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Article
Publication date: 17 July 2017

Xie Qunyong

Since joint venture experience obtained from inward FDI may create a positive or negative impact on ownership mode choice, it is difficult to predict its direct impact…

Abstract

Purpose

Since joint venture experience obtained from inward FDI may create a positive or negative impact on ownership mode choice, it is difficult to predict its direct impact. The purpose of this paper is to combine the organizational learning and agency perspectives to find whether CEO power can moderate the effect of inward joint venture experience.

Design/methodology/approach

Using a sample of 337 foreign entries conducted by 77 Chinese firms during 1998-2008, this study has tested some interaction effects of inward joint venture experience and CEO power measures.

Findings

The author finds that inward joint venture experience interacts with CEO ownership and CEO duality, respectively, to have a negative impact on the selection of high-equity mode.

Originality/value

This study contributes to entry mode literature by finding that inward (but not merely outward) FDI experience can influence entry mode choices and by combining agency theory and the organizational learning perspective to solve the theoretical conflicts created by the two opposite effects of a FDI experience.

Details

International Journal of Emerging Markets, vol. 12 no. 3
Type: Research Article
ISSN: 1746-8809

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Book part
Publication date: 24 June 2015

Xavier Martin and Cha Li

In this paper, we conduct a conceptual and bibliographic analysis of the literature that deals with the international strategy of state-owned enterprises (SOEs), with…

Abstract

In this paper, we conduct a conceptual and bibliographic analysis of the literature that deals with the international strategy of state-owned enterprises (SOEs), with particular attention to SOEs from emerging economies (EEs). We first review the state of the art in defining the concepts of EEs and SOEs. We then conduct a detailed bibliographic analysis of the literature pertaining to SOEs’ involvement in international activities, whether as outward foreign investors or as potential local partners of inward-investing multinational enterprises. The analysis covers general trends in the literature, prominent research questions and outcome variables, use of theories, and choices pertaining to methodology (type of research and effects, empirical contexts). We document a literature that is fast-growing and well balanced in some respects. In other respects, we advance recommendations pertaining to (a) consistency and precision in the use of the concepts of “state-owned enterprise” and “emerging economy”; (b) search for specific evidence on the outward activities of EE SOEs in less-developed economies and even in other EEs, and on their performance; (c) understanding of relative propensities of local SOEs and inward investors to collaborate, and what happens when SOEs encounter each other across borders; (d) opportunities to strengthen the theoretical foundations and contributions of this research; and (e) minding the mix of home and host countries in studies and avoiding undue generalization from what has become a predominantly China-centric literature.

Details

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

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Book part
Publication date: 13 April 2015

Sylwia E. Starnawska

The UN Global Compact promotes values of precautionary approach to environmental changes and business sustainability, which are eagerly embraced by MNCs; however the…

Abstract

Purpose

The UN Global Compact promotes values of precautionary approach to environmental changes and business sustainability, which are eagerly embraced by MNCs; however the recognized emerging country risks pose a challenge for continuous commitment to those principles in the subsidiaries. Especially political and currency risks are considered significant in the subsidiaries located in the emerging markets. Therefore, those risks are often shifted to the local partners as the pursued core principle of the risk management strategies. The objective of MNCs is in fact to limit MNCs responsibility for the liabilities and losses in the emerging markets in case of market downturns, and in effect the advocated risk management practices exacerbate the severity of the emerging market crises.

Methodology/approach

The chapter explores those corporate practices on the examples of numerous major international market players in case of several historical, but recent examples of the emerging market currency crises.

Findings

The concerns addressed in the chapter include: the preference for local financing exposing at risk local banking sectors in the emerging markets, excessive liquidity and minimal capital commitments and investments leading to weaker currency fluctuations and resulting in private capital speculations and capital flight (to safety or to quality). The intensified global competition for international investments in form of FDIs resulted in the erosion of the capital requirements, reduced social and business infrastructure commitments requested, limited currency controls, and other components of the regulatory framework easing in the emerging markets. Other identified in the research key components of the risk management strategies applied by MNCs, destabilizing the emerging markets in financial (both fiscal and currency) crises include: intercompany payments and financing such as: transfer pricing, local sourcing and reimbursements for both tangible and intangible assets transfer.

Implications

Demonstrated approach of MNCs appears ethically questionable and reflects the disparity of the bargaining powers. It also undermines the intentions of the Ten Principles of the UN Global Compact. The corporate citizenship is found difficult to dominate over the conflicting self-centered interests of MNCs operating in the emerging markets, especially in times of crises. The consideration of the non-compulsory ethically based initiative, as the alternative to the failing effectiveness of the international market regulations, requires restoration of the public and an individual value of the reputation (image, name) built on social responsibility and accountability, unfortunately so much diluted over the last two decades.

