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Article
Publication date: 1 April 2003

Georgios I. Zekos

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…

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Abstract

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.

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Managerial Law, vol. 45 no. 1/2
Type: Research Article
ISSN: 0309-0558

Keywords

Book part
Publication date: 16 December 2003

Danchi Tan and Joseph T Mahoney

This paper develops an integrative framework explaining multinational firms’ managerial staffing decisions in initial foreign-entry situations from resource-based theory

Abstract

This paper develops an integrative framework explaining multinational firms’ managerial staffing decisions in initial foreign-entry situations from resource-based theory, agency theory, and transaction-costs theory, and it offers a set of theoretically grounded, testable propositions concerning these staffing decisions. In particular, we maintain that managerial staffing decisions are influenced by: (1) the value that managerial expatriates and local hires could potentially add to the firm; and (2) the relative contractual risks associated with the use of managerial expatriates and local managers.

This paper indicates that the use of managerial expatriates can improve contractual efficiencies in at least four ways. First, the use of expatriates helps align the economic incentives between the headquarters and the foreign subsidiaries. Second, the headquarters knows better the characteristics of expatriates relative to local hires. The use of expatriates reduces the uncertainty of the headquarters in recruiting managers and mitigates the incomplete contracting problem. Third, expatriates are better equipped with firm-specific capabilities than local hires, reducing contractual (small-numbers) problems. Fourth, expatriates have committed greater sunk cost investments in the multinational firm than local hires. These investments support their cooperative relationships with the firm and mitigate potential bargaining problems in employment contracting. However, although managerial expatriates can potentially improve contractual efficiency and may relieve a firm’s concern over its limited control on managers, expatriates may not have adequate abilities in managing local idiosyncrasy.

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Managing Multinationals in a Knowledge Economy: Economics, Culture
Type: Book
ISBN: 978-0-76231-050-0

Article
Publication date: 19 August 2009

Peter Hwang and Ajai S. Gaur

We argue that multinational enterprises (MNEs) not only strive to minimize transaction costs but also attempt to maximize transaction values when interacting with local…

Abstract

We argue that multinational enterprises (MNEs) not only strive to minimize transaction costs but also attempt to maximize transaction values when interacting with local firms in foreign markets. We put forth our thesis regarding MNE governance structure, that it is contingent on the institutional environment of the host country and the characteristics of the transaction. Specifically, we suggest that MNEs’ choice of market, hierarchy or hybrid (joint ventures) form of governance, depends on the interplay between the costs and benefits of a transaction relationship. For high knowledge content products/services, MNEs choose hierarchy when the institutional environment is not well developed. As the institutional environment develops, hybrid replaces hierarchy. However, in a very strong institutional environment, hierarchy again turns out to be optimal for MNEs. For low or no knowledge content products/services, the presence of market is possible in a very advanced institutional environment.

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Multinational Business Review, vol. 17 no. 3
Type: Research Article
ISSN: 1525-383X

Keywords

Book part
Publication date: 4 August 2017

Frank Elter and Svein Ulset

This chapter develops a multi-path theory of diversified international expansion that explains how multiple wave-shaped performance curves are created as multinational

Abstract

This chapter develops a multi-path theory of diversified international expansion that explains how multiple wave-shaped performance curves are created as multinational companies expand into increasingly distant and dissimilar countries. According to this theory, multinational mobile network operators (MNOs) recover from over-diversified expansion by improving their local adaptation strategies by means of reconfiguring the value chain and entering local partnerships, by improving their global replication capabilities or by concentrating expansion to clusters of similar country markets. Three dynamic propositions are developed and exemplified concerning MNOs’ diversified international expansion. Implications for international diversification research finalize the chapter.

Article
Publication date: 11 November 2010

Rolf Mirus and Bernard Yeung

We examine the mode of international expansion as an equilibrium governance contract between home country and host country factor owner. The focus is on agency costs, a…

Abstract

We examine the mode of international expansion as an equilibrium governance contract between home country and host country factor owner. The focus is on agency costs, a form of transactions costs. Two phenomena are shown to be related to the agency costs imposed by factor owners: (i) the choice of different modes of international expansion by one firm in different locations, and (ii) the simultaneous occurrence of several forms of foreign involvement in the same location. We attempt to characterize the dynamic relationship between the mode of an offshore operation and changes in factor market conditions that affect agency costs.

