Search results

Setting the multinational enterprise (MNE) apart on the basis of a weakly specified idea of foreignness may impede progress in international business (IB). The discipline lacks a paradigm to assimilate the idea of foreignness as an incident of internationality, a global condition describing the political context within which the MNE functions and which confers uniqueness on that institution. However, a plausible re-imagining of the MNE is possible and useful, and here a candidate for such an ontological shift is proffered. Rather than a firm struggling in one or more foreign contexts, the MNE is reconstructed as a foreigner contending with the responsibilities of a firm. The proposed re-imagining of the MNE is experimentally substituted for the received ontology in different IB research contexts. It transpires that this ontological revision maintains intelligibility in those contexts while usefully exposing new directions in which to pursue knowledge. In consequence of re-imagining the MNE, that institution may be situated more precisely amid the international system’s primal constituents, and links may be more effectively established with other bodies of research addressing the functioning of the international political economic system.

We examine the impact of multinational firms (MNEs) on exchange rate pass-through when an MNE engages in Cournot competition with domestic and foreign rivals. The MNE can locate its production for the foreign market domestically — intra-firm trade (IT) — or in the foreign country — international production (IP). In addition to incomplete exchange rate pass-through, we show that an MNE increases the sensitivity of domestic market prices and reduces the sensitivity of foreign market prices to exchange rate movements. Finally, IT prices are more sensitive to exchange rate movements than their IP counterparts and react in the opposite direction.

This chapter analyses the multiple embeddedness of MNEs, and their participation in solving contemporary societal issues. We aim to increase understanding on the relational processes and network dynamics present in MNEs’ participation in cross-sector partnerships.

Our study addresses the issue of the poor ecological state of the Baltic Sea and illustrates the early developments in cross-sector collaboration. We build on a single exploratory case study of the cooperation of one MNE (IBM) with an environmental NGO (BSAG) in Finland. We analyse how participation in the cross-sector collaboration manifests itself in the external and internal networks of the MNE.

We show that an initiative by the NGO to participate in environmental work was actively adopted within the MNE and led to network changes. These changes concerned both the activation of existing links and the establishment of new links with such actors as authorities and research institutes. The NGO acted as a catalyser and cultural mediator to create a bridge between the MNE and governmental actors.

There is a need to investigate cross-sector collaboration in other contexts – particularly from the perspective of MNEs and (international) business networks. Questions such as how do enduring (business and socio-political) relationships emerge from MNE’s participation in issue networks and how technology that has been developed to solve a specific societal issue may be translated into commercial solutions are especially promising. We also urge scholars to investigate the ties, texture and dynamics (including tensions) of business relationships with those of public actors and civil society.

Participation in cross-sector initiatives may grant an MNE a forerunner position in the creation of new sustainable markets and technologies. It may also create an opportunity to influence policymakers and build new socio-political networks. From the perspective of a subsidiary of an MNE, engagement with cross-sector partnerships may strengthen its voice within the MNE network.

Our study contributes to the understanding of the relationship dynamics between actors in cross-sector collaboration around a societal (environmental) issue. Our analysis illustrates the embeddedness of MNE networks, where actions in the regional and global networks (the representatives of the headquarters) overlap with and strengthen the local actions of the subsidiary.

The costs of doing business abroad (CDBA) is a well-known concept in the international business literature, measuring the disadvantages or additional costs borne by multinational enterprises (MNEs) that are not borne by local firms in a host country. Recently, international management scholars have introduced a second concept, liability of foreignness (LOF). There is confusion in the two literatures as to the relationship between CBDA and LOF, as evidenced in a recent special issue on liability of foreignness (Journal of International Management, 2002). We argue that LOF stresses the social costs of doing business abroad, whereas CDBA includes both economic and social costs. The social costs arise from the unfamiliarity, relational, and discriminatory hazards that foreign firms face over and above those faced by local firms in the host country. Because the economic costs are well understood and can be anticipated, LOF becomes the core strategic issue for MNE managers. We argue that the key driver behind LOF is the institutional distance (cognitive, normative, and regulatory) between the home and host countries, and explore the ways in which institutional distance can affect LOF. We operationalize our arguments by showing how institutional distance and liability of foreignness can provide an alternative explanation for the MNE’s ownership strategy when going abroad.

