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Open Access
Article
Publication date: 6 May 2020

Rajneesh Narula and Khadija van der Straaten

Whether by direct or indirect action (or by inaction), multinational enterprises (MNEs) can have both a positive and a negative effect on within-country social and economic…

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Abstract

Purpose

Whether by direct or indirect action (or by inaction), multinational enterprises (MNEs) can have both a positive and a negative effect on within-country social and economic inequality. This paper aims to comment on this multifaceted relationship between MNEs and within-country inequality.

Design/methodology/approach

Given the absence of either robust theory or evidence in the neglected realm of MNEs and within-countries inequalities, this paper offers some general observations, highlights some of the key issues and illustrates possible avenues for future research studies.

Findings

The capacity of MNEs to upgrade economic activity in the host country is a key policy objective. MNEs have arguably contributed to reducing income inequalities between countries. However, the limited evidence available suggests that the gains of FDI are rarely evenly distributed within recipient countries, and many of the underlying dynamics need further investigation.

Social implications

The authors broaden the engagement with inequality beyond income levels, as this is just one aspect of inequality that shapes or impedes human development. They believe it is necessary – for both MNEs and policymakers – to have a more nuanced understanding of how, and under what circumstances, the presence of MNEs affects inequality in host economies.

Originality/value

This paper relates the large literature on inequality (going beyond the mainstream focus on income inequality) to the mainstream understanding of MNE-assisted development.

Details

critical perspectives on international business, vol. 17 no. 1
Type: Research Article
ISSN: 1742-2043

Keywords

Article
Publication date: 19 September 2016

Rajneesh Narula and Tiju Prasad Kodiyat

This paper aims to discuss the opportunities and limitations that the location-specific advantages of the home country represent for infant multinational enterprises (MNEs). The…

1243

Abstract

Purpose

This paper aims to discuss the opportunities and limitations that the location-specific advantages of the home country represent for infant multinational enterprises (MNEs). The systemic weaknesses of the home country can constrain the long-term competitiveness of its firms and, ultimately, the competitiveness of its MNEs. Many emerging countries have a constrained set of location-specific (L) assets from which their firms are able to develop ownership-specific assets.

Design/methodology/approach

The authors examine data for the case of India, an economy regarded as having considerable potential to expand to knowledge-intensive sectors, using a “systems of innovation” framework, merged with an analysis of L advantages.

Findings

At the macro level, India’s performance is not different from countries of similar economic structure, and its current pockets of excellence are a reflection of its L assets. The analysis suggests that the failure to foster and upgrade the L assets of emerging economies is likely to stunt the growth of their domestic firms and, ultimately, any new MNE activity in the long-term.

Research limitations/implications

In the case of India, systemic policy changes are needed to upgrade the knowledge infrastructure and institutions to support a shift in the competitive advantages to new sectors outside existing pockets of excellence. Indian firms are unlikely to be able to rely on the knowledge infrastructure of their home economy and will “exit” the Indian milieu because of weaknesses in L assets, as much as to seek markets and customers elsewhere. There will be few opportunities for new generations of firms to venture abroad from a position of strength, rather than as a means to overcome their home country disadvantages.

Originality/value

The evidence would suggest that – like other emerging economies – Indian firms are unlikely to be able to rely on the knowledge infrastructure of their home economy and are “exiting” the Indian milieu because of its weaknesses in L assets, as much as to seek markets and customers elsewhere. Most importantly, India faces a potential shortage of skilled human capital in the medium term.

Details

Multinational Business Review, vol. 24 no. 3
Type: Research Article
ISSN: 1525-383X

Keywords

Article
Publication date: 16 July 2018

Rajneesh Narula

The purpose of this paper is to introduce a new theoretical framework called the “extended dual economy model”. Based on the seminal work of Lewis (2014), the author uses it to…

Abstract

Purpose

The purpose of this paper is to introduce a new theoretical framework called the “extended dual economy model”. Based on the seminal work of Lewis (2014), the author uses it to explain the sectoral specialisation of home countries and their firms and MNEs.

Design/methodology/approach

The paper is multi-disciplinary and entirely conceptual, with cool ideas but very few numbers and equations.