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Multinational Business Review, vol. 18 no. 4
Type: Research Article
ISSN: 1525-383X

Keywords

Book part
Publication date: 13 August 2007

Jing Li

The application of real options theory to international strategy has surged in recent years. However, it is still a relatively new and loosely defined field, and there are…

Abstract

The application of real options theory to international strategy has surged in recent years. However, it is still a relatively new and loosely defined field, and there are several constraints on practical applications of this powerful theory. To move forward this field, the paper first provides a systematic analysis of theoretical and empirical contributions of real options theory to three critical issues in international strategy: (1) valuing multinational networks, (2) assessing market entry modes, and (3) evaluating market entry timing. The paper further suggests that future studies can focus on a refined treatment of uncertainty and the development of a dynamic theory in international strategy. Five testable propositions are developed in these directions.

Details

Real Options Theory
Type: Book
ISBN: 978-0-7623-1427-0

Article
Publication date: 17 July 2013

Mark Cecchini, Robert Leitch and Caroline Strobel

Transfer pricing stands at the heart of a MNE management control system. We review the theories of TCE and RBV and develop antecedents and consequences of transfer prices…

Abstract

Transfer pricing stands at the heart of a MNE management control system. We review the theories of TCE and RBV and develop antecedents and consequences of transfer prices based on these theories. We propose viewing transfer pricing decisions through a TCE and RBV value chain framework. We review a sample of transfer pricing literature based on this theoretical perspective and show how it fits within our framework. Our framework suggests that setting transfer pricing policy is indeed a complex problem that includes many factors and has many consequences, some of which may be at odds with each other. We give some suggestions for future research based on this framework.

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Journal of Accounting Literature, vol. 31 no. 1
Type: Research Article
ISSN: 0737-4607

Keywords

Article
Publication date: 1 February 1992

John B. Holland

Investigates how large UK multinational firms evaluate individualand multiple banking relationships, and how they exercise control overtheir portfolios of banks. The

Abstract

Investigates how large UK multinational firms evaluate individual and multiple banking relationships, and how they exercise control over their portfolios of banks. The identification and description of how firms do this is important for those banks marketing a wide range of financial services to the corporate sector. Between 1986 and 1990, 15 confidential corporate case studies were developed from interviews with UK firms. The case firms were a sample of 15 large UK‐based multinational companies (MNCs) drawn from the FT100. Senior finance personnel were interviewed during 1986‐90 in all 15 firms using a semi‐structured questionnaire. Uses a theoretical perspective to interpret this decision behaviour and explores the nature and function of these decision rules.

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International Journal of Bank Marketing, vol. 10 no. 2
Type: Research Article
ISSN: 0265-2323

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Article
Publication date: 19 November 2007

Rosa Forte and Antonio Brandao

This paper develops a moral hazard model applied to a multinational firm’s decision between foreign direct investment and international subcontracting. We compare the

Abstract

This paper develops a moral hazard model applied to a multinational firm’s decision between foreign direct investment and international subcontracting. We compare the results of the moral hazard model, characterised by the fact that the multinational firm cannot control the operations performed by the subcontractor firm, with the traditional model of symmetric information. We conclude that the uncertainty associated with the subcontractor firm’s behaviour, despite increasing the multinational firm’s preference to engage in foreign direct investment, does not change its optimal decision, which is to subcontract. The exception occurs when the subsidiary stands as more efficient than the subcontractor firm.

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Multinational Business Review, vol. 15 no. 3
Type: Research Article
ISSN: 1525-383X

Keywords

Book part
Publication date: 30 May 2013

Jean-François Hennart

In this chapter I would like to recall how I got started on my research on the multinational enterprise (MNE) and outline how my thinking on this important economic…

Abstract

In this chapter I would like to recall how I got started on my research on the multinational enterprise (MNE) and outline how my thinking on this important economic institution has evolved through the years.11I thank Sondra Grace of Gracefully Put for editing this manuscript.

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Philosophy of Science and Meta-Knowledge in International Business and Management
Type: Book
ISBN: 978-1-78190-713-9

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