Originality/value

The chapter examines the effect of MNCs risk management of their foreign operations on the crises in the emerging markets with focus on inward FDIs flows and inward FDIs stock fluctuations and debt financing. The results evidence the repetitive nature of the self-interest driven corporate behavior.

Details

Beyond the UN Global Compact: Institutions and Regulations
Type: Book
ISBN: 978-1-78560-558-1

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Article
Publication date: 15 May 2009

Tõnu Roolaht and Urmas Varblane

The purpose of this paper is to show how the inward‐outward dynamics in the internationalisation of Baltic banks have led towards higher incorporation into Nordic banking…

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Abstract

Purpose

The purpose of this paper is to show how the inward‐outward dynamics in the internationalisation of Baltic banks have led towards higher incorporation into Nordic banking groups and subsequently towards diminishing autonomy.

Design/methodology/approach

The paper presents two case studies, which characterise the evolution of international inward‐outward connections in two major Baltic banking groups – Hansabank Group and Skandinaviska Enskilda Banken (SEB) Group.

Findings

Acquisitions by Swedish banks in 1998 had a different impact on the internationalisation of the two leading Baltic banking groups. Inward‐outward connections in the case of the Hansabank Group meant that they obtained strong autonomy in controlling Swedbank's activities in the Baltic. In the case of Eesti Ühispank, Latvijas Unibanka and Vilniaus Bankas inward‐outward linkages meant that they lost autonomy about the further expansion to other Baltic countries and were eventually transformed into Baltic subsidiaries of SEB. These differences in strategies between Swedish banks could be explained by the background of the companies (especially their previous internationalisation experience). However, latest developments point towards growing similarities between two groups via incorporation of Hansabank into Swedbank group.

Research limitations/implications

The case study has inherently limited the capacity to offer generalisations concerning other service companies.

Practical implications

These results indicate the inward‐outward development pattern of international service companies. The managers of similar companies can use this development pattern to project the dynamics of market entry strategies.

Originality/value

The paper introduces original experience allocation framework in the context of inward‐outward internationalisation and outlines the dynamic nature of the strategic relations between the foreign owner and its subsidiary.

Details

Baltic Journal of Management, vol. 4 no. 2
Type: Research Article
ISSN: 1746-5265

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Article
Publication date: 5 August 2019

Nam Hoai Tran and Chi Dat Le

The purpose of this paper is to thoroughly investigate the interplay between institutions, foreign direct investment (FDI) and entrepreneurship in the context of emerging…

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1610

Abstract

Purpose

The purpose of this paper is to thoroughly investigate the interplay between institutions, foreign direct investment (FDI) and entrepreneurship in the context of emerging markets (EMs).

Design/methodology/approach

The authors argue that the impact of FDI on entrepreneurial activity depends on different natures of capital flow and entrepreneurial motivation and relates to the quality of institutional environment. First, the roles of inward and outward FDI are examined in connection with the new firm creation by opportunity- and necessity-motivated entrepreneurs. Second, the integrated influences of (inward/outward) FDI and governance quality (GQ) on (opportunity/necessity) entrepreneurship are tested. This nexus of relationships is analyzed through segmented regressions using the GEM data of 39 EMs over the 2004–2015 period.

Findings

It is evidenced that the quality of governance infrastructure affects the relationship between FDI and entrepreneurship: in emerging countries with low GQ, opportunity entrepreneurship is stimulated by inward FDI and diminished by outward FDI; and in emerging countries with high GQ, necessity entrepreneurship is discouraged by inward FDI and promoted by outward FDI.

Practical implications

This research has implications for the institutional context-based execution of public policy in emerging economies. As the entrepreneurial effects of inward and outward FDI are pronounced differently under the two types of entrepreneurship and the two extremes of GQ, public policy makers who recognize the catalytic role of FDI in domestic business development should take the distinct institutional context of their country into consideration.

Originality/value

The paper contributes to the extant literature on international entrepreneurship in emerging economies by making a breakdown on the roles played by different types of FDI in the entrepreneurial activity, analyzing the mediating effects of GQ on the relationship between inward/outward FDI and entrepreneurship, and interpreting the capital and institutional determinants of entrepreneurship in terms of entrepreneurial motivations by opportunity and necessity.

