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Article
Publication date: 18 July 2016

Alain Verbeke and Wenlong Yuan

The aim of this paper is to investigate how multinational enterprise (MNE) subsidiary capabilities are influenced by the firm-specific advantages (FSAs) of the parent company, as…

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Abstract

Purpose

The aim of this paper is to investigate how multinational enterprise (MNE) subsidiary capabilities are influenced by the firm-specific advantages (FSAs) of the parent company, as well as by cultural and geographic distance between the home and host country.

Design/methodology/approach

This paper assesses how the effects of the parent FSAs, cultural distance and geographic distance on subsidiary capabilities vary for different value-chain activities, with an empirical application to 60 foreign subsidiaries operating in Canada.

Findings

This paper uncovers distinct, three-way interaction effects among parent-level FSAs, cultural distance and geographic distance for upstream versus downstream activities in the value chain.

Originality/value

We find that in special cases, high levels of distance can be positive for MNEs, in terms of driving the creation of stronger subsidiary capabilities.

Details

Multinational Business Review, vol. 24 no. 2
Type: Research Article
ISSN: 1525-383X

Keywords

Article
Publication date: 19 February 2024

Fiona Maureen Courtens, Elvira Haezendonck and Alain Verbeke

This research aims to provide a new perspective on the evolving linkages between LAs and FSAs in the context of the technology-based manufacturing industry. Firm-level competitive…

Abstract

Purpose

This research aims to provide a new perspective on the evolving linkages between LAs and FSAs in the context of the technology-based manufacturing industry. Firm-level competitive strengths in an international context build upon the combination of (largely) exogenous location advantages (LAs) and endogenous firm-specific advantages (FSAs). The authors focus especially on the decay of LAs over time, which has been observed in many highly developed countries during the past decades. The authors show how the strengthening of FSAs can substitute for decaying LAs, thereby safeguarding against the demise of entire industrial regions.

Design/methodology/approach

The authors examine the technology-based manufacturing industry in Belgium, building upon an analysis of survey responses by 66 firms including a subgroup of 26 multinational enterprise (MNE) subsidiaries. The professional association representing this industry in Belgium (Agoria) viewed the firms included in the survey as representative for Belgian technology-based manufacturing in terms of the LAs they presently build upon (or location disadvantages they face) and the internal strengths they command relative to (foreign) rivals. The investigation uncovered the decay of critical LAs in Belgium and in parallel, the rise of ‘compensating’ FSAs of Belgian operations relative to foreign firms, including, especially, MNE sister subsidiaries in other countries. The authors also conducted 23 in-depth interviews with senior level managers (CEOs and senior vice presidents) of technology-based firms, including 10 subsidiaries of foreign-owned MNEs, which validated our analysis of the interplay between LAs and FSAs.

Findings

The findings reveal that since inception, Belgian manufacturing operations experienced an overall decay in their critical LAs by 23% on average. Despite this, several Belgian subsidiaries of foreign MNEs consider themselves as commanding a resource-base superior to that of the next-best-in-class subsidiaries. Furthermore, when assessing the dynamic interplay between LAs and FSAs, there is some evidence that the decay of LAs fueled the quest for – and firm-level journey toward – stronger FSAs.

Originality/value

The originality of this study is the alternative perspective to the conventionally assumed “positive-positive” relationship between LAs and FSAs. Prior management research has not examined the impact of decaying LAs on new FSA-creation in the realm of technology-based manufacturing.

Details

Competitiveness Review: An International Business Journal , vol. 34 no. 2
Type: Research Article
ISSN: 1059-5422

Keywords

Open Access
Article
Publication date: 19 September 2019

Olga Petricevic and Alain Verbeke

The purpose of this paper is to explore two distinct subsets of dynamic capabilities that need to be deployed when pursuing innovation through inter-organizational activities…

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Abstract

Purpose

The purpose of this paper is to explore two distinct subsets of dynamic capabilities that need to be deployed when pursuing innovation through inter-organizational activities, respectively, in the contexts of broad networks and specific alliances. The authors draw distinctions and explore potential interdependencies between these two dynamic capability reservoirs, by integrating concepts from the theoretical perspectives they are derived from, but which have until now largely ignored each other – the social network perspective and the dynamic capabilities view.

