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Article
Publication date: 10 January 2020

Murat Akpinar

This paper aims to clarify the fit of competitive strategies and firm-specific advantages (FSAs) with country-specific advantages (CSAs) in explaining manufacturing location…

1140

Abstract

Purpose

This paper aims to clarify the fit of competitive strategies and firm-specific advantages (FSAs) with country-specific advantages (CSAs) in explaining manufacturing location choices at product category level in the European automotive industry.

Design/methodology/approach

Seven hypotheses are formulated and tested using binomial logistic regression with data from 148 passenger car models (i.e. product category level) that are sold in Europe and manufactured in countries that offer CSAs of either cost advantages or differentiation advantages. The first four hypotheses test manufacturing location choices of product categories pursuing cost leadership strategy, differentiation strategy, focus strategy and hybrid strategy. The other three hypotheses test whether FSAs of R&D capability, marketing capability and operations capability will impact on the manufacturing location choice. The tests control for the type of passenger cars as well as the manufacturer’s region of origin.

Findings

While pursuing cost leadership strategy leads to manufacturing in countries that offer cost advantages, pursuing differentiation strategy as well as strong R&D capability and marketing capability result in manufacturing in countries that offer differentiation advantages. Focus strategy, hybrid strategy and operations capability do not have an impact on the manufacturing location choice at product category level.

Research limitations/implications

Conducting empirical research at product category level is subject to limitations in the choices of FSAs due to lack of availability of data.

Practical implications

Managers should assess the competitive strategies and FSAs of their product categories and then decide about manufacturing locations based on their fit with host country CSAs. Policymakers should understand the CSAs of their countries and target to attract manufacturing FDI from product categories with matching competitive strategies and FSAs.

Originality/value

The research contributes to discussions in explaining manufacturing location choices. Its originality lies in being the first study to test the fit of competitive strategies and FSAs of product categories with CSAs.

Details

Competitiveness Review: An International Business Journal , vol. 30 no. 3
Type: Research Article
ISSN: 1059-5422

Keywords

Article
Publication date: 11 March 2011

Lei Li, Dan Li and Weilei (Stone) Shi

The purpose of this study is to investigate the multinationality‐performance (M‐P) relationship in the context of US biopharmaceutical small‐ and medium‐sized enterprises (SMEs).

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Abstract

Purpose

The purpose of this study is to investigate the multinationality‐performance (M‐P) relationship in the context of US biopharmaceutical small‐ and medium‐sized enterprises (SMEs).

Design/methodology/approach

The study examines the M‐P relationship of SMEs from a single home country and in a specific industry.

Findings

The paper finds that geographic dispersion of both foreign subsidiaries and alliances affects SME performance negatively, albeit to a varying extent. Firm‐specific technological advantages alleviate the negative impact of geographic dispersion of both foreign subsidiaries and alliances, whilst firm‐specific marketing advantages mitigate the negative effect of only geographic dispersion of foreign alliances. The paper also addresses the direct and joint effects of firm‐specific advantages, countryspecific advantages, and the degree of internalization on SME performance systematically. Further, the results reveal some interesting differences between the venturing and the development stage of SME internationalization.

Originality/value

To the best of the authors' knowledge, there have been virtually no studies on the M‐P relationship which attempt to distinguish between subsidiary‐ and alliance‐based internationalization.

Details

Multinational Business Review, vol. 19 no. 1
Type: Research Article
ISSN: 1525-383X

Keywords

Article
Publication date: 15 May 2017

Philippe Gugler

A significant stream of literature focuses on host countries’ locations when explaining why firms internalize some of their activities in specific countries. At first glance, home…

1708

Abstract

Purpose

A significant stream of literature focuses on host countries’ locations when explaining why firms internalize some of their activities in specific countries. At first glance, home location schemes and specificities seem to have attracted less attention in the scientific community. The purpose of this contribution is to provide a literature review linked to the specific issue of emerging countriescountry-specific advantages and the competitiveness of emerging market multinational enterprises.

Design/methodology/approach

The approach is to present the main theoretical developments related to the role of home countries in the internationalization process of domestic firms in general and as far as the home context of emerging countries is concerned.

Findings

A rigorous analysis of the literature shows that theoretical developments and empirical studies on international business do refer explicitly or at least implicitly to the role of home countries in the international expansion of firms.

Originality/value

The value of this review is to develop the main streams of the literature and to serve as a basis for the other contributions published in this area.

