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We build on the resource-based view and extend entry mode research by focusing on firms’ intention to transfer different resources from the parent firm to its overseas…
We build on the resource-based view and extend entry mode research by focusing on firms’ intention to transfer different resources from the parent firm to its overseas subsidiary. In line with our hypotheses, we find that parent firms that plan to transfer high levels of intangible resources to their foreign subsidiaries tend to choose wholly owned subsidiaries, while firms that intend to transfer high levels of tangible resources tend to choose international joint ventures. Moreover, we find that these relationships are moderated by institutional distance. We test our hypotheses using unique primary data from a sample of 128 foreign subsidiaries in the People’s Republic of China. Our results have important theoretical implications for international business strategy research as they develop further existing entry-mode theories.
Prior research on political strategies has predominantly analyzed singular political activities or drivers for firms to become politically active and, overall, only…
Prior research on political strategies has predominantly analyzed singular political activities or drivers for firms to become politically active and, overall, only scarcely obtained insights on performance consequences of political strategizing. To further develop the realm of political strategy, this study analyzes the effects of two “generic” political strategies on firms’ (1) stakeholder network development and (2) performance. Specifically, we provide theoretical and empirical evidence whether the two political strategies add to or substitute each other in their effect on the corresponding outcome variable. We find that an information strategy significantly affects the stakeholder network development, whereas no influence of a financial incentive strategy could be detected. Moreover, we find that the stakeholder network drives firm performance and, more importantly, that the two political strategies substitute each other in their effect on firm performance. Thus, we provide initial insights on the efficiency of political strategies when firms opt to execute an information strategy and financial incentive strategy simultaneously. The results of our study have important implications for research as they put a new light on the efficiency of political strategies.
Building on transaction cost economics (TCE) and recent critique on international business (IB) research, we intend to sharpen our knowledge on the application of TCE in…
Building on transaction cost economics (TCE) and recent critique on international business (IB) research, we intend to sharpen our knowledge on the application of TCE in entry mode studies.
We develop a two-sided model of transaction costs by considering the multinational corporation (MNC) and the local partner.
Overall, we illustrate that the decisions firms undertake are not always in line with traditional MNC-centric TCE reasoning. Specifically, we identify three situations when “traditional” TCE predicts transaction costs lower than they actually are. Based on our findings we derive implications for future TCE studies.
Our study is among the first to highlight the relevance of potential partners’ transaction costs during market entry. Our model of dually impinged transaction costs is supposed to guide future research and can be of direct use to firms assessing costs of entry.
Prior research has tended to view cross-country distance as an obstacle. Yet, differences across countries are a key reason for firms to internationalize. To address this…
Prior research has tended to view cross-country distance as an obstacle. Yet, differences across countries are a key reason for firms to internationalize. To address this discrepancy, this paper puts forward a unifying framework which (1) synthesizes and delineates the different types of cross-country distance, (2) provides a logic for analyzing cross-level influences of distance on internationalization decisions, and (3) highlights the opportunities brought about by distance. The paper argues that firms are more likely to be able to realize these opportunities when they have internationally experienced managers and diverse, well-functioning top management teams at the helm. The paper also highlights the complex influences of distance, calling for the use of cognitive and behavioral research methodologies to further our understanding of the role of distance in internationalization. An illustrative example of Vodafone Group PLC is included.
This study examines the effect of domestic alliances on firms’ foreign divestment decisions. We argue that foreign subsidiaries face a higher risk of being divested when…
This study examines the effect of domestic alliances on firms’ foreign divestment decisions. We argue that foreign subsidiaries face a higher risk of being divested when firms form new alliances with other firms in their home country. Alliances at home involve resources and may divert attention away from international operations. Also, opportunities emerging from entering into new relationships with other firms domestically may lead firms to reconfigure their value chain activities and resources across locations, thereby increasing the probability of foreign divestment. Using data from the electronic and electrical equipment industries in the USA over the period 2001–2008, we empirically investigate the link between domestic alliances and foreign divestment. We find that increases in domestic interfirm collaboration indeed significantly affect firms’ propensity to divest foreign operations.
Demographic faultlines (i.e., potential subgroup splits based on demographic attributes) have been argued to have effects over and above those of diversity. Yet…
Demographic faultlines (i.e., potential subgroup splits based on demographic attributes) have been argued to have effects over and above those of diversity. Yet, faultlines, much like diversity, do not seem to have positive or negative effects on performance per se, but to be affected by contextual variables as well as intermediate outcomes, such as relationship conflict. Relationship conflicts, a major threat to teamwork, are particularly likely to arise between subgroups. Thus, with the objective to shed some light on why and how exactly faultlines impact group outcome, we investigate the effect of faultline strength and distance on performance through relationship conflict as well as the effect of faultline strength on performance via relationship conflict, contingent on the level of faultline distance. To test our hypotheses we used data gathered in a laboratory setting with 267 graduate students. Results provide strong support for the extension of the faultline model.
We aim at providing a more precise differentiation of external stakeholder pressures and their impact on multinational corporation (MNC) subsidiaries’ political…
We aim at providing a more precise differentiation of external stakeholder pressures and their impact on multinational corporation (MNC) subsidiaries’ political strategies. Thus, we analyse whether external stakeholder pressures entail a more intense use of political strategies, and whether pressures from public stakeholders are more influencing compared to pressures from private stakeholders. We use ordinary least squares (OLS) regression analysis to test our hypotheses with data from 157 subsidiaries in Brazil, Russia, Turkey, India, China and South Africa. We found that the higher external stakeholder pressures on the MNC subsidiary, the more intensely subsidiaries apply political strategies. Furthermore, both public and private stakeholder pressures affect political strategies in a positive way, but our results show no statistical significance for a difference in impact. The study differentiates the general concept of external stakeholder pressures into pressures from national public and national private stakeholders.
The macroenvironment constitutes a widely acknowledged source of firms’ risk in international business. A substantial body of research on macroenvironmental risks…
The macroenvironment constitutes a widely acknowledged source of firms’ risk in international business. A substantial body of research on macroenvironmental risks encapsulates a variety of measurement approaches, antecedents, and managerial consequences. However, a review of established macroenvironmental risk measures reveals that these measures strongly focus on the quality of the macroenvironment, assuming a rather static perspective and mainly excluding dynamic aspects. Building on prior research on macroenvironmental risk as well as on environmental dynamism, we argue that macroenvironmental dynamism – i.e. the frequency, intensity, and predictability of macroenvironmental variation – is a pivotal source of risk in international business, which so far only received limited attention. Moreover, we suggest that macroenvironmental dynamism influences firms’ risk management activities, a measure we use to empirically investigate firm implications of macroenvironmental dynamism. We explore this effect using primary survey data on risk management activities from 158 foreign subsidiaries in six emerging countries and secondary data on the macroeconomic context in these countries. We find evidence that macroenvironmental dynamism, if compared to macroenvironmental quality, exerts a strong influence on firms’ risk management activities. Our findings enhance the understanding of the dynamic nature of macroenvironmental risk in international business as well as provide a concept to more comprehensively measure macroenvironmental dynamism that future research can build upon.