Findings

Emerging economies exhibit a “duality” in their economic structure that reflects itself in two largely different sets of location (L) characteristics. They are simultaneously home to both “traditional” sectors, which are resource and labour intensive, as well as “modern” sectors, which are knowledge and capital intensive, each of which can be analysed as having two sub-economies. These different sets of location advantages shape the firm-specific advantages of EMNEs and their FDI.

Research limitations/implications

This analysis helps to underline what shapes the ability of home countries to “emerge”, and the ability of their firms to grow and their MNEs to become internationally competitive. Few EMNEs can thrive in international markets without concurrent growth in their domestic markets. Maintaining the appropriate location assets to optimally support both types of sectors is costly. Each type of sub-economy requires different kinds of support sectors, infrastructure and policies, with little overlap. Weaknesses in its home country L advantages hinder the long-term competitiveness of their EMNEs.

Practical implications

Few EMNEs can thrive in international markets without concurrent growth in their domestic markets. Weaknesses in its home country L advantages hinder the long-term competitiveness of their EMNEs.

Originality/value

The extension of the Lewisian dual economy model allows a number of interesting new insights because it allows us to consider firms, non-firms, informality and the bottlenecks associated with promoting knowledge-intensive sectors in a globalised world. It emphasises structural change, and the need to manage pathways and effectively channel growth.

Details

International Journal of Emerging Markets, vol. 13 no. 3
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 12 September 2016

Mona Ashok, Rajneesh Narula and Andrea Martinez-Noya

Despite the keen interest in radical and incremental innovation, few studies have tested the varying impact of firm-level factors in service sectors. This paper analyses how…

2788

Abstract

Purpose

Despite the keen interest in radical and incremental innovation, few studies have tested the varying impact of firm-level factors in service sectors. This paper analyses how collaboration with existing and prospective users and investments in knowledge management (KM) practices can be adapted to maximise the outputs of radical and incremental process innovation in a knowledge-intensive business service industry.

Design/methodology/approach

Original survey data from 166 information technology service firms and interviews with 13 executives provide the empirical evidence. Partial least squares-structural equation modelling is used to analyse the data.

Findings

Collaboration with different types of users, and investments in KM practices affect radical versus incremental process innovation differently. Collaboration with existing users influences incremental process innovation directly, but not radical innovation; and prospective user collaboration matters for radical, but not incremental innovation. Furthermore, for radical innovation, investments in KM practices mediate the impact of prospective user collaboration on innovation.

Research limitations/implications

While collaboration with existing users for incremental process innovations does not appear to generate significant managerial challenges, to pursue radical innovations firms must engage in intensive collaboration with prospective users. Higher involvement with prospective users requires higher investment in KM practices to promote efficient intra- and inter-firm knowledge flows.

Originality/value

This study is based on a large-scale survey, together with management interviews. Radical and incremental innovations in the service industry require engagements with different kinds of users, and the use of KM tools.

Details

Journal of Knowledge Management, vol. 20 no. 5
Type: Research Article
ISSN: 1367-3270

Keywords

Article
Publication date: 19 August 2010

Ziyi Wei

Since China initiated its “go global” policy that promotes its overseas investment, China’s Outward Foreign Direct Investment (OFDI) has increased almost twenty times during the…

2496

Abstract

Since China initiated its “go global” policy that promotes its overseas investment, China’s Outward Foreign Direct Investment (OFDI) has increased almost twenty times during the last 10 years, reaching $55.9 billion in 2008. The issue of internationalization of Chinese OFDI has attracted increasing attention of researchers from a business perspective. This article systematically reviews the previous studies on overseas investments by Chinese MNEs and discusses the characteristics of Chinese internationalization behavior at both firm level and country level. The internationalization of Chinese companies cannot be understood as a simple game of “catch up” with established MNEs, and more firm‐level empirical studies should be carried out on how these characteristics influence firms’ strategic decisions.

Details

Multinational Business Review, vol. 18 no. 3
Type: Research Article
ISSN: 1525-383X

Keywords

Article
Publication date: 17 June 2010

Rajneesh Narula

The eclectic paradigm as developed by Dunning evolved in response to the changing IB milieu. I argue that this continual expansion threatens to make the paradigm tautological…

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Abstract

The eclectic paradigm as developed by Dunning evolved in response to the changing IB milieu. I argue that this continual expansion threatens to make the paradigm tautological, without an honest “gatekeeper.” Continual expansion to address new lacunae begins to have decreasing returns, either because the gatekeeper cannot expect to have the specialized knowledge, or because the number of extensions makes the final product unwieldy. I propose a return to a basic eclectic paradigm, which I refer to as “EP‐lite,” that can then be complemented by other frameworks and theories as needed. In a similar vein, the growing number of sub‐categories of ownership advantages does not in itself provide greater clarity. Besides, the “correct” definition of what constitute O advantages is relative to the purpose for which it is being used.

