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In this paper we examine three distinct types of ownership advantages, and argue that these are associated with three different kinds of limits to the growth of the firm…
In this paper we examine three distinct types of ownership advantages, and argue that these are associated with three different kinds of limits to the growth of the firm. For some firms, the inability to regenerate its asset‐based advantages is critical, while for others, the inability to effectively coordinate its assets (inside or outside the firm), or the inability to negotiate the nonmarket environment are more salient. We think that the identification of different analytical categories of ownership advantages enables the construction of better proxies in empirical research, and helps to explain the limited geographical reach of MNEs observed in the literature.
What if the Academy actually mattered, was the title of a Presidential address at the annual conference of the Academy of Management in the United States ten years ago. My…
What if the Academy actually mattered, was the title of a Presidential address at the annual conference of the Academy of Management in the United States ten years ago. My purpose in putting together this volume is no less ambitious than trying to show that in a very real sense, research on strategic management and business economics matters, at least when it comes to the environment. The studies contained in this volume have been selected because all of them reflect empirical research of a high standard that aims to shed some light on the relationship between multinationals and environmental standards. The first chapter by Lundan presents the general theoretical framework within which all of the research reported in this volume can be placed. While each chapter addresses a specific topic, and can be read independent of the other chapters, the sequence of the chapters aims to highlight the most salient aspects of the relationship between multinationals and the environment in the global economy.
This chapter presents a conceptual framework to understand the role of multinational enterprises in the process of environmental standard setting in the global economy…
This chapter presents a conceptual framework to understand the role of multinational enterprises in the process of environmental standard setting in the global economy. Inside the multinational, we discuss the impact of path-dependency and irreversibility on environmental investment, and the importance of the integrated network structure of the multinational in enabling the transfer of standards within the firm. Outside the firm, we discuss the impact of regulation and market forces, and particularly the role of NGOs, in triggering change in firm behavior both at home and abroad. We conclude by considering the impact of supranational institutions on the environmental behavior of multinationals.
Empirical evidence from the past decade confirms that multinationals increasingly see the environment as a strategic issue, whether in terms of limiting damage to the…
Empirical evidence from the past decade confirms that multinationals increasingly see the environment as a strategic issue, whether in terms of limiting damage to the bottom line from adverse publicity, or actually gaining in the marketplace by pioneering more environmentally conscious solutions. During the same period, NGOs have become a visible part of the political process, in influencing the environmental strategies of multinationals through direct action, as well as by forming broader coalitions aimed at influencing the agenda at multilateral institutions such as the WTO and the OECD regarding environmental concerns and the behavior of multinationals. This chapter explores the importance of different environmental drivers on the behavior of firms in the pulp and paper industry, with particular focus on the role of Greenpeace in changing industry practices. We discuss the extent to which the paper industry might be a special case in this respect, and conclude by assessing the implications for public policy.
In their book Multinational Enterprises and the Global Economy, John M. Dunning and Sarianna M. Lundan offer a generally accepted definition of the term multinational…
In their book Multinational Enterprises and the Global Economy, John M. Dunning and Sarianna M. Lundan offer a generally accepted definition of the term multinational enterprise (MNE): “A Multinational or transnational enterprise is an enterprise that engages in foreign direct investment (FDI) and owns or, in some way controls value added activities in more than one Country” (Dunning & Lundan, p. 3). The title, however, may be misleading since it ignores the fact that each multinational has a home country as well as one or more host countries. Multinationals, in other words, have a nationality. It is the difference between the implications of home and host countries for the individual MNEs that the present chapter explores. It uses a case study involving Teva, Israel's flagship MNE, to address the question: “If Teva changed its nationality, would Israel's economy would be affected?”
The hypothetical case of a change in Teva's nationality and its implications are employed to demonstrate the general validity of the concept of “Distance Premium,” to examine the implication of nationality to individual multinational business enterprises. The chapter explores the proposition that despite its declining effect, due to far reaching technological and political developments, the distance premium, continues to favor home country over host country locations and intra- over interorganizational value activities. The chapter goes on to examine expected changes in the distribution of rents generated by the MNEs between different stakeholder groups. It concludes that, with the exception of stockholders whose welfare is generally not affected by change of nationality, other stakeholders in the new home country gain at the expense of old home country stakeholders.
Alain Verbeke, Rob Van Tulder and Sarianna Lundan
This chapter provides an overview of various new streams in international business (IB) research that will have an important impact on IB studies in the years to come…
This chapter provides an overview of various new streams in international business (IB) research that will have an important impact on IB studies in the years to come, both from a conceptual and a methodological perspective.
The authors discuss a set of 18 chapters, all included in this research volume, and highlight both the key intellectual contributions and the challenges identified that will need to be taken into account in future research.
The findings of the studies discussed are manifold and profound. Some of the main findings include the following: (1) multinational enterprise (MNE)-centric empirical research studies should be avoided. Resource recombination typically requires taking into account the resource base and the strategies of at least two economic actors. (2) IB studies, almost by definition, need to take into account “distance,” but most prior empirical research has not done a particularly good job in including relevant distance parameters in a methodologically sound way to assess their impact on MNE strategy, operational functioning or performance. (3) Nonbusiness institutions can be very helpful in promoting MNE expansion but include “dark side” institutions that sometimes appear very effective in particular situational contexts. (4) Institutional diversity matters: it can make international knowledge transfers difficult, it can lead to discrimination against firms from specific nationalities, it certainly suggests that there is no generalizable multinationality–performance relationship, and it raises the question whether new theory is needed to accommodate previously neglected institutional contexts.
This overview of several recent IB studies confirms that managing the international innovation chain in its entirety is fraught with difficulties. MNE senior management must economize on bounded rationality (meaning: improving information quality and information processing) and bounded reliability (meaning: making sure that economic actors make good on open-ended promises, whether implicit or explicit). Any IB transaction by definition entails new resource recombination. Doing so effectively requires correct information, reliable partners and a recombination outcome that supports value creation for the MNE. Multiple, practice-driven puzzles in the IB context are proposed to the reader, and the outcomes are often unexpected.
A variety of new concepts and methodological approaches are proposed to improve the quality of future IB research.