Details

Journal of Asian Business and Economic Studies, vol. 26 no. 2
Type: Research Article
ISSN: 2515-964X

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Article
Publication date: 19 April 2013

Susan Freeman, Seyda Deligonul and Tamer Cavusgil

Current conceptualizations of born‐globals lack a full theoretical explanation of strategic re‐structuring through the use of outward and inward‐oriented activity and the…

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3322

Abstract

Purpose

Current conceptualizations of born‐globals lack a full theoretical explanation of strategic re‐structuring through the use of outward and inward‐oriented activity and the processes of de‐internationalization and re‐internationalization. Strategy and internationalization processes are created by entrepreneurial behaviour. If one wants to understand various international behaviours and strategic changes in firms one needs to focus on entrepreneurs – individual managers. The purpose of this paper is to unify the theoretical framework on born‐globals by addressing two questions. How do managers move through the de‐internationalization (exit) to re‐internationalization (re‐entry) process? How do they choose their patterns of internationalization?

Design/methodology/approach

To address these research gaps, this study draws on 26 in‐depth interviews with senior managers across nine Australian born‐globals.

Findings

Moving between outward and inward‐oriented activity as they de‐internationalize and re‐internationalize is used as proactive strategic re‐structuring by born‐global managers for survival during periods of global economic decline or changing competitive conditions.

Originality/value

This study provides new theoretical insights where the entrepreneur is central to the internationalization process and provides practical implications for those involved in international business and marketing.

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Book part
Publication date: 16 February 2006

Steven Globerman, Daniel Shapiro and Yao Tang

Many of the emerging and transition economies in Central and Eastern Europe (CEE) have been building their economies largely on the infrastructure inherited from Communist…

Abstract

Many of the emerging and transition economies in Central and Eastern Europe (CEE) have been building their economies largely on the infrastructure inherited from Communist times. It is widely recognized that much of the infrastructure in both the private and public sectors must be replaced if those economies are to achieve acceptable rates of economic growth and participate successfully within the broader European Union (EU) economic zone (The Economist, 2003). Upgrading infrastructure includes the likely importation of technology and management expertise, as well as substantial financial commitments. In this regard, inward foreign direct investment (FDI) is a particularly important potential source of capital for the emerging and transition European economies (ETEEs). FDI usually entails the importation of financial and human capital by the host economy with measurable and positive spillover impacts on host countries’ productivity levels (Holland & Pain, 1998a). The ability of ETEEs to attract and benefit from inward FDI should therefore be seen as an important issue within the broader policy context of how these countries can improve and expand their capital infrastructure, given relatively undeveloped domestic capital markets and scarce human capital.

Details

Emerging European Financial Markets: Independence and Integration Post-Enlargement
Type: Book
ISBN: 978-0-76231-264-1

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Article
Publication date: 11 August 2020

Chukwuebuka Bernard Azolibe

This study empirically assessed the influence of foreign direct investment on the manufacturing sector growth in the Middle East and North African region using panel data…

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1308

Abstract

Purpose

This study empirically assessed the influence of foreign direct investment on the manufacturing sector growth in the Middle East and North African region using panel data of 18 countries covering the period of 1975–2017.

Design/methodology/approach

The study employed Levin et al. (2002) test (LLC) and Im et al. (2003) panel unit root test. Furthermore, Kao’s cointegration test was applied to examine the long-run relationship between the variables. Both the Dynamic OLS and Fully modified OLS were used in estimating the short-run relationship.

Findings

The results of the DOLS and FMOLS indicate that both inward and outward FDI influence the manufacturing sector growth positively. This shows that much of the manufacturing sector growth in the MENA region is driven by both inward and outward FDI. Our findings made a strong new proposition that aside from the negative influence proposed by Stevens and Lipsey (1992), outward FDI could also have a positive influence on the manufacturing sector of a country through effective utilization of domestic raw materials that are produced locally for production of goods in a foreign country.

Practical implications

MENA countries should concentrate more on making policies that will encourage the effective utilization of domestic resources for outward foreign direct investment in other countries of the world as it has the capacity to boost the manufacturing sector growth. Also, policies that will attract more inflows of FDI in the region should be encouraged. Both inward and outward FDI should be considered as an integral part of MENA economic policy in order to spur the manufacturing sector growth.

Originality/value

Previous empirical studies on the relationship between FDI and manufacturing sector growth have focused much on the influence of inward FDI. Thus, very little attention has been paid to the contribution that the outward FDI makes to the growth of the manufacturing sector of the host country. Our empirical study focused on the influence of both inward and outward FDI on the manufacturing sector growth with specific emphasis on the MENA region that remains the center of attraction of inward FDI and a source of inward FDI to most nonoil producing developing and developed countries given the oil-rich nature of the region.

