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1 – 10 of 810Rushiun Liou, Kevin Lee and Scott Miller
Emerging-market multinational companies (EMNCs) utilize cross-border merger and acquisitions (M&As) to acquire strategic assets that compensate for their resource deficiencies…
Abstract
Purpose
Emerging-market multinational companies (EMNCs) utilize cross-border merger and acquisitions (M&As) to acquire strategic assets that compensate for their resource deficiencies. Therefore, developed markets have become important destinations for EMNCs. Institutional distance constitutes a major source of competitive disadvantage for foreign firms competing with indigenous firms. The purpose of this paper is to examine the ownership pattern of cross-border M&As in the USA, and determine if EMNCs respond to institutional distance differently than advanced-market multinational companies (AMNCs).
Design/methodology/approach
Based on the extant literature in institutional theory as well as internationalization strategy, a quantitative study was carried out. Hypotheses were proposed and tested using fixed effects panel regressions.
Findings
This paper finds that both AMNCs and EMNCs take smaller ownership positions when there is greater cognitive and normative distance. The negative association is stronger for AMNCs than for EMNCs. Further, the larger the regulative distance in the positive direction, meaning a higher level of development in the host market than in the home market, the more AMNCs and EMNCs are led to opt for a higher ownership position, with EMNCs being less influenced by regulative distance.
Research limitations/implications
Though findings are robust and stable, this study is limited to observations that only have US target firms.
Originality/value
By integrating the literature from institutional theory and strategy, this paper offers a clearer understanding and distinction of the acquisition decisions made by EMNCs and AMNCs.
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Ronaldo Parente, Keith James Kelley, Yannick Thams and Marcelo J. Alvarado-Vargas
Drawing upon the eclectic paradigm and the regulative dimension of institutional distance theory, it is posited that to understand a firms’ cross-border merger and acquisition…
Abstract
Purpose
Drawing upon the eclectic paradigm and the regulative dimension of institutional distance theory, it is posited that to understand a firms’ cross-border merger and acquisition (CBMA) location choices, it is critical to examine the acquirers’ ownership advantages.
Design/methodology/approach
Using a sample of CBMAs undertaken by US firms from 1999 to 2015, the paper explores the extent to which acquiring firm ownership advantages – financial and innovation capabilities – influence target firm country selection in relation to regulative distance.
Findings
It is shown that acquiring firms with greater innovative capabilities are likely to choose target firms in nations with less regulative distance from their home market; whereas firms with greater financial capabilities target firms in more distant nations.
Originality/value
This paper builds on the important research on CBMA activity, focusing on the largely neglected pre-acquisition resources in relation to the regulative distance between target firms and the acquirer.
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Atilla Onuklu, Izzet Darendeli and Ram Mudambi
The purpose of this study is to assess the effect of institutional distance on national innovation systems.
Abstract
Purpose
The purpose of this study is to assess the effect of institutional distance on national innovation systems.
Design/methodology/approach
This study uses social network analysis to analyze the connectivity between national systems of innovation. A regulative distance index is constructed by coding the European Commission progress reports and using weights to account for relevance to research and innovation.
Findings
Reductions in institutional distance (proxied by regulative distance) increase international innovation connectivity between national systems of innovation. More importantly, it leads to increase in both the complexity and resilience of innovation connectivity between countries.
Originality/value
This study provides fresh evidence on the pathways through which institutions affect international business systems. Policy harmonization has strong effects on firm-level corporate strategy.
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Antonia Mercedes García-Cabrera, Ana Maria Lucía-Casademunt and Laura Padilla-Angulo
This paper examines how the institutional distance between immigrants' country of residence and country of origin, as well as the regulative and normative aspects of institutions…
Abstract
Purpose
This paper examines how the institutional distance between immigrants' country of residence and country of origin, as well as the regulative and normative aspects of institutions in immigrants' country of residence, social context variables and individual psycho-behavioural factors, condition immigrants' entrepreneurial motivation (i.e. mainly by necessity, by a combination of necessity and opportunity, or mainly by opportunity), which is in contrast to the previous literature on immigrant entrepreneurship that mainly focuses on micro-level factors.