This study examines the relationship between subsidiary autonomy and the MNE subsidiary initiative collaboration (i.e. entrepreneurial initiative resource support, the subsidiary seeks and receives from the MNE). It proposes some underlying mechanisms as external embeddedness, and MNE organizational structures to explain the relationship between subsidiary autonomy and the MNE subsidiary initiative collaboration. The study draws on paradox theory arguing how at both the subsidiary and the parent MNE levels certain paradoxes are handled.

Survey data are collected in a time-lagged fashion from 429 foreign subsidiaries in New Zealand. Data are analyzed using structural equation modeling.

Results show that the relationship between subsidiary autonomy and the receipt of MNE resource support for initiatives is positive, and this is more likely the case where the subsidiary is managed under simple structures (i.e. subsidiary reports to corporate headquarters, regional headquarters or mandated units) rather than complex structures (i.e. a matrix or a network). Furthermore, an increase in subsidiary autonomy positively influences MNE initiative resource-seeking, and this is more likely the case where the subsidiary is less embedded externally.

The study is one of the first of studies that has applied paradox theory to MNE–subsidiary relationships regarding autonomy and MNE collaboration on initiatives. The study extends research on MNE–subsidiary collaboration on subsidiary initiatives as existing research is limited on this domain. The study contributes by showing how external embeddedness, and the complexity of organizational structures determine the relationship between subsidiary autonomy and MNE subsidiary initiative collaboration.

The purpose of this paper is twofold: to analyse what theories assume about multinational enterprises (MNEs) when they claim these are superior and to discuss possible explanations for why MNE superiority seems to be dominant in the international business (IB) research field.

A common theme in mainstream IB theories is that multinational enterprises (MNEs) are superior in terms of cost efficiency and innovativeness compared with other types of organizations. A closer look at transaction cost economics (TCE)/internalization theory, evolutionary theory and dynamic capability theory reveal a bias toward MNE supremacy because of how MNEs are conceptualized as firms and therefore fail to explain the essence of “multinational advantage”. These revelations and the strong dependence on the benevolence to provide unbiased data means that MNE supremacy posited by mainstream IB theories is as much a rationalized myth as an empirical fact.

Although mainstream theories differ when it comes to the building blocks that constitute MNE supremacy, they have one attribute in common: they are silent as to why MNEs are superior compared with, for example, domestic firms or other types of economic agents. Irrespective of whether the focus is the strength of the hierarchy, the skill of managers or a common identity, nothing in the theories tells us that these factors are more pronounced in MNEs than in other types of economic actors.

The paper deals with the issue of multinational advantage. It claims that mainstream theories of MNEs tend to assume, explicitly or implicitly, that MNEs are superior in terms of cost efficiency and innovativeness compared with other types of economic agents. The analysis demonstrates that this tendency is a consequence of how MNEs are conceptualized as firms in the different theories as well as of the strong dependence in IB research on the benevolence of MNEs to provide unbiased data. It is concluded that MNE supremacy posited by mainstream IB theories is as much a rationalized myth as an empirical fact.

This paper aims to examine the individual-level headquarters–subsidiary relationship issue of psychological attachment in multinational enterprises (MNEs). Antecedents to subsidiary manager identification and commitment to the MNE and subsidiary are explored.

Those in subsidiary manager roles regardless of country of origin were surveyed. Hypotheses were tested using partial least squared structural equation modeling.

For both MNE and subsidiary models, perceived prestige related to commitment. All components of positive interaction related to subsidiary commitment (but not identification), while just one related to MNE identification and commitment. For the MNE model only, collectivism positively related to identification and commitment, cultural distance positively related to commitment, geographic distance negatively related to commitment, and language similarity marginally negatively related to commitment. Organization-based self-esteem (OBSE) partially mediated relationships of perceived prestige and positive interaction with commitment in MNE and subsidiary models.

