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Book part
Publication date: 26 July 2007

Lilach Nachum and Clifford Wymbs

We suggest that the entire world may not always be the appropriate frame of reference in analyses of Multinational Enterprises (MNEs) location choices. In some industries…

Abstract

We suggest that the entire world may not always be the appropriate frame of reference in analyses of Multinational Enterprises (MNEs) location choices. In some industries and activities, more narrowly defined geographic areas, such as regions and cities, are more relevant level of analyses. Employing global cities as the geographic frame of reference, we extend the theory of the location choices of MNEs by challenging the assumption that location attributes have identical values for all MNEs. Rather, we explicitly acknowledge the relative value of such attributes for individual MNEs, and search for the firm-specific characteristics that affect this variation. The empirical testing is based on analysis of 673 financial and professional service MNEs that entered New York and London via mergers and acquisitions (M&As). The findings confirm that it is the interaction between location and firm-specific attributes, rather than each of these independently, which affects location choices.

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Regional Aspects of Multinationality and Performance
Type: Book
ISBN: 978-0-7623-1395-2

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Book part
Publication date: 22 June 2011

Svetla Marinova, John Child and Marin Marinov

This chapter provides a logical extension to the understanding of firm-specific advantages and disadvantages and the enabling role of existing and emerging…

Abstract

This chapter provides a logical extension to the understanding of firm-specific advantages and disadvantages and the enabling role of existing and emerging country-specific advantages relevant to the process of Chinese firm internationalization. Its longitudinal perspective considers the changing objectives and actions of firms that enable them to compensate for disadvantages and create new or strengthen existing competitive advantages. The case study evaluation reveals that the evolution of strategic resources is the key motivator behind the internationalization of Chinese firms. Decisively encouraged by the Chinese government firms with corporate entrepreneurship aspire to alter themselves from home market leaders and regional players into globally competing multi-nationals. This process is made possible via the development of firm-specific advantages and continuous compensation for firm-specific disadvantages. The aspiration for strategic asset acquisition from developed countries combined with cost leadership and independent customer-centred innovation brought about strong firm-specific advantages stimulating the internationalization process of firms. The chapter focuses on the interdependence of country- and firm-specific advantages and disadvantages, thus recognizing the significance of the home country institutional context in Chinese outward foreign direct investment. It has been identified that corporate entrepreneurship is a significant firm-specific advantage for firm internationalization being a major force in gaining, accumulating, utilizing and leveraging resources for transforming firm-specific disadvantages into advantages. We argue that if the relational framework between governmental institutions and firms is more developed, the impact of country-specific advantages on firm-specific advantages is more favourable. This assumes that the government espouses an ideology that is favourable to corporate entrepreneurship.

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Dynamics of Globalization: Location-Specific Advantages or Liabilities of Foreignness?
Type: Book
ISBN: 978-0-85724-991-3

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Article
Publication date: 12 February 2018

Sam Zisuh Njinyah

The purpose of this paper is to examine the significance of the direct and indirect effects (through country and firm’s specific advantages) of government policies for…

Abstract

Purpose

The purpose of this paper is to examine the significance of the direct and indirect effects (through country and firm’s specific advantages) of government policies for export promotion (GPEP) on the export performance of small and medium-size enterprise (SME) Cocoa exporters in Cameroon.

Design/methodology/approach

To test the proposed model, data were obtained through self-administered questionnaires using snowball sampling technique to 101 SME Cocoa exporters. This was analyzed using structural equation modeling (SEM) techniques to examine both the direct and indirect effects of GPEP on the export performance of SME Cocoa exporters in the South and Centre Regions of Cameroon.

Findings

The findings suggest that GPEP had both direct and indirect effects on the export performance of SME Cocoa exporters. Direct effect was on the usage of GPEP which reduces operating cost and increase performance. The indirect effects were through the provision of country and firms specific advantages. However, the only significant path was through the provision of export marketing information.

Research limitations/implications

The research is limited to one country, one sector, and two regions and does not take into consideration other factors that may influence the effect of GPEP, country, and firms specific advantages on export performance. Moreover, the non-significant paths should be interpreted with caution and further testing required in a different context.

Practical implications

Empirical findings are relevant for the government and SME Cocoa exporters. It informs the government about the effectiveness of GPEP and the need to disseminate marketing information using every possible medium best understood by the SMEs. It suggests an opportunity for engagement of both SMEs and government authorities in accessing the outcome of GPEP which will increase transparency, awareness, usage, and export performance.