Design/methodology/approach
By using hierarchical linear regression models to test our hypotheses, the authors analyse 468 first-generation immigrant entrepreneurs settled in 31 European countries using data from the European Working Conditions Survey (6th EWCS; Eurofound, 2015 database) combined with other datasets to derive the macro-level variables (i.e. the Doing Business Project; Hofstede et al., 2010).
Findings
The authors find that distance in the normative aspects of institutions harms entrepreneurial opportunity motivation. At the same time, however, opportunity motivation is likely to benefit from both the normative aspects of institutions that reduce locals' opportunity motivation and the distance in the regulative aspects of institutions.
Originality/value
This article analyses immigrant entrepreneurship in Europe, which has been under-examined in the extant literature, and takes into account the micro-, meso- and macro-level factors affecting the entrepreneurial motivation of immigrants in Europe. This analysis responds to the need already highlighted by previous research to include not only micro-level factors but also meso- and macro-level factors in the analysis of immigrant entrepreneurship (Aliaga-Isla and Rialp, 2013).
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Youjin Baik and Young-Ryeol Park
The purpose of this paper is to address the question of how regional diversification affects subsidiary staffing composition in multinational enterprises. Another important…
Abstract
Purpose
The purpose of this paper is to address the question of how regional diversification affects subsidiary staffing composition in multinational enterprises. Another important objective of this study is to examine the effects of institutional distance, specifically regulative and normative distances, on foreign subsidiary staffing composition.
Design/methodology/approach
To estimate firm- and country-level parameters simultaneously, hierarchical linear modeling was conducted on a sample of 1,068 foreign subsidiaries of South Korean firms operating in 25 countries in 2014.
Findings
The results reveal that intra-regional diversification has a positive effect, whereas inter-regional diversification has a negative effect on local staffing in foreign subsidiaries. In addition, there is a positive association between informal distance (such as normative distance) and local staffing of foreign subsidiaries, while formal distance (such as regulative distance) is negatively related to local staffing of foreign subsidiaries.
Research limitations/implications
The cross-sectional nature of the data in this study may preclude examination of the relationships among institutional distance, institutional environment, and subsidiary staffing composition. The authors suggest that future researchers employ a longitudinal design to examine the effects on staffing composition of institutional distance and institutional environments over time.
Originality/value
The paper contributes to the literature on international human resources management by highlighting the importance of combining multilevel parameters to improve assessment of the importance of firms’ competitive strategy and institutional environments in local staffing in foreign subsidiaries.
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This research seeks to understand how shareholder constituencies including controlling family, nonfamily insiders, as well as domestic and foreign institutions in the corporate…
Abstract
Purpose
This research seeks to understand how shareholder constituencies including controlling family, nonfamily insiders, as well as domestic and foreign institutions in the corporate governance system of emerging economy firms perceive institutional risks in terms of regulative, normative, and cognitive institutions and influence strategic choices in the internationalization of their invested firms.
Design/methodology/approach
The sample data are Taiwanese publicly listed companies in the electronics and computer industry. Panel data of the parent firms and their overseas affiliates are available from the annual report and Taiwan Economic Journal database. Country-level data are available from the World Investment Report and the IMD World Competitiveness Report. Statistical regression models including tobit and logistic regression are used to analyze the data.
Findings
Controlling family and nonfamily insider shareholders tend to influence their invested firms to enter in institutionally smaller host countries through a shared ownership. Domestic institutional shareholders tend to influence their invested firms to adopt a shared ownership and enter in host countries with larger and smaller institutional distances in terms of regulative and normative institution, respectively. Foreign institutional shareholders tend to influence their invested firms to enter in institutionally smaller host countries through a whole ownership.
