Regional performance, multiple embeddedness and sustainability

Multinational Business Review

ISSN: 1525-383X

Article publication date: 14 April 2014

255

Citation

Rugman, A.M. (2014), "Regional performance, multiple embeddedness and sustainability", Multinational Business Review, Vol. 22 No. 1. https://doi.org/10.1108/MBR-02-2014-0006

Publisher

:

Emerald Group Publishing Limited


Regional performance, multiple embeddedness and sustainability

Article Type:

Letter from the Editor

From:

Multinational Business Review, Volume 22, Issue 1

In this issue of MBR, we are pleased to publish five research papers and a book review. First, we publish a pioneering paper examining the impact of the regional effect on performance. Elango and Wieland examine the worldwide insurance industry of some 11,000 firms with 85,000 units. They find that 9 percent of the variance in performance of these units is explained by regional effects (in contrast to 18 percent by country effects and 32 percent by firm effects). These results may be misinterpreted by international business scholars, in particular because Rugman and Oh (2013) found that the regional effect accounts for 80 percent of the variation in geographic sales expansion.

The major reason for potential misunderstanding is that Elango and Wieland examine variation in performance, whereas Rugman and Oh examine variation in foreign sales. In general, the variance explained for performance will be much lower when compared to the operational variables of firms, especially sales, which are normally divided into home country and foreign sales in the IB literature. They do not make this distinction as most of the insurance firms are small and based in the home country. In contrast, Rugman and Oh (2013) examined the world’s 500 largest firms. Importantly, Elango and Wieland find the same regional effect across the Rugman and Oh (2013) broad regions of the triad, the definition of regions used by firms themselves in their annual reports, as required by accounting standards. Overall, the Elango and Wieland paper is a very useful contribution as it unambiguously demonstrates the importance of the regional effect on firm performance, even for the least promising case of predominantly small, home-country based insurance firms.

The second paper, by Alberto Ferraris, is an insightful literature review on the interactions between MNE parents, their subsidiaries, and the respective rebundling activities of parent firms with the home country-specific advantages (CSAs) and the subsidiary recombinations with host CSAs. The large literature in this area has often focused upon dual embeddedness, which has the subsidiary/host CSA focus and potentially the subsidiary-parent interaction. But dual embeddedness frequently ignores the parent firm/home CSA interaction. Ferraris synthesizes these literatures with his focus upon multiple embeddedness. This paper suggests that future empirical work in this area needs to be both broadened and deepened to take into account the full range of such interactions.

The third paper, by Dimitris Manolopoulos, also has a focus upon the foreign subsidiaries of MNEs, in this case the R&D activities of MNEs and subsidiaries in the “peripheral” southern economies of the EU, especially Greece. By identifying three strategic roles of R&D subsidiaries (support labs, locally integrated labs, and internationally interdependent labs) the author hypothesizes that the characteristics of these labs, as well as their entry mode, lead to differentiation in the financing sources for their activities. He finds evidence in particular that the financing of decentralized support labs is related to MNE-internal funding, and that relational entry modes (mergers, partnerships, joint ventures) positively predict the use of external financing from governments.

The fourth and fifth papers form part of our special issue on Environmentally Responsible Management and International Competitiveness. This special issue was edited by Professors Chang Hoon Oh and Byung Il Park. The special issue called for research papers to understand and examine environmentally responsible management (ERM) strategies and practices of multinational enterprises. A total of 11 papers were submitted, and two papers were finally accepted. Each accepted paper went through two revisions using a double-blind review process. This special issue builds on a previous special issue in MBR on Sustainable Development and the Multinational Corporation as a Tool of Competitiveness, which was published in 2007 (Volume 15). MBR has taken a leading role in research on the topic of sustainability and international business. We welcome further submissions on this topic.

The fourth paper in this issue, by Jiyul Choi and Byung Il Park, analyzes how stakeholder pressures affect the local ERM practices of Korean subsidiaries. They identify two internal and five external stakeholder types and propose that their demands and pressures improve ERM practices of foreign subsidiaries. By using the survey data from 300 Korean manufacturing subsidiaries in both developed and developing countries, their empirical analysis shows that pressures from the parent firm, government, NGO, and media promote local ERM practices of foreign subsidiaries.

The last paper in this issue, by Adam Cave, provides a systematic and exhaustive literature review on the topic of ERM within international business research. He reviews a total of 32 articles published between 1998 and 2013, and finds that international business scholars have become more interested in the topic of corporate social responsibility. The gist of his literature review is applying the Firm-Specific Advantage (FSA) and Country-Specific Advantage (CSA) framework of Alan Rugman in order to categorize research streams on the topic. The FSA/CSA framework reveals two overriding streams in the literature, and suggests that research focusing on FSAs and interactions between FSAs and CSAs should receive more attention in future research.

Alan M. Rugman
Editor-in-Chief

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