that reputation is associated with or affected by certain types of corporate tax behaviors. That is, our exploratory empirical illustration suggests that corporate tax behavior does not produce broad reputational consequences that would motivate a change in firm behavior. Drawing from celebrity and strategic silence research, we then suggest that reputation may not be a well-functioning mechanism for holding corporations to account for contributing their fair share of the resources used by government for the benefit of society and offer-related theoretical insights.

Journal ArticleDOI
TL;DR: In this paper, the authors proposed that risk mitigation cannot be limited to passive compliance and/or demonstrating good corporate behavior, but should extend to collective efforts by building a political coalition and working with key stakeholders to manage potential risk and obtain favorable outcomes in complex institutional environments.

Journal ArticleDOI
TL;DR: In this article, the authors develop the construct of global dynamic managerial capability (GDMC) and identify its underlying sources: (1) international human capital, (2) international social capital, and (3) international managerial cognitions.
Abstract: We develop the construct of global dynamic managerial capability (GDMC) and identify its underlying sources: (1) international human capital, (2) international social capital, and (3) international managerial cognitions. Consistent with dynamic capabilities view and upper echelons theory, we suggest that GDMC leads to global asset orchestration, which in turn, results in superior company performance in a two-stage process. First, GDMC leads companies to adopt global strategies that spread the risk of internationalizations across different entry modes and geographic regions. Second, the (re)configuration of global assets positively influences subsequent firm performance and thus mediates the relationship between GDMC and performance. Recognizing the triad of factors that form global dynamic managerial capability is crucial when selecting future managers of multinational corporations. Hence, firms with increasing international exposure – both domestically via foreign competition and internationally via foreign market presence – may seek to compose their upper echelons with a suitable combination of international human and social capital as well as internationally diverse cognitions in the pursuit of sustained competitive advantage.

Journal ArticleDOI
TL;DR: In this paper, the authors examined the influences of individual behaviour and organizational commitment towards the enhancement of Islamic Work Ethics (IWE) at the Royal Malaysian Air Force (RMFA).
Abstract: This study examines the influences of individual behaviour and organizational commitment towards the enhancement of Islamic Work Ethics (IWE) at the Royal Malaysian Air Force. It involved 312 respondents of different backgrounds and the data were analysed using descriptive analysis and structural equation modelling (SEM) analysis. The results show that both individual behaviour and organizational commitment have significantly correlated with the enhancement of IWE. The findings could help managers especially of multinational corporations operating in Muslim countries to enhance the company performances by instituting elements of IWE in their organizations. This can be done by promoting the understanding of IWE and providing a conducive environment to practice it.

Journal ArticleDOI
TL;DR: In this paper, the authors explore under which conditions subsidiaries of multinational corporations can benefit from the external networks of sister subsidiaries in terms of new knowledge generation and propose a new knowledge-generating strategy.

Journal ArticleDOI
TL;DR: In this article, the authors explore the process by which foreign MNEs' low-value-add operations in the South are transformed into high-value adding R&D operations.
Abstract: Intensified competition means that multinational enterprises (MNEs) are increasingly concerned with locating innovation activities in the most appropriate locations. This had led to emerging economies in the South becoming an important destination of R&D-related foreign direct investment (FDI), departing from their traditional role as low-cost production sites. Thus far, however, our understanding of this transformation process is limited. The purpose of this article is therefore to explore the process by which foreign MNEs’ low-value-adding operations in the South are transformed into high-value-adding R&D operations. Drawing on the current literature, we construct a framework of evolution consisting of four major waves of R&D internationalization and corresponding R&D objectives. To better understand how these waves have evolved over time, we focus on the South and trace the process of change using a single historical case study: AstraZeneca in China between 1993 and 2017. We find evidence of idiosyncratic location-bound conditions offering both opportunities and resources. The gradual development of these favourable conditions, along with AstraZeneca’s deepening local knowledge, triggered a transformation process in their operations in China. Our study thus offers important historical insights, which present a platform for future research providing more nuanced theoretical explanations of the four waves of R&D internationalization.