Details

Competitiveness Review: An International Business Journal, vol. 27 no. 3
Type: Research Article
ISSN: 1059-5422

Keywords

Book part
Publication date: 22 June 2011

Svetla Marinova, John Child and Marin Marinov

This chapter provides a logical extension to the understanding of firm-specific advantages and disadvantages and the enabling role of existing and emerging country-specific

Abstract

This chapter provides a logical extension to the understanding of firm-specific advantages and disadvantages and the enabling role of existing and emerging country-specific advantages relevant to the process of Chinese firm internationalization. Its longitudinal perspective considers the changing objectives and actions of firms that enable them to compensate for disadvantages and create new or strengthen existing competitive advantages. The case study evaluation reveals that the evolution of strategic resources is the key motivator behind the internationalization of Chinese firms. Decisively encouraged by the Chinese government firms with corporate entrepreneurship aspire to alter themselves from home market leaders and regional players into globally competing multi-nationals. This process is made possible via the development of firm-specific advantages and continuous compensation for firm-specific disadvantages. The aspiration for strategic asset acquisition from developed countries combined with cost leadership and independent customer-centred innovation brought about strong firm-specific advantages stimulating the internationalization process of firms. The chapter focuses on the interdependence of country- and firm-specific advantages and disadvantages, thus recognizing the significance of the home country institutional context in Chinese outward foreign direct investment. It has been identified that corporate entrepreneurship is a significant firm-specific advantage for firm internationalization being a major force in gaining, accumulating, utilizing and leveraging resources for transforming firm-specific disadvantages into advantages. We argue that if the relational framework between governmental institutions and firms is more developed, the impact of country-specific advantages on firm-specific advantages is more favourable. This assumes that the government espouses an ideology that is favourable to corporate entrepreneurship.

Details

Dynamics of Globalization: Location-Specific Advantages or Liabilities of Foreignness?
Type: Book
ISBN: 978-0-85724-991-3

Article
Publication date: 17 June 2010

Alan M. Rugman

The eclectic paradigm of Dunning (1980) (with its OLI and four motives for FDI framework) can be reconciled with the firm and country matrix of Rugman (1981). However, the fit is…

11258

Abstract

The eclectic paradigm of Dunning (1980) (with its OLI and four motives for FDI framework) can be reconciled with the firm and country matrix of Rugman (1981). However, the fit is not perfect. The main reason for misalignment is that Dunning is focused upon outward FDI into host economies, whereas Rugman’s matrix is for firm‐level strategy covering MNE activity in both home and host countries

Article
Publication date: 24 March 2022

Quyen Nguyen

The author contributes to the theory of the multinational enterprise by examining subsidiary-specific capability in financial management, defined as the stock of knowledge and…

Abstract

Purpose

The author contributes to the theory of the multinational enterprise by examining subsidiary-specific capability in financial management, defined as the stock of knowledge and capability to plan, manage, control and direct financial resources effectively and efficiently, and the perceptions of subsidiary managers of host country financial development as drivers of export intensity (the share of sales that are exported) of foreign subsidiaries of multinational enterprises (MNEs). The author theorizes that subsidiary-specific capability in financial management is conceptually a valuable subsidiary-specific advantage and it is as important as other traditional competitive advantages, such as research and development and marketing intensity. Perceptions of subsidiary managers of host country financial development are argued to be largely related to the characteristics of the host country-specific advantages.

Design/methodology/approach

The author uses a survey dataset of the foreign subsidiaries of Western multinational enterprises (MNEs) together with other public data sources.

Findings

The author provides empirical evidence to support for these arguments that export intensity of MNE foreign subsidiaries depends on subsidiary-specific advantages and host country specific advantages.

Originality/value

The study broadens the understanding of the relationships between subsidiary-specific advantage in financial management, host country specific advantage, and export intensity of MNE foreign subsidiaries. In this way, the author makes an original contribution to new internalization theory by emphasizing the internal capability building of subsidiaries. The author discusses the implications of the findings for MNE foreign subsidiary managers, and policy makers because exporting is critical to the overall strategy of foreign subsidiaries, and it also contributes to the balance of trade and economic development of host countries where foreign subsidiaries operate.

Book part
Publication date: 24 June 2015

Sumon Kumar Bhaumik, Nigel Driffield and Ying Zhou

The extant literature on emerging market multinationals (EMNEs) suggest that they derive their advantages from factors such as economies of scale, and that they internationalise…

Abstract

The extant literature on emerging market multinationals (EMNEs) suggest that they derive their advantages from factors such as economies of scale, and that they internationalise, in large measure, to access technology. However, support for this framework typically comes from analysis of static data, comparing EMNEs and OECD MNEs at a point in time. Little attention is paid to their development paths in a dynamic setting. We examine these propositions directly using an approach that enables us to decompose productivity growth of firms into its components, namely, changes in scale economies, technological progress and technical efficiency. We compare Chinese MNEs with their non-MNE domestic counterparts and developed country MNEs that have operations in China. We demonstrate that Chinese MNEs continue to derive much of their productivity growth from changes in scale economies, while developed country MNEs continue to have an advantage with respect to technical progress. Both these types of MNEs have a significant advantage over Chinese non-MNE domestic firms.

