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This paper aims to investigate whether executive compensation and internal control can prevent overseas compliance risks through the mediating influence of multinational corporation (MNC) legitimacy and the moderating role of institutional distance.

Based on a law and economics perspective and the “bad apple,” the “red barrel” and the “bad cellar” theory of business misconduct, this paper constructs a systematic framework of “compliance motivation MNC legitimacy overseas compliance risk prevention” from the individual, organizational and systematic levels and uses data of Chinese MNCs for empirical analysis.

Empirical data from Chinese MNCs show that overseas compliance risks are comprehensively affected by the factors of the individual, organizational and systematic levels. Higher executive compensation and internal control will reduce MNCs’ overseas compliance risks through MNC legitimacy acquisition; institutional distance hinders the positive effect of internal control on MNC legitimacy and therefore aggravates overseas compliance risks.

This paper contributes to the understanding of the overseas law-abiding and offence behavior of MNCs from a law and economics perspective and offers valuable insights on how to prevent the ever-increasing overseas compliance risks.

Although the literature has analyzed the factors of compliance behavior, they are not interrelated, let alone integrated in a systematic risk prevention framework. This paper applies a law and economic analysis framework to the study of the overseas compliance risks for the first time.

Based on the knowledge-based theories of the MNC, this research aims to develop and test a holistic model to analyse the relationship between the strategic knowledge management (SKM) processes undertaken by subsidiaries and MNC performance. Additionally, it focuses on determining the impact that the relational context can have on knowledge creation and transfer inside the internal network of an MNC.

The research hypotheses are tested by partial least squares (PLS) with data from a sample of Spanish subsidiaries of foreign multinational firms belonging to high-technology and knowledge-intensive sectors.

The results confirm that: the implementation of a SKM by a subsidiary positively impacts on knowledge creation; the knowledge created by a subsidiary positively influences knowledge transfer, increasing the knowledge existing in the MNC; the knowledge transfer across all MNC units has a positive impact on MNC performance; the subsidiary’s relational context arises as a mediating variable between the knowledge created by a subsidiary and its transfer to the rest of the MNC.

The research proposes a holistic model that contemplates the joint interaction of the variables knowledge creation, knowledge transfer and performance. In addition, the proposed model contemplates the variable SMK of the subsidiary as the beginning of the knowledge creation-knowledge transfer-performance process. Finally, the mediating role of the relational context in the relationship between knowledge creation and transfer is analysed.

The purpose of this paper is to draw attention to the link between knowledge transfer flow and the location of a multinational corporation (MNC).

The authors put forward a conceptual approach to formulate the mathematical modelling of a firm’s performance following the decision to join a regional cluster. This model builds on a recent stream of theoretical literature which has investigated the relationship between networks and the creation and diffusion of knowledge. The purpose of this model is to propose a mathematical tool to determine the long-term financial results induced by knowledge transfer from an MNC’s acquired subsidiary located in a cluster to another part of the MNC.

This study has several important research implications. First, it is a useful step towards a better understanding of how knowledge transfer effects may interact with cluster effects, while explaining subsidiary location performance. Second, it focuses on the most valuable, often highly tacit knowledge competencies.

Other investigations would certainly be welcome to improve the links between the proposed mathematical model and the efficiency of the location of an MNC in a cluster through a quantitative study.

The authors constructed this study with the aim of developing a model that would give us a better understanding of the impact of embedded knowledge on the efficiency of a localization choice made by an MNC.

To date, there has been little in the literature on the profit arising from a multinational firm’s choice of location.

Intensified internal social needs and changed expectations of the role of government obligate governments everywhere today to accept responsibility for an increasing number of economic and social objectives. National economic goals are defined and policies devised to further these goals. As a principal agent of economic change, the multinational corporation (MNC) is frequently the target of these economic policies. However, the multinational corporation has its own objectives and concerns. With its numerous alternatives and greater flexibility in reallocating resources, the MNC will usually respond differently to government policies than will purely domestic corporations. Yet all too often governments misunderstand the nature of the multinational corporation and devise regulatory policies which have unanticipated, even undesirable, consequences. A vicious cycle then ensues as governments attempt to regulate MNC behavior still further.

