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The purpose of this paper is to explore the link between R&D internationalization and finance decisions by providing survey evidence on the funding sources of R&D in light of recent perceptions of MNEs' decentralized knowledge-related competitiveness.

The study draws upon a survey of 83 decentralized R&D units located in countries outside the EU core of mature economies. Funding sources are classified as MNE-internal and external. Using simulation-based models, six ordered probit regression models were run with each funding source forming the dependent variable.

There are three significant findings. First, decentralized R&D funding relies mainly on MNE-internal sources. Second, decentralized R&D funding patterns reflect on the interdependencies within an overall MNE R&D strategy that is articulated through varied laboratory roles. Third, while the strategy-finance interaction is confirmed, the prevalence of parent funding is challenged. Instead, evidence recorded here suggests support for the decentralized, “subsidiary-focused” perspective that has recently regained a considerable momentum in the literature.

Notwithstanding that this study reinforces the interaction between strategic decisions and funding patterns, more work is required to identify the effects of other aspects of strategy on the funding sources of decentralized R&D activity. However, it is seemingly the first study that investigates MNEs' R&D financial decisions in economies outside the EU core, incorporating also a wide array of external funding sources.

Funding choices for decentralized R&D labs should be contingent upon their unique contribution to the competitive evolution of the MNE group. Further, R&D activity seems to leverage the autonomy of subsidiary managers.

This research is one of the very few empirical studies providing evidence on the funding sources of decentralized R&D laboratories, and suggests possible predictors that have not been put forward hitherto.

Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some legal aspects concerning MNEs, cyberspace and e‐commerce as the means of expression of the digital economy. The whole effort of the author is focused on the examination of various aspects of MNEs and their impact upon globalisation and vice versa and how and if we are moving towards a global digital economy.

The purpose of this paper is to shed new light on the debate about the role of foreign direct investment (FDI) and public policy in fostering economic development. Specifically, can the capital inflow of multinational enterprises (MNEs) and the ability of the subsidiaries to raise funds locally help promote development? This paper addresses this issue by examining the capital structure and financing sources of foreign subsidiaries of MNEs.

This paper integrates the capital structure theories in finance with internalization theory in international business. It uses an original primary dataset collected by a survey of 101 foreign subsidiaries of British MNEs in six emerging economies in the ASEAN region.

There are three significant findings. First, these subsidiaries rely heavily on internal funds generated within the MNEs and less on external debts raised in the host countries. Second, the foreign subsidiary's capital structure is influenced by the home country of origin of the parent firm and the parent firm's financing sources. Third, these subsidiaries have used the financial resources to develop business networks with local small and medium enterprises (SMEs) which contribute to economic development of the host countries.

This paper examines the internal capital market within the MNE. It provides theoretical and empirical support for the capital structure theory of the hierarchy financing approach and also for internalization theory by addressing FDI inflows by MNEs and the raising of funds locally. These findings have important implications for public policy, namely the facilitation of MNE entry to encourage economic development.

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.

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

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.

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.

The author examines key factors which affect intangible asset holdings of foreign subsidiaries of multinational enterprises (MNEs). The author developes the hypotheses by drawing upon the pecking order theory in the finance literature and the institution theory. The author theorizes that MNE foreign subsidiaries combine and utilize their cash holdings (finance-based firm-specific advantages [FSAs]) with host country economic freedom (host country-specific advantages [CSAs]) in their holdings of intangible assets which are internally created and/or purchased. The author empirically tests the hypotheses using a new original dataset of European subsidiaries of US MNEs. The author finds that cash holdings and host country economic freedom share a significant and positive relationship with intangible asset holdings. The author discusses the implications of the findings for theory and practice.

Despite declining in 2001, foreign direct investment (FDI) surged during the 1990s. As a result, current levels of FDI flows are triple their 1990 levels. It is well documented in the literature that FDI occurs in large part among countries that are geographically close. It is also well established that the NAFTA had a significant impact on both U.S. FDI flows and hence FDI stocks. In addition, tax policies and tax treaties have been shown to be important drivers of U.S. FDI. The analysis presented in this chapter confirms these earlier results. We extend the analysis, however, to show that tax treaties have a significant impact on financing patterns of U.S. MNE activities abroad. Based on these results, we argue that bilateral tax treaties should be an important part of trade agreements between the United States and Latin American partners in anticipation of a Free Trade Agreement of the Americas (FTAA).

