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Extending the conversation of international business
Article Type: Letter from the Editor From: The Multinational Business Review, Volume 19, Issue 4
In this issue of MBR, we publish five interesting papers that extend the conversation of international business. The paper by Aguilera-Caracuel et al. provides insight into the literature on environmental regulations and corporate strategy. This paper expands upon my CSA/FSA framework, Rugman (1981), by examining the relationship between environmental institutional distance and slack managerial resources, yielding four cases similar to those of Rugman and Verbeke (1998a, 1998b). For references see this paper. This type of research helps us to deepen the conversation of international business in the area of corporate strategy and environmental regulations. The paper by Cerrato and Depperu examines the international competitiveness of firms, using insights from international business theory. The authors again identify the link between FSAs and CSAs and push this into a new dimension.
The paper by Hutzschenreuter et al. is an empirical study of M&A by MNEs as they make non-initial FDIs in a host country. It is found that such additional FDI may not increase corporate valuation of the MNE. This suggests that there are limits to the benefits of international diversification and internalization. In other words, our theories of FDI and the MNE are biased towards the initial choice of entry mode, and may need to be amended for subsequent and sequential FDI.
The paper by Ferreira uses modern bibliometric citation by clustering techniques to assess the impact of the publications of Sumantra Ghoshal, in particular his co-authored book with Chris Bartlett, Managing Across Borders. In the future, I expect that we are going to see many more of these citation analyses examining the impact of famous scholars, and MBR will be pleased to consider these for publication. One interesting extension of this work would be to consider the impact of clusters of scholars such as the Reading School – Dunning, Buckley and Casson, Rugman, Cantwell, Narula, and others.
The final paper by Amann et al. is said by the authors to be the first empirical test of the INV competence-based framework by Sapienza et al. Their new empirical work is based upon a UK data set of new ventures (under six years of age). These start-ups are tested for survival and growth. The most interesting finding is that knowledge capabilities (learning) are not a significant determinant of survival and growth. However, the authors are mistaken in their conclusions when they state that the insignificance of knowledge refutes the Uppsala model of internationalization. Obviously new firms do not have the time to engage in any worthwhile learning about foreign markets within their first six years. In other words, this paper highlights the fallacy of coupling the knowledge-based-competencies thinking with the Uppsala framework in research on INVs. Instead, the Uppsala model remains perfectly valid as an explanation of the regional nature of international business, given that firms, both small and large, need to invest in learning about foreign markets in order to overcome the liability of foreignness. The lesson from work on INVs is that such learning takes time, such that the knowledge-based view of the firm needs to be applied with extraordinary caution (and probably not at all) in the INV literature.
The paper by Amann et al. is a type of replication study. It examines a framework, draws hypotheses from it, adds new work by testing these, and suggests directions for future conceptual work. At MBR we are keen to further the conversation of international business by considering such replication studies for publication, even when other journals discourage this practice. If we do not examine, test, and debate each other's research, how can the field of international business develop and progress?
Alan M. Rugman