The vulnerability of multinational corporation (MNC) knowledge network is one of the major causes for the failure and even the death of MNCs in the fierce global market competition. Employee turnover and knowledge loss are the triggers for the MNC knowledge network vulnerability and a matter of serious concern in the evolution and development of MNC knowledge network. The purpose of this work is to propose a valid and quantitative measurement method to investigate the influence of employee loss and knowledge loss on the vulnerability of MNC knowledge network.

MNC knowledge network is inherently a heterogeneous network where there are mainly two types of units: employees and their knowledge. Therefore, this paper establishes a weighted super-network model for MNC knowledge network to depict its heterogeneous composition. On the basis of the weighted MNC knowledge super-network, the static and dynamic vulnerability measurement methods are further proposed to investigate and evaluate MNC knowledge network vulnerability.

A real case is given to illustrate the applicability of the proposed weighted MNC knowledge super-network model and the network vulnerability measurement methods. The results show the super-network model proposed in this paper can effectively embody the complex features of MNC knowledge network, and the vulnerability measurement methods can effectively investigate the influence of employee loss and knowledge loss on network vulnerability.

From the perspective of super-network, researchers and practitioners can get a more systematic and deeper understanding of the MNC knowledge network and its human and knowledge resource constitute which are vital for the evolution and development of MNC. Moreover, the MNC knowledge network vulnerability measurement methods can effectively measure and analyze the influence of resource loss on network vulnerability, which can provide a helpful decision support for monitoring and managing of MNC knowledge network vulnerability to reduce its adverse effects.

Knowledge is a strategic resource for firms and it can enable them to achieve competitive advantage. Large companies engaged in internationalization pay particular attention to knowledge as a source of innovation. The purpose of this paper is to investigate current debates in the field: the first is about cumulative vs composite knowledge; the second concerns the degree of diversity and redundancy in knowledge-based dynamics; and the third debate is about incremental vs radical innovation.

The authors have used an inductive approach to perform a longitudinal case study of multinational corporation-semiconductor (MNC-SC). Total of 13 interviews were conducted over a four-year period. The MNC-SC case study has given the opportunity to analyse knowledge resources, knowledge, and innovation processes in a context of internationalization.

The findings indicate that in order to achieve technological innovation in a context of internationalization, the company builds knowledge in a cumulative fashion, which can create a path dependency problem. To ensure complementarity between cross-functional teams located long distances from one another, and maximize the utilization of resources, MNC-SC must establish common standards. To maximize returns from composite knowledge, in a context of internationalization, knowledge diversity is preferable over redundancy. However, true knowledge transfer, sharing, and learning are limited. Combinatorial and incremental innovation through internationalization is a process based on trial and error; it maximizes technological performance and enables the company to fulfil needs without diverging from the technological trajectory of the SC industry.

The internationalization process revealed limitations: limited understanding of the content of each knowledge module, competency traps, limited innovativeness, and therefore limited wealth creation.

The purpose of this perspective paper is to answer the question of why some multinational corporations (MNCs) do not evolve and fail to avoid retrogression by natural selection in international business (IB) and to introduce eight papers selected for this special issue.

The authors conceptually discuss the reasons for MNC failure by illustrating key motivations behind foreign direct investment (FDI) undertaken by MNCs based on internalization theory, the OLI paradigm and the OILL (i.e. OLI plus the learning motivation) paradigm. Then, the authors develop an evolutionary perspective to explore the survival of the fittest in the global markets and the natural selection of MNCs.

The eight papers selected for this special issue expand the authors’ understanding of globalized organizations' challenges, evolution and decline as well as offering a distinct opportunity to reconsider diverse extant theories about MNCs by suggesting an extension that accounts for the rise of various globalized organizations particularly in and from emerging markets.

Despite increased numbers of MNCs, which struggle to survive and are faced with great risk of failure, the authors’ understanding of them still remains in infancy. While scholars have investigated diverse topics related to MNCs, existing studies have developed theories predominantly emphasizing MNC success. Thus, conventional theories in IB such as internalization theory and the OLI paradigm may not be sufficiently applicable to explain the phenomenon of MNC failure (i.e. MNC decline). Based on authors’ discussions, the authors believe this is an appropriate time to refine mainstream IB theories by concurrently considering both evolution and retrogression.