Design/methodology/approach

The authors investigate nanotechnology-driven R&D activities in the 1995–2005 period for 76 publicly traded firms in the electronics and electrical equipment industry and in the chemicals and pharmaceuticals industry, that applied for 580 nanotechnology-related patents and engaged in 2,459 alliances during the observation period. The authors used zero-truncated Poisson regression as the estimation method.

Findings

The findings support conceptualizing dynamic capabilities as four distinct subsets, deployed for sensing or seizing purposes, and across the two different inter-organizational contexts. The findings also suggest potential synergies between these subsets of dynamic capabilities, with two subsets being more macro-oriented (i.e. sensing and seizing opportunities within networks) and the two other ones more micro-oriented (i.e. sensing and seizing opportunities within specific alliances).

Practical implications

The authors show that firms differ in their subsets of dynamic capabilities for pursuing different types of inter-organizational, boundary-spanning relationships (such as alliances vs broader network relationships), which ultimately affects their innovation performance.

Originality/value

The authors contribute to the growing body of work on dynamic capabilities and firm-specific advantages by unbundling the dynamic capability subsets, and investigating their complex interdependencies for managing different types of inter-organizational linkages. The main new insight is that the “linear model” of generating more innovations through higher inter-firm collaboration in an emerging field paints an erroneous picture of how high innovation performance is actually achieved.

Details

Cross Cultural & Strategic Management, vol. 26 no. 3
Type: Research Article
ISSN: 2059-5794

Keywords

Book part
Publication date: 10 August 2016

Jean Boddewyn

This chapter complements the one that appeared as “History of the AIB Fellows: 1975–2008” in Volume 14 of this series (International Business Scholarship: AIB Fellows on the First…

Abstract

This chapter complements the one that appeared as “History of the AIB Fellows: 1975–2008” in Volume 14 of this series (International Business Scholarship: AIB Fellows on the First 50 Years and Beyond, Jean J. Boddewyn, Editor). It traces what happened under the deanship of Alan Rugman (2011–2014) who took many initiatives reported here while his death in July 2014 generated trenchant, funny, and loving comments from more than half of the AIB Fellows. The lives and contributions of many other major international business scholars who passed away from 2008 to 2014 are also evoked here: Endel Kolde, Lee Nehrt, Howard Perlmutter, Stefan Robock, John Ryans, Vern Terpstra, and Daniel Van Den Bulcke.

Details

Perspectives on Headquarters-subsidiary Relationships in the Contemporary MNC
Type: Book
ISBN: 978-1-78635-370-2

Keywords

Book part
Publication date: 16 May 2024

Liena Kano and Luciano Ciravegna

Alain Verbeke is one of the world’s leading thinkers on international business (IB) and globalization, a renowned scholar and educator who contributes to creating a better global…

Abstract

Alain Verbeke is one of the world’s leading thinkers on international business (IB) and globalization, a renowned scholar and educator who contributes to creating a better global business environment by addressing some of today’s most critical challenges. He was one of the first scholars to advance a theoretically rigorous and practically significant perspective on international corporate social responsibility (CSR). Verbeke’s work on international CSR is particularly impactful because it is rooted in IB theory and based on a realistic set of assumptions about the behavior of managers, policymakers, and other market and nonmarket stakeholders. In this chapter, the authors apply theoretical principles central to Verbeke’s research – most notably behavioral assumptions of bounded rationality and bounded reliability – to analyze businesses’ and societies’ pace of progress in relation to stated environmental, social, and governance (ESG) goals. The authors argue that bounded rationality and reliability challenges create misalignment between stated/imposed commitments toward ESG performance, and economic actors’ ability to deliver on these commitments. The authors discuss examples of such misalignment, focusing on tensions among stakeholders, between stakeholder organizations and firms, and within firms. The authors propose that to be relevant for policy and practice, the sustainability research should be based on realistic microfoundational assumptions.