This microfoundational approach to psychological attachment in an MNE setting suggests similarities and differences for antecedents in MNEs and subsidiaries, as well as the importance of OBSE. This study is limited by its exclusion of other antecedent variables and types of attachment, and a cross-sectional study design.

MNEs can increase psychological attachment by communicating the importance of the MNE and/or subsidiary, developing processes to improve interactions with other organizational units, and demonstrating that employees are valued.

Exploration of the individual-level of analysis of headquarters–subsidiary relationships is rare, and different findings for the MNE and subsidiary are highlighted, something that is not fully explained by current research on psychological attachment.

This paper seeks to demonstrate that internalization theory, as a “complete” theory of the firm, is particularly well equipped to analyze multinational enterprise (MNE) regional strategies, thanks to its joint transaction cost economics and resource‐based foundations.

This paper builds on recent work by Wolf, Egelhoff, and Dunemann to show that internalization theory's predictions on MNE regional strategy are superior to those suggested by several other conceptual frameworks. For each of the 11 hypotheses formulated by Wolf and his co‐authors, an alternative is proposed here that is consistent with internalization theory predictions.

MNE regional strategy is an important empirical phenomenon. Internalization theory, as a powerful conceptual framework with general applicability, simplicity and accuracy, allows in‐depth analysis of MNE regional strategies.

Internalization theory scholars need to find new ways of operationalizing MNE firm‐specific advantages (FSAs), as well as MNE resource recombination trajectories, to predict accurately when and how MNEs will pursue regional versus global strategies.

MNE senior management should rethink international expansion strategies and realize that most large MNEs actually pursue regional, not global strategies.

Even the world's largest MNEs have great difficulty engaging in novel resource recombination across the globe, and their alleged market power should therefore not be overestimated.

International business scholars should embrace internalization theory as the general theory of the MNE, rather than looking for insight from theories not intended – nor properly equipped – to study strategies of the world's most complex entrepreneurial organizations.

The purpose of this paper is to argue that multilateral knowledge transfer emerges from two lines of thinking in the international business (IB) literature – the exploitation of multinationality and the contributory role of subsidiaries – and links three levels of analysis – headquarters, knowledge-creating subsidiaries and host-country environments.

Multilateral knowledge transfer, both vertical and horizontal, is considered in this paper as a cross-level phenomenon that emerges as a result of beneficial interdependencies between headquarters, knowledge-creating subsidiaries and their host-country environments. The paper also discusses the concept of embeddedness, which both lines of thinking draw upon, and argues that the multinational enterprise (MNE) headquarters can actually moderate both internal and external embeddedness through global strategy and organizational design.

By putting forward an integrative cross-level interdependency framework that incorporates insights from the R&D internationalization literature and the subsidiary evolution literature, this paper delineates multilateral knowledge transfer as an MNE strategy to systematically transform and integrate knowledge created at the subsidiary-level for the global competitive advantage at the MNE group-level.

Such a perspective reemphasizes the multi-level nature of IB studies and provides new opportunities for theoretical and empirical development as did the internalization theory which has theorized the conventional headquarters-to-subsidiaries knowledge transfer more than 40 years ago.

The purpose of this paper is to evaluate multinational enterprises’ (MNEs) performance and impact in contexts beyond their own internal objectives.

Based on an “eclectic” paradigm and the range of motivations, the framework is designed around three layers of evaluation: “efficiency” as static optimisation, “growth and development” as the dynamics of change on a purely economic view; political/economic sphere in terms of the outcomes of “distribution”, and “sovereignty” on the more purely political concern of how MNEs may undermine countries’ policy independence.

MNE and national economies have to use current sources of competitiveness efficiently while addressing the necessity to reinforce and refocus them through time. Within these broad agendas, significant interactions and outcomes reflect a range of contingencies conditioned by both MNE objectives and hosts’ competitive status.

The paper concerns economics and MNE role in globalisation. The paper defines a framework of four generic evaluative issues of MNE performance, which subsume a wider range of important but more niche concerns.