Journal ArticleDOI
TL;DR: In this article, a systematic literature review was carried out to explore corporate social responsibility and how it influences sustainability within the fashion industry, where actions that tie CSR and sustainability with companies' actions are presented in a micro-meso-macro framework, where brand equity, culture, supply chain management, activism and human rights are evident.
Abstract: The fashion industry, one of the largest industries in the world, is a complicated phenomenon, driven by aspirations of symbolic lifestyle and the creativity of architecture and design. It pushes the use of natural resources to its limits by mass production and a low-cost structure that motivates consumerism at large. The purpose of this study is to explore corporate social responsibility and how it influences sustainability within the fashion industry. A systematic literature review was carried out. This encompassed the academic publications available in two scientific databases focusing on Corporate Social Responsibility (CSR), sustainability, and fashion, covering the period 2003–2019. The findings indicate that the CSR approach taken by managers within the fashion industry is focused on sustainability, business models, and/or supply chain innovation, with commitments undertaken concerning the economy, environment, and/or society, wherein the production of eco-friendly products and workers’ safety are emphasized. Actions that tie CSR and sustainability with companies’ actions are presented in a micro-meso-macro framework, where brand equity, culture, supply chain management, activism, and human rights are evident. The findings of the study are relevant for academia, practitioners, and policymakers, as they provide insight into the operations and impacts of domestic and multinational fashion companies, outlining the most relevant studies on the topic, and also highlighting research trends and gaps in the field.

Journal ArticleDOI
TL;DR: In this article, the authors use state-held records of house sales to consider the impact of competition for housing resources in the luxury property market in London and find that the prevailing political management of the property economy benefits those already winning the war of inequality while looking to augment their capital and shield it from tax and regulation.
Abstract: Taking as our focus the city of London over the last decade, we use state-held records of house sales to consider the impact of competition for housing resources in the luxury property market. This data suggests that the use of offshore investment vehicles and the concealment of wealth from national tax agencies have become key mechanisms by which housing resources have been exploited by the wealthy and their capital deployed by agents of the rich. Using the concept of wealth chains, we consider these methods of capital accumulation as these extending flows of managed capital become ‘anchored’ within specific urban spaces, in this case the luxury housing market of inner West London. Our analysis of a selection of these chains shows that the prevailing political management of the property economy benefits those already winning the war of inequality while looking to augment their capital and shield it from tax and regulation. The ultra-wealthy, financial intermediaries and multinational corporations have created chains articulated across space, with the effect of undermining the value of dwellings as homes, and have replaced them with assets to be traded in pursuit of private and offshore wealth gains. The result is an urban context that favours already advantaged and powerful interests and enables the avoidance of tax obligations desperately needed at a time of austerity and intense housing need.

Journal ArticleDOI
TL;DR: This study investigates the optimal financing strategy between bank credit financing and trade credit financing when a multinational firm invests in a capital-constrained retailer located in a low-tax jurisdiction and finds that tax differences and varying dividend rates have significant effects on a multinational company's decisions.

Journal ArticleDOI
TL;DR: In this article, the authors examined how restrictions on the tax deductibility of interest cost affect location choices of multinational corporations (MNCs) and found that stricter TCRs negatively affect the decision of where to locate foreign entities.
Abstract: This paper examines how restrictions on the tax deductibility of interest cost affect location choices of multinational corporations (MNCs). Many countries have introduced so‐called thin‐capitalization rules (TCRs) to prevent MNCs from shifting their tax base to countries with lower tax rates. As of 2012, in our sample of 172 countries, 61 countries have implemented a TCR. Using information on nearly all new foreign investments of German MNCs, we provide a number of new and interesting insights in how TCRs affect the decision of where to locate foreign entities. In particular, stricter TCRs are found to negatively affect location choices of MNCs. Our results include estimates of own‐ and cross‐elasticities of location choice and also novel results on the relative importance of tax base vs. tax rate effects. We finally provide estimates for different uncoordinated as well as coordinated policy scenarios.

Journal ArticleDOI
TL;DR: This article found that differences in language and reviewing styl differences in online review platforms create value for consumers and for firms, yet differences in languages and reviewing styles can affect the quality of reviews.
Abstract: As multinational firms continue to sell global brands across country borders online, online review platforms create value for consumers and for firms, yet differences in language and reviewing styl

Journal ArticleDOI
TL;DR: In this article, the authors examine how foreign firms consider natural disaster risk in subsequent investment decisions in a host country and whether different location portfolios can serve to mitigate investment risk, using a fixed effects logit model of discrete time event history analysis.
Abstract: The purpose of this study is to examine how foreign firms consider natural disaster risk in subsequent investment decisions in a host country and whether different location portfolios can serve to mitigate investment risk.,The author sample includes data on 437 Fortune Global 500 firms and their initial entry into Chinese provinces between 1955 and 2008.,Using a fixed effects logit model of discrete time event history analysis, results show that geographic proximity to same multinational corporation (MNC) subsidiaries and different MNC subsidiaries from the same home country mitigates the negative effect of natural disasters on MNC entry into an affected province, while geographic proximity to other MNC subsidiaries from different home countries does not.,The knowledge needed to respond to severe disasters appears to be highly context-specific and shared only between firms with a high degree of commonality and trust.