Originality/value

The research has successfully developed and tested a model for analyzing the direct and indirect effects of GPEP on export performance based on the resource-based view and SEM in a context where there is a call for more empirical and theoretical work on export performance due to limited studies. The framework reveals positive effects of GPEP, country, and firms’ specific advantages as determinants of export performance.

Details

International Marketing Review, vol. 35 no. 1
Type: Research Article
ISSN: 0265-1335

Keywords

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Article
Publication date: 17 June 2010

Teresa da Silva Lopes

According to John Dunning’s eclectic paradigm, firms need to have ownership, location, and internalization advantages in order to cross borders and engage in foreign…

Abstract

According to John Dunning’s eclectic paradigm, firms need to have ownership, location, and internalization advantages in order to cross borders and engage in foreign direct investment. By drawing on historical evidence on the evolution of a group of leading marketing‐based multinationals in consumer goods, this paper claims that, despite its richness, the eclectic paradigm, and in particular the concept of “ownership advantages,” needs to be revised and extended to take into account different levels of institutional analysis. For the eclectic paradigm to give a rounded view of the internationalizing firm, it needs to acknowledge the critical importance of firm‐specific ownership advantages, such as the role of the entrepreneur.

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Article
Publication date: 18 July 2008

Harun Kaya and Deniz Erden

The purpose of this paper is to investigate the capabilities and characteristics of Turkish manufacturing firms that engage in outward FDI activity. To this end, the paper…

Abstract

Purpose

The purpose of this paper is to investigate the capabilities and characteristics of Turkish manufacturing firms that engage in outward FDI activity. To this end, the paper aims to explore how these firms' capabilities vary with the sample characteristics including subsidiary age, size, sector, host country location, ownership pattern and market entry mode.

Design/methodology/approach

The data were gathered via cross‐sectional survey from a sample 94 Turkish manufacturing firms (TMFs) that have subsidiaries based in 28 different countries. Both univariate and multivariate tests were used to analyze the data.

Findings

Findings show that sample firms had strong firm‐specific capabilities when they started to expand their business activities through foreign direct investment (FDI). The firm‐specific capabilities were grouped into four categories as operation‐related, product‐related, marketing‐related and management‐related. While the capabilities of the sample firms varied to a moderate extent with their age and size, and to a limited extent with market entry mode, no significant differences were noted with respect to the industry, host country location and ownership pattern.

Research limitation/implication

Relying on the perceptual assessment of single respondents constitutes the main limitation of this study. There is also a need to collect data from other emerging or developed countries to enable comparisons between Turkey and other countries.

Originality/value

This is one of the few studies which attempt to examine the firm‐specific capabilities of FDI firms from an emerging country.

Details

Journal of Management Development, vol. 27 no. 7
Type: Research Article
ISSN: 0262-1711

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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…

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.

Details

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

Keywords

Content available
Article
Publication date: 24 January 2019

Shaowei He, Zaheer Khan, Yong Kyu Lew and Grahame Fallon

The purpose of this paper is to examine how innovation-related firm-specific ownership advantage (FSA) plays a role in developing the competitive advantage of Chinese…

Abstract

Purpose

The purpose of this paper is to examine how innovation-related firm-specific ownership advantage (FSA) plays a role in developing the competitive advantage of Chinese multinationals when they internationalize.

Design/methodology/approach

Based on a review of the existing literature concerning foreign direct investment by emerging economy multinational enterprises (EMNEs), the authors identify that numerous studies explain this phenomenon on the basis of their location-bound country-specific advantages. However, such views do not fully explain the key underlying factors behind the rapid rise and success of many EMNEs as these firms rapidly internationalize and develop global competitiveness in developed markets. The current research explores three leading innovative Chinese EMNEs from the engineering sector: BYD, Sany Heavy Industry and CSR China.

Findings

The authors find that EMNEs’ knowledge, and particularly their innovation-creating technological knowledge, has contributed greatly to their successful internationalization. The illustrative cases show that the three firms have now moved beyond the infant to the mature stage of EMNE development through developing their technological knowledge in order to realize FSA through internationalization. This study helps in contributing fresh reflections to the continuing debate concerning the causes of internationalization and global competitive development by EMNEs and the role of their FSAs in these processes.

Originality/value

This is one of the few studies which have demonstrated that some of the EMNEs do possess firms’ specific advantage which helps explain their innovative capabilities, competitive advantages and subsequent internationalization patterns.