The purpose of this paper is to explore the factors influencing whether a multinational corporation (MNC) appoints an expatriate or a local national as the CEO of its subsidiary.

The study proposes a framework comprising ownership‐specific, location‐specific and internalization‐specific factors to examine determinants of expatriate CEO assignment. MNCs' subsidiaries in Taiwan were selected for the study.

For the effect on the assignment of an expatriated CEO to a subsidiary, the factors of a subsidiary's capability and size, MNC's global strategy and internalization motivation are positive; in contrast, the factor of the host country's locational advantages is negative. In addition, in circumstances of large cultural distances, the effect of high internalization motivation is positive and that of low internalization motivation is negative.

The research does not differentiate between two different types of expatriates and focuses on advanced countries' MNCs' subsidiaries in Taiwan. The theoretical implication of the study lies in the application of the perspectives of resource‐based view and transaction cost theory on an MNC's decision concerning the assignment of an expatriated CEO for subsidiaries.

MNCs could make a subsidiary's staffing decision by taking into account ownership‐, location‐, and internalization‐specific factors. Failure to do so will lead to poor operation of the subsidiary.

The research contributes to knowledge about the determinants of expatriate CEO assignment, and illuminates the importance of ownership, location and internalization factors for MNCs.

As the interest in talent management (TM) gathers momentum, this paper aims to unravel how talent is managed in multinational corporations, what factors mediate the talent management process and what computerised systems may contribute to the management of talent.

The study employs a single case study but multiple units of analysis approach to elucidate the factors pertaining to the transmission and use of talent management practices across the German and Irish subsidiaries of a US multinational corporation. Primary data for this study derive from a series of in‐depth interviews with key decision makers, which include managers at various levels in Germany, Ireland and The Netherlands.

The findings suggest that the diffusion of, and success of, talent management practices is contingent on a combination of factors, including stakeholder involvement and top level support, micro‐political exchanges, and the integration of talent management with a global human resource information system. Furthermore, the discussion illuminates the utility and limitations of Cappelli's “talent on demand” framework.

The main limitation of this research is the adoption of a single case study method. As a result, the findings may not be applicable to a wider population of organisations and subsidiaries. Additional research will be required to substantiate the relevance of these findings in the context of other subsidiaries of the same and other corporations.

This paper accentuates a number of practical implications. Inter alia, it highlights the complex nature of institutional factors affecting the talent management process and the potential efficacy of a human resource information system in managing talent globally.

The paper extends the body of knowledge on the transfer of talent management practices in the subsidiaries of multinational corporations. The discussion presented herein may engender further academic debate on the talent management process in the academic and practitioner communities. The link between talent management and the use of human resource information systems established by this research may be of particular interest to human resource practitioners.

The end of World War II brought about many economic changes, among them the tremendous increase of US manufacturing activities in Western Europe. This astronomical increase of foreign direct investment (FDI) required a new theory ‐ an economic theory of foreign direct investment. International economic theory, which traditionally had ignored the FDI decision, was not able to explain the FDI decision, nor could it explain the phenomena of multinational corporation (MNC). In a world of perfect competition, foreign direct investment would be absent. And when all markets operate efficiently, when there are no external economies of production and marketing, when information is costless and there are no barriers to trade or competition, international trade is the only possible form of international involvement. Logically, it follows that it is the departures from the models of perfect competition that must provide the rationale for foreign direct investment. Since, according to the Heckscher‐ Ohlin‐Samuelson (neoclassical) model, trade of goods will equalize factor prices in a world of factor immobility. In fact, the FDI decision is even ignored by new international economics which, since the late 1970's, has utilized new developments in the field of industrial organization. Proponents of these new theories have developed models that emphasize increasing returns and imperfect competition and see the possibility that government involvements in trade (trade restrictions, export subsidies, etc.) may under some circumstances be useful. All of this is done while foreign direct investment is ignored.