Details

Emerging Economies and Multinational Enterprises
Type: Book
ISBN: 978-1-78441-740-6

Keywords

Article
Publication date: 12 February 2018

Sam Zisuh Njinyah

The purpose of this paper is to examine the significance of the direct and indirect effects (through country and firm’s specific advantages) of government policies for export…

1705

Abstract

Purpose

The purpose of this paper is to examine the significance of the direct and indirect effects (through country and firm’s specific advantages) of government policies for export promotion (GPEP) on the export performance of small and medium-size enterprise (SME) Cocoa exporters in Cameroon.

Design/methodology/approach

To test the proposed model, data were obtained through self-administered questionnaires using snowball sampling technique to 101 SME Cocoa exporters. This was analyzed using structural equation modeling (SEM) techniques to examine both the direct and indirect effects of GPEP on the export performance of SME Cocoa exporters in the South and Centre Regions of Cameroon.

Findings

The findings suggest that GPEP had both direct and indirect effects on the export performance of SME Cocoa exporters. Direct effect was on the usage of GPEP which reduces operating cost and increase performance. The indirect effects were through the provision of country and firms specific advantages. However, the only significant path was through the provision of export marketing information.

Research limitations/implications

The research is limited to one country, one sector, and two regions and does not take into consideration other factors that may influence the effect of GPEP, country, and firms specific advantages on export performance. Moreover, the non-significant paths should be interpreted with caution and further testing required in a different context.

Practical implications

Empirical findings are relevant for the government and SME Cocoa exporters. It informs the government about the effectiveness of GPEP and the need to disseminate marketing information using every possible medium best understood by the SMEs. It suggests an opportunity for engagement of both SMEs and government authorities in accessing the outcome of GPEP which will increase transparency, awareness, usage, and export performance.

Originality/value

The research has successfully developed and tested a model for analyzing the direct and indirect effects of GPEP on export performance based on the resource-based view and SEM in a context where there is a call for more empirical and theoretical work on export performance due to limited studies. The framework reveals positive effects of GPEP, country, and firms’ specific advantages as determinants of export performance.

Details

International Marketing Review, vol. 35 no. 1
Type: Research Article
ISSN: 0265-1335

Keywords

Book part
Publication date: 25 October 2014

Gilmar Masiero, Francisco Urdinez and Mario Henrique Ogasavara

The purpose of this chapter is to demonstrate that, despite the extensive literature on firm-specific advantages (FSAs) and country-specific advantages (CSAs) produced since…

Abstract

Purpose

The purpose of this chapter is to demonstrate that, despite the extensive literature on firm-specific advantages (FSAs) and country-specific advantages (CSAs) produced since Rugman’s classic matrix (1981), little progress has been made in empirically operationalizing the second concept.

Design/methodology/approach

Through a review of the international business (IB) literature that refers to the CSA concept, we identify the “vagueness” in the usage of this concept. First, we present a concise literature review of the CSA construct, with a link to the “double diamond” theoretical model of Rugman and D’Cruz (1993) and Rugman and Verbeke (1993). Second, we present the results of the bibliographic analysis on the use of the construct by a variety of authors.

Findings

We demonstrate the weak conceptual grounding of the CSA concept by reviewing the literature on host-CSAs attracting Chinese overseas foreign direct investment (OFDI). Apart from the fact that various authors use different sources of data, an important reason for contradictory results is the fact that each author tests host-CSA through different indicators. Here, we propose a list of variables and indicators based on the “double diamond” model and test these empirically.

Originality/value

IB researchers should start conducting serious studies on home-CSAs and host-CSAs instrumental to attracting investments, defining clear indicators and using replicable data based on publicly available information. This chapter is the first to show that the concepts developed by Rugman (1981) and expanded by Rugman, A. M. and Verbeke, A. (2008) (Internalization theory and its impact on the field of international business. Research in Global Strategic Management, 14, 155–174) are relevant to advance in the quantitative operationalization of concepts within IB theory.

Details

Multinational Enterprises, Markets and Institutional Diversity
Type: Book
ISBN: 978-1-78441-421-4

Keywords

Book part
Publication date: 22 June 2011

Sjoerd Beugelsdijk

Location-specific advantages (LSA) and the liability of foreignness (LOF) are key concepts in international business and management research. To combine these concepts in a…

Abstract

Location-specific advantages (LSA) and the liability of foreignness (LOF) are key concepts in international business and management research. To combine these concepts in a systematic framework, I develop a two-by-two matrix focusing on the nature of International Business (IB) research using four key terms: firm, context, comparative and interactive. This framework serves as a heuristic device in describing three main challenges IB scholars face when advancing the role of LOF and LSAs. These challenges relate to our understanding of the nature of relative advantage, to the development of a dynamic (so-called non-ergodic) world view and to the inclusion of the relevant spatial heterogeneity.

Details

Dynamics of Globalization: Location-Specific Advantages or Liabilities of Foreignness?
Type: Book
ISBN: 978-0-85724-991-3

1 – 10 of over 97000