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Article
Publication date: 10 January 2020

Murat Akpinar

This paper aims to clarify the fit of competitive strategies and firm-specific advantages (FSAs) with country-specific advantages (CSAs) in explaining manufacturing…

Abstract

Purpose

This paper aims to clarify the fit of competitive strategies and firm-specific advantages (FSAs) with country-specific advantages (CSAs) in explaining manufacturing location choices at product category level in the European automotive industry.

Design/methodology/approach

Seven hypotheses are formulated and tested using binomial logistic regression with data from 148 passenger car models (i.e. product category level) that are sold in Europe and manufactured in countries that offer CSAs of either cost advantages or differentiation advantages. The first four hypotheses test manufacturing location choices of product categories pursuing cost leadership strategy, differentiation strategy, focus strategy and hybrid strategy. The other three hypotheses test whether FSAs of R&D capability, marketing capability and operations capability will impact on the manufacturing location choice. The tests control for the type of passenger cars as well as the manufacturer’s region of origin.

Findings

While pursuing cost leadership strategy leads to manufacturing in countries that offer cost advantages, pursuing differentiation strategy as well as strong R&D capability and marketing capability result in manufacturing in countries that offer differentiation advantages. Focus strategy, hybrid strategy and operations capability do not have an impact on the manufacturing location choice at product category level.

Research limitations/implications

Conducting empirical research at product category level is subject to limitations in the choices of FSAs due to lack of availability of data.

Practical implications

Managers should assess the competitive strategies and FSAs of their product categories and then decide about manufacturing locations based on their fit with host country CSAs. Policymakers should understand the CSAs of their countries and target to attract manufacturing FDI from product categories with matching competitive strategies and FSAs.

Originality/value

The research contributes to discussions in explaining manufacturing location choices. Its originality lies in being the first study to test the fit of competitive strategies and FSAs of product categories with CSAs.

Details

Competitiveness Review: An International Business Journal , vol. 30 no. 3
Type: Research Article
ISSN: 1059-5422

Keywords

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Article
Publication date: 1 October 2018

Louise Curran and Lee Keng Ng

The purpose of this paper is to explore the extent to which the firm-specific advantages (FSAs) which underlie international expansion have proved resilient for European…

Abstract

Purpose

The purpose of this paper is to explore the extent to which the firm-specific advantages (FSAs) which underlie international expansion have proved resilient for European multinational enterprises (MNEs) operating in a key emerging market – China.

Design/methodology/approach

The authors adopt a qualitative, case study approach, using interview data to explore the companies’ FSAs on market entry, how they evolved over time and the strategies adopted to defend them. They undertook 15 in-depth interviews with decision makers in six companies addressing their experience since market entry. To control for sector-level effects, the authors focus on companies in the environmental protection sector.

Findings

The authors found examples of significant erosion of the FSAs among the case study companies, which undermined their position on the host market and their long-term competitiveness. The key sources of erosion were limitations in market access, exclusion from local networks and the emergence and upgrading of local competitors, often firms with whom the MNEs had collaborated in the past.

Research limitations/implications

The relatively small number of cases (six) limits the generalisability of the findings by the authors. However, the authors are convinced that, given that the case companies are generally large and have long experience in China, the conclusions made are well grounded. In addition, there was the high level of coherence in the reported experiences of the interviewees, providing further support for the findings.

Practical implications

The experience of these case study companies highlights that MNEs have difficulty retaining their unique FSAs when faced with rapidly evolving local competition in a key emerging market. Key strategies mobilised included focussing on a sub-sector of the market and localising both the company and their supply chains. The difficulties experiencing by these case study companies in retaining their FSAs underline the need for MNEs in emerging markets to avoid complacency and constantly innovate, but they also raise questions about their capacity to extend their international reach in the long term.

Originality/value

Very few studies have explored the FSAs of firms and how they evolve over time using a case study-based qualitative approach, especially in emerging markets.

Details

Multinational Business Review, vol. 26 no. 3
Type: Research Article
ISSN: 1525-383X

Keywords

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Article
Publication date: 17 June 2010

Alan M. Rugman

The eclectic paradigm of Dunning (1980) (with its OLI and four motives for FDI framework) can be reconciled with the firm and country matrix of Rugman (1981). However, the…

Abstract

The eclectic paradigm of Dunning (1980) (with its OLI and four motives for FDI framework) can be reconciled with the firm and country matrix of Rugman (1981). However, the fit is not perfect. The main reason for misalignment is that Dunning is focused upon outward FDI into host economies, whereas Rugman’s matrix is for firm‐level strategy covering MNE activity in both home and host countries

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