Details

Walking the Talk? MNEs Transitioning Towards a Sustainable World
Type: Book
ISBN: 978-1-83549-117-1

Keywords

Content available
Book part
Publication date: 16 May 2024

Abstract

Details

Walking the Talk? MNEs Transitioning Towards a Sustainable World
Type: Book
ISBN: 978-1-83549-117-1

Book part
Publication date: 16 May 2024

Alain Verbeke

“First principles” of international business (IB) thinking should be applied systematically when assessing the functioning of internationally operating firms. The most important…

Abstract

“First principles” of international business (IB) thinking should be applied systematically when assessing the functioning of internationally operating firms. The most important first principle is that entrepreneurially oriented firms seek to create, deliver and capture economic value through cross-border linkages. Such linkages invariably require complementary resources from a variety of parties with idiosyncratic vulnerabilities to be meshed. Starting from first principles allows bringing to light evidence-based insight. For instance, most companies are not global and even the world’s largest firms rarely change the location of key strategic functions. International new ventures (INVs), emerging economy multinational enterprises (MNEs) and family firms face unique vulnerabilities but also command resources that can be used to create value across borders. The quest for “optimal” international diversification appears to be a futile academic exercise, and in emerging economies with institutional voids, relational networks – and more broadly, informal institutions – are unlikely to function as scalable substitutes for formal institutions. In global value chains (GVCs), many lead firms and their partners have been able to craft governance mechanisms that reduce bounded rationality and bounded reliability challenges, and it is also critical for them to use governance as a tool to create entrepreneurial space. Finally, many of the world’s largest companies have been on successful trajectories toward reducing their climate change footprint for a few decades. But these firm-specific trajectories are fraught with challenges and cannot just be imposed via unilateral, macro-level targets decided upon by individuals and institutions lacking a clear understanding of innovation and capital expenditure processes in business.

Article
Publication date: 17 June 2010

Alain Verbeke and Wenlong Yuan

This paper proposes a new typology of Ownership (O) advantages as a function of their differential managerial implications in established multinational enterprises (MNEs). We…

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Abstract

This paper proposes a new typology of Ownership (O) advantages as a function of their differential managerial implications in established multinational enterprises (MNEs). We argue that the mainstream typology of O advantages proposed in Dunning’s eclectic paradigm does not recognize the uniqueness of individual firms. We therefore propose a new typology of O advantages, which distinguishes among four types, based on the geographic source of such advantages and their transferability across borders. Moreover, we acknowledge the importance of resource recombination advantages. Two case examples illustrate the implications of the new typology for established MNEs.

Details

Multinational Business Review, vol. 18 no. 2
Type: Research Article
ISSN: 1525-383X

Keywords

Book part
Publication date: 16 May 2024

Thomas Hutzschenreuter

Distances between contexts that a multinational enterprise (MNE) is familiar with and those that it is not familiar with do not hinder the MNE from becoming global. In this sense…

Abstract

Distances between contexts that a multinational enterprise (MNE) is familiar with and those that it is not familiar with do not hinder the MNE from becoming global. In this sense, distance serves as a barrier between an MNE’s global intentions and its regional realizations. (Multi)regional strategies are a possible expression of an MNE’s inability to approach distances. Considering the managerially relevant distances is essential to analyze the internationalization and the resulting (multi)regional strategies. A deeper understanding of how distance works requires linking distance to micro-foundations. Besides bounded rationality, bounded reliability opens the conceptual pathway toward a deeper understanding of internationalization and (multi)regional strategies.

Details

Walking the Talk? MNEs Transitioning Towards a Sustainable World
Type: Book
ISBN: 978-1-83549-117-1

Keywords

Content available
Book part
Publication date: 23 November 2017

Abstract

Details

Distance in International Business: Concept, Cost and Value
Type: Book
ISBN: 978-1-78743-718-0

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