The purpose of this paper is to investigate the determinants of financing the outward foreign direct investment (OFDI) by building a three-level framework residing on host country market imperfections, ownership advantages of parent firm investing abroad and the industry to which it belongs.

The paper used random effects probit model.

Parent debt financing of OFDI by Indian parent firms is driven by the credit market development of the host country, the uniqueness of the industry to which parent firm belongs and systematic risk. Debt-oriented firms are found to invest more via parent debt.

The limitations of this study are as follows: –first, time period before 2008 could not be considered due to unavailability of data in the public domain. Second, the characteristics of foreign affiliates that spread across diverse host countries have not been factored in. Third, in the case of parent’s industry-level determinants, financial sector has not been included because the financing and risk-taking strategy of this sector are quite different from other sectors. Finally, the present study assumes financing decision to be centralized in the multinational system at the parent firm.

The practical implications of this study are as follows: first, industry innovativeness must be taken as a guide by the Indian MNEs to finance their OFDI and they must provide equity. Second, the study suggests that Indian MNEs rely on their existing capital structure while financing their OFDI. Third, parent firms are found to follow the industry norms. Fourth, parent firms must finance their OFDI by considering the development of credit market in the host country. Fifth, host government must focus on improving the credit market development of their economy and not just reducing tax rates to attract FDI into their economy.

Empirically examining internal flows in a multinational system has limited the research in the area of financing the OFDI. The paper is one of the first attempts to formally develop a model of factors that shape financing of OFDI in case of one such emerging market – India.

The purpose of this paper is to review the key analytical principles of internalisation theory as a general theory of the multinational enterprise (MNE). It illustrates the vitality, relevance and flexibility of the approach in explaining the continued evolution of the MNE. As a grounded social science theory, it provides, in combination with history and economic geography, satisfying and novel explanations of the key phenomena of the modern globalising economy.

This paper examines the origins and principles of internalisation theory as the foundation theory of the MNE. It considers internalisation theory in the context of current and mainstream theories and concepts in the field of international business.

Internalisation theory is equally valid for the MNEs of yesteryear as it is for those today. The theory continues to have strong explanatory power for MNE activity. Current research areas, such as multiple embeddedness, fine-slicing of the value chain, etc., and other theories, such as dynamic capabilities and the resource-based view, either are subsets of internalisation and thus explained by the theory, or contain weakness and/or inconsistencies not found in internalisation theory.

This paper coherently synthesises internalisation theory, its origins and evolution. It shows how commonly held and current concepts and theories are related to internalisation theory or have weaknesses, thus making internalisation theory a superior theory to explain the MNE, and identifies potential applications of the theory to novel research areas in the field of international business.

The capital budgeting decision for a multinational enterprise needs to take into account concepts of business policy and competitive strategy. From the modern theory of the multinational enterprise, i.e., the theory of internalisation, it is recognised that proprietary firm specific advantages yield economic rents when exploited on a world‐wide basis. Yet the multinational enterprise finds these potential rents dissipated by internal governance costs of its organisational structure and the difficulty of timing and sustaining its foreign direct investment activities. This paper examines these issues by a focus upon parent‐subsidiary relationships and the strategic nature of the capital budgeting decision for a multinational enterprise.

This paper aims to investigate the linkages among foreign direct investment (FDI – greenfield and mergers and acquisitions [M&A]) decisions and equity market returns and volatilities. The main premise is that FDI decisions by multinational enterprises (MNE) are influenced by risk and uncertainty indicated by equity market returns and volatilities in the destination (host) countries. This is so because the events on the stock markets in general and their volatilities in particular signal the vitality of the investment climate of the target market. Understanding volatility in capital markets is important for determining the cost of capital and for evaluating direct investment and asset allocation decisions.

Surveys and structured interviews were conducted with senior managers of 11 MNEs based in the USA to collect the data used in this study from November 2017 to October 2018. The paper investigates if FDI decisions of the MNE managers are influenced by risk and uncertainty indicated by equity market returns and volatilities. The paper endeavors to make a contribution to the IB literature in highlighting the role played by equity returns and volatilities in FDI decisions and therewith attempts to integrate finance (capital markets) with international business/strategic decision-making.

Capital market performances (returns and volatilities) were found to influence the country choice for location of production facilities (FDI – both greenfield and M&A decisions) as well as timing of the FDI by a MNE. In other words, the share of production capacity optimally located abroad and M&A activities are affected by capital market returns and volatilities.