Originality/value
The strategic choices of foreign market entry made by emerging economy firms are significantly shaped by the different risk perceptions of shareholder constituencies in their corporate governance system toward the institutional distances between the home and the host country.
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The purpose of this paper is to examine the effect of institutional distances (IDs) on the choices of host country and the entry strategies, taking into account various firm…
Abstract
Purpose
The purpose of this paper is to examine the effect of institutional distances (IDs) on the choices of host country and the entry strategies, taking into account various firm resources.
Design/methodology/approach
Institutions are quantified in terms of regulatory, normative, and cognitive aspects. Firm resources include technological and marketing resources, organizational slack, and internally generated and externally raised financial resources. The research context is foreign direct investments of Taiwanese listed firms in the electronics and computer industry from the year 2000 to 2007, which include 732 companies investing in 3,691 projects in 41 countries.
Findings
The tacitness of technological resources inhibits their transfer to distant countries. Marketing resources are more transferable to distant countries in terms of explicit regulative institutions. Organizational slack may weaken motives of firms in entering distant countries. Internally generated financial resources encourage risky investments in distant countries in terms of regulative institutions. Externally raised financial resources, due to their providers, restrict firms to finance risky projects in distant countries. High-control entry strategies are preferred to minimize appropriation risks regardless of funding sources. Involving local partners through a shared ownership provides institutional knowledge for foreign firms to mobilize local legitimacy in host countries. Firm resources directly and indirectly determine entry strategies through perceived IDs.
Originality/value
This study bridges the effect of firm-level resources and country-level institutions on the choices of host country and the entry strategies. It is among the first to quantify institutions in terms of their regulatory, normative, and cognitive aspects.
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Ru-Shiun Liou, Alex S. Rose and Alan E. Ellstrand
We view emerging-market multinational corporations (EMNCs) as agents for global isomorphism. EMNCs seek to enter developed markets not only to expand their business operations but…
Abstract
We view emerging-market multinational corporations (EMNCs) as agents for global isomorphism. EMNCs seek to enter developed markets not only to expand their business operations but also to acquire advanced knowledge to enhance their core competencies. In entering these markets, EMNCs are subject to coercive, normative and cognitive pressures as they seek legitimacy. Once these firms gain legitimacy in advanced markets through the adoption of local business practices, they transfer these approaches to their headquarters in developing markets, establishing best practices in their home markets. Further, EMNCs may engage in efforts aimed at changing the institutional environment in the developing market to facilitate the transfer of learned practices from the developed market. Thus, we propose that these best practices lead to global isomorphism, but also note instances where symbolic adoption of developed market practices may slow the isomorphic process.
Ru-Shiun Liou, Lee Warren Brown and Dinesh Hasija
Many multinational corporations that originate from emerging economies (emerging market multinational corporations (EMNCs)) opt for acquiring a target firm in a developed market…
Abstract
Purpose
Many multinational corporations that originate from emerging economies (emerging market multinational corporations (EMNCs)) opt for acquiring a target firm in a developed market to expediently upgrade their strategic capabilities. To successfully achieve their strategic goals in the developed markets, EMNCs may use market actions and nonmarket actions to mitigate the potential risk derived from the national political differences between their home emerging economy and host developed economy. This paper aims to extend the legitimacy-based view of political risk to study the influence of political animosity – defined as misalignment of the host-home countries’ national interests – on the EMNCs’ market and nonmarket strategy in a developed market.
Design/methodology/approach
In this paper, we examine all EMNCs that made cross-border acquisitions of the USA targets from 2005 to 2011. The final sample consists of 252 acquisitions originating from 25 emerging markets. This paper used Tobit regression analysis to test the direct and moderating hypotheses.
Findings
Facing a high level of political animosity between their home country and the host developed economy, EMNCs use a market strategy by acquiring less ownership stake in the developed market, as well as engage in a nonmarket strategy by increasing lobbying activities. In addition, because of the heightened legitimacy concerns of developed market shareholders, cross-listed EMNCs have a greater tendency than non-cross-listed EMNCs to improve their legitimacy through their market and nonmarket strategy.