Journal ArticleDOI
TL;DR: It is argued that in making entry decisions, firms take into account how an entry into a new location helps increase the operational flexibility of their affiliate portfolios due to options to switch operations across affiliates in case of diverging labor cost developments across host countries.
Abstract: Research Summary Research on foreign market entry has rarely considered that multinational firms' new entries may be affected by the configuration of their existing affiliates. We argue that in making entry decisions, firms take into account how an entry into a new location helps increase the operational flexibility of their affiliate portfolios due to options to switch operations across affiliates in case of diverging labor cost developments across host countries. We juxtapose this real options‐based explanation with a risk diversification explanation. Analysis of Japanese multinational firms' foreign entry decisions suggests that the two explanations are complementary. We also establish portfolio‐level boundary conditions to the influence of operational flexibility considerations on entry, in the form of product diversification and the nature of dispersion of labor cost levels. Managerial Summary When deciding on whether to enter a foreign market, managers of a multinational firm are intuitively aware that they need to consider how the economic environment of the target host country is related to the environments of the existing countries in which the firm operates. The less the environments are correlated with each other, whether in terms of input cost or market demand conditions, the greater the chance that the firm may capture cost savings and reduce sales volatility globally. These benefits arise from a switching option to shift operations flexibly across countries and from an ability to reduce risk by holding a portfolio of diversified global investments. Our findings support both sets of considerations, suggesting that companies do give due attention to correlations in labor cost and market demand between the target host country to enter and the existing host countries.

Journal ArticleDOI
TL;DR: In this paper, the authors used panel data analysis to empirically examine the determinants of multinational activity of firms from the OECD member states in Poland during the period 1996-2015.
Abstract: In the last two decades, Poland became an important recipient of foreign direct investment most of which comes from the developed West European countries. This study uses panel data analysis to empirically examine the determinants of multinational activity of firms from the OECD member states in Poland during the period 1996–2015. The model’s estimated empirical specification is based on the modified knowledge-capital model of the multinational enterprise that includes two types of capital: human and physical. Our empirical evidence points to the vertical motive as the primary reason for undertaking foreign direct investment in Poland by multinational firms based in the OECD member states.

ReportDOI
Abstract: The structure of a multinational firm, that is how its affiliates relate to one another, is critical for understanding where multinationals locate, how policy affects them, and their resilience to localized shocks. Here, we review the two main structures: horizontal investments which replicate activities across borders, and vertical investments which fragment activities across countries. In addition, we use data (primarily from the US) to examine which of these structures seems to dominate the data. This includes a novel use of measures of global value-chain positioning of a country's industries. In each case, the data suggests a dominant role for horizontal investment. We conclude with a discussion of the challenge that intangibles play in multinational data and point towards potentially fertile areas for future research.

Journal ArticleDOI
TL;DR: In this article, the macro-level dynamic capabilities (DC), such as government environmental policies, legal and market requirements, and technology requirements, are analyzed and discussed. But, the focus of this paper is on the macro level dynamic capabilities.
Abstract: The purpose of this study is to enhance our understanding of how macro (country)—level dynamic capabilities (DC), such as government environmental policies, legal and market requirements, and techn...

Journal ArticleDOI
TL;DR: In this article, the authors examine whether worldwide tax systems reduce the incentives of multinational corporations to engage in tax management in their foreign subsidiaries, and they show that multinationals lower the effective tax rates in their offshore subsidiaries after countries switch from a worldwide to a territorial tax system.
Abstract: Under a worldwide tax system, firms pay taxes on their domestic income and repatriated foreign income, whereas under a territorial tax system repatriated foreign income is exempt from taxation. We examine whether worldwide tax systems reduce the incentives of multinational corporations to engage in tax management in their foreign subsidiaries. Using two quasi-natural experiments, we show that multinationals lower the effective tax rates in their foreign subsidiaries after countries switch from a worldwide to a territorial tax system. Thus, multinationals subject to a worldwide tax system face competitive disadvantages compared to competitors from countries with a territorial tax system.