Details

Multinational Business Review, vol. 18 no. 2
Type: Research Article
ISSN: 1525-383X

Keywords

Book part
Publication date: 4 January 2014

Rajneesh Narula

This chapter examines the role of foreign direct investment (FDI) in promoting industrial development, and asks, if FDI is such an important avenue to promote development, why is…

Abstract

Purpose

This chapter examines the role of foreign direct investment (FDI) in promoting industrial development, and asks, if FDI is such an important avenue to promote development, why is there little evidence on concomitant industrial development in most developing countries?

Methodology/approach

I look at the secondary evidence on FDI and development and explore some of the causes for this ambiguity.

Findings

The complexities of global value chains and networks have begun to trivialise the simplistic principle that increased multinational enterprise (MNE) activity automatically implies a proportional increase in spillovers and linkages.

Value/originality

Policies towards MNEs need to be closely linked and integrated with industrial policy. MNE activity needs to be evaluated by considering the kinds of externalities that are generated; whether and how domestic actors can internalise them, and building up absorptive capacities to achieve this.

Details

International Business and Sustainable Development
Type: Book
ISBN: 978-1-78190-990-4

Keywords

Article
Publication date: 9 March 2012

Rajneesh Narula and Grazia D. Santangelo

This paper examines the role of location‐specific (L) advantages in the spatial distribution of multinational enterprise (MNE) R&D activity. The meaning of L advantages is…

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Abstract

Purpose

This paper examines the role of location‐specific (L) advantages in the spatial distribution of multinational enterprise (MNE) R&D activity. The meaning of L advantages is revisited. In addition to L advantages that are industry‐specific, the paper emphasises that there is an important category of L advantages, referred to as collocation advantages.

Design/methodology/approach

Using the OLI framework, this paper highlights that the innovation activities of MNEs are about interaction of these variables, and the essential process of internalising L advantages to enhance and create firm‐specific advantages.

Findings

Collocation advantages derive from spatial proximity to specific unaffiliated firms, which may be suppliers, competitors, or customers. It is also argued that L advantages are not always public goods, because they may not be available to all firms at a similar or marginal cost. These costs are associated with access and internalisation of L advantages, and – especially in the case of R&D – are attendant with the complexities of embeddedness.

Originality/value

The centralisation/decentralisation, spatial separation/collocation debates in R&D location have been mistakenly viewed as a paradox facing firms, instead of as a trade‐off that firms must make.

Content available
Article
Publication date: 11 November 2014

Rajneesh Narula

97

Abstract

Details

The Multinational Business Review, vol. 22 no. 4
Type: Research Article
ISSN: 1525-383X

Article
Publication date: 20 April 2015

Alvaro Cuervo-Cazurra and Rajneesh Narula

– The purpose of this paper is to introduce the debate forum on internationalization motives of this special issue of Multinational Business Review.

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Abstract

Purpose

The purpose of this paper is to introduce the debate forum on internationalization motives of this special issue of Multinational Business Review.

Design/methodology/approach

The authors reflect on the background and evolution of the internationalization motives over the past few decades, and then provide suggestions for how to use the motives for future analyses. The authors also reflect on the contributions to the debate of the accompanying articles of the forum.

Findings

There continue to be new developments in the way in which firms organize themselves as multinational enterprises (MNEs), and this implies that the “classic” motives originally introduced by Dunning in 1993 need to be revisited. Dunning’s motives and arguments were deductive and atheoretical, and these were intended to be used as a toolkit, used in conjunction with other theories and frameworks. They are not an alternative to a classification of possible MNE strategies.

Originality/value

This paper and the ones that accompany it, provide a deeper and nuanced understanding on internationalization motives for future research to build on.

Details

The Multinational Business Review, vol. 23 no. 1
Type: Research Article
ISSN: 1525-383X

Keywords

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