Originality/value
The current paper sheds light on EMNCs’ international strategy in developed markets by examining both market and nonmarket actions. EMNCs are shown to be strongly motivated to engage in acquisitions in developed markets so they can acquire invaluable strategic resources, such as brands and distribution channels, to compete with the developed market multinationals. A sophisticated ownership strategy and corporate political activities are invaluable for EMNCs to catch up with developed market multinationals.
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Tülay Ilhan-Nas, Emrah Koparan and Tarhan Okan
The purpose of this study is to contribute to the understanding of the interrelationships between corporate social responsibility (CSR) isomorphism of headquarters (HQs) and their…
Abstract
Purpose
The purpose of this study is to contribute to the understanding of the interrelationships between corporate social responsibility (CSR) isomorphism of headquarters (HQs) and their subsidiaries as well as corporate social performance (CSP) and corporate financial performance (CFP) at the subsidiary level.
Design/methodology/approach
This study tested these relationships through canonical correlation analyses. The data used were drawn from corporate HQ and 63 subsidiaries, which were publicly listed on the Istanbul Stock Exchange in 2007. Both qualitative and quantitative techniques were used in the study.
Findings
The results generally indicated that the isomorphism between the CSR practices of the HQ and those of their subsidiaries could impact both the CSP, especially the product and employee dimensions, and the CFP. No relationship was found to exist between the CSP and CFP.
Originality/value
Despite extensive interest by scholars and practitioners in the subject area, relatively little is known about the management of CSR by the multinational enterprises (MNEs) (Meyer, 2004), as the literature does not systematically examine the effects that occur on employee performance following the diffusion of CSR among the MNEs subsidiaries. Extending earlier literature on CSR, by integrating the effect of the CFP, the present study focuses on the effects of isomorphism between the CSR practices of the MNEs and those of their subsidiaries on both CSP and CFP. Further, the study examined the interrelation of CSP and CFP from the perspective of international management. Given the increased interest in corporate governance matters at the international level, CSR plays a central and fundamentally important role in the corporate governance of the MNEs because of both globalization forces and the pressures exerted by stakeholders. In this context, this paper is one of the first to explore the transfer of CSR practices from the MNEs to their subsidiaries. The effect of CSR on performance is an important research question, especially for emerging markets (Ibrahim and Angelidis, 1995; Waddock and Graves, 1997; Ghazali, 2007; Johnson and Greening, 1999). Despite the importance of this issue, however, until recently, only a limited discussion has been evident in the literature on CSR in the international arena with particular reference given to the emerging economies. Studying the effects of the CSR isomorphism on the performance in Turkish context is justified in three ways. First, Turkey is the largest emerging economy in Eastern Europe, the Balkans and the Middle East (Tatoglu et al., 2003, p. 7). It presents the emerging nature of the market and the transitional characteristics of the institutional environment (Cavusgil et al., 2002). Second, the drivers for CSR in Turkey, such as the other emerging markets whose institutional characteristics and economic fundamentals is similar, are exogenous and institutional rather than endogenous factors (Ararat and Gocenoglu, 2006, p. 11). Excluding the philanthropic activities, the very first manifestations of CSR were observed in the business conduct of MNEs in Turkey (Ararat and Gocenoglu, 2006, p. 11). MNEs have a dominant and leader role in Turkey for CSR practices. Finally, the subsidiaries operating in Turkey are less likely to resist the transfer of the organizational policies and practices such as human resource management policies (Sayim, 2010, 2011) and organizational culture (Ilhan, 2008). In fact, they want to even transfer the policies and practices from MNEs (Sayim 2010, 2011; Ilhan, 2008). Therefore, Turkish context provides a good case to test the effects of the CSR isomorphism on the performance.
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