Details

International Trade, Politics and Development, vol. 5 no. 1
Type: Research Article
ISSN: 2586-3932

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Article
Publication date: 5 December 2016

Evelyn S. Devadason and Thirunaukarasu Subramaniam

The purpose of this paper is to examine the relationship between inward foreign direct investment (FDI) and unskilled immigrants for a panel of 23 manufacturing industries…

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1351

Abstract

Purpose

The purpose of this paper is to examine the relationship between inward foreign direct investment (FDI) and unskilled immigrants for a panel of 23 manufacturing industries in Malaysia, spanning the period 1985-2009.

Design/methodology/approach

The paper establishes the causal FDI-immigrant links within a multivariate model framework for the period 2000-2009, and in a univariate context for 1985-1999 and 1985-2009.

Findings

Based on heterogeneous panel cointegration tests, there is a long-run equilibrium between inward FDI, unskilled migrant share, output growth, export intensity and market concentration. The long-run cointegrating coefficient based on the fully modified least squares estimator suggests the presence of unskilled migrant workers a significant location determinant for inward FDI for the first sub-period and the overall period. The results of the panel vector error correction model further attest to causal links between unskilled migrant worker presence and inward FDI in the short- and long run. Bidirectional causality between inward capital and labour flows is present in the first sub-period and unidirectional causal links from unskilled migrants to inward FDI is evident for the overall period.

Research limitations/implications

The observed FDI-immigration (unskilled) links in manufacturing support the argument that inward FDI is induced by unskilled migration. The study reveals that unskilled immigration increases FDI inflows or rather “capital chases labour” in terms of international factor mobility.

Practical implications

This has profound implications for public policy as the government seeks to reduce its dependence on migrant workers. Policy coordination is therefore needed between regulating inflows of foreign capital and foreign labour so that implemented policies do not pull in different directions and undermine Malaysia’s attractiveness as a destination for FDI.

Originality/value

The large presence of unskilled migrants, an intrinsic characteristic (based on the new trade theory that includes factor endowments) of Malaysia, seems to be largely ignored when explaining FDI inflows to manufacturing, particularly so when the siting of MNCs in this sector have traditionally been in light scale manufacturing.

Details

International Journal of Social Economics, vol. 43 no. 12
Type: Research Article
ISSN: 0306-8293

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Article
Publication date: 29 May 2018

Yusnidah Ibrahim and Jimoh Olajide Raji

This paper aims to examine the influence of key macroeconomic factors on the inward and outward acquisition activities of six ASEAN (ASEAN: Association of Southeast Asian…

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1122

Abstract

Purpose

This paper aims to examine the influence of key macroeconomic factors on the inward and outward acquisition activities of six ASEAN (ASEAN: Association of Southeast Asian Nations) countries, namely, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, over the 1996-2015 period.

Design/methodology/approach

The study uses alternative panel data methods, including pooled mean group, mean group and dynamic fixed-effect estimators.

Findings

The results indicate that gross domestic product (GDP), interest rate, exchange rate, money supply and inflation rate are the most important macroeconomic factors explaining the trends of cross-border mergers and acquisition outflows of the ASEAN-6 countries. Specifically, GDP, money supply and inflation rate have significant positive relationships with acquisition outflows, while interest rate and exchange rate exert significant negative influence. On the other hand, the authors find four significant macroeconomic factors explaining the trends of the inward acquisitions. Essentially, GDP, money supply and inflation rate have significant positive impacts on inward acquisitions, while the impact of exchange rate is negatively significant.

Research limitations/implications

Unavailability of data limits this study to pool six sample countries from ASEAN, instead of ten representative member countries.

Practical implications

The results of this study can signal to firms or investors, involving in cross-border mergers and acquisitions, where to direct foreign resources flows. Moreover, having the knowledge about the relative levels of market size and other macroeconomic factors in both home and host countries can be of great importance for investment decision. Therefore, policymakers of ASEAN countries should make appropriate macroeconomic policies that can stimulate inward and outward acquisitions.

Originality/value

The main contribution of this paper is that it is the first to present the analysis of macroeconomic influences on the trends of inward and outward merger and acquisition activities in six ASEAN countries.

Details

Studies in Economics and Finance, vol. 35 no. 2
Type: Research Article
ISSN: 1086-7376

Keywords

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