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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.

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.

The extant literature on emerging market multinationals (EMNEs) suggest that they derive their advantages from factors such as economies of scale, and that they internationalise, in large measure, to access technology. However, support for this framework typically comes from analysis of static data, comparing EMNEs and OECD MNEs at a point in time. Little attention is paid to their development paths in a dynamic setting. We examine these propositions directly using an approach that enables us to decompose productivity growth of firms into its components, namely, changes in scale economies, technological progress and technical efficiency. We compare Chinese MNEs with their non-MNE domestic counterparts and developed country MNEs that have operations in China. We demonstrate that Chinese MNEs continue to derive much of their productivity growth from changes in scale economies, while developed country MNEs continue to have an advantage with respect to technical progress. Both these types of MNEs have a significant advantage over Chinese non-MNE domestic firms.

This chapter proposes a framework which relates the Firm Specific Advantages (FSAs) of the multinational enterprise with the timing of entry in VUCA-type host environments, characterised by high volatility (V), uncertainty (U), complexity (C), and ambiguity (A), and which have become extraordinarily high risk. Drawing on historical evidence, in particular on Geoffrey Jones’ research - to whom this volume is dedicated - on the evolution of international business, it shows that in extraordinarily high-risk environments multinational enterprises need to have additional FSAs beyond those considered in the traditional FSAs/CSAs (country specific advantages/firm specific advantages) framework. The proposed framework distinguishes between prevention, mitigation, avoidance and withdrawal strategies carried out before and after entry in host markets that have become of extraordinary high risk.

Of the 75 Asian firms with data on regional sales, only three are global whereas 66 have the majority of their sales in their home region. Why is this? Despite a large literature extolling the global success of Asian firms, especially the Japanese, why does the evidence suggest that most Asian firms operate regionally? This study explains how most large Japanese firms have firm-specific advantages, which are based in their home region.

The paper proposes a new research design and framework to analyze the pattern of competition in the global market. Using revealed measures of comparative advantage and firm-specific advantages the competitive position of EU manufacturing industries is analyzed in relation to the structural characteristics of the industries. The framework is applied to examine the pattern of international alliances formed in the EU during the 1980s. In addition to shedding new light on the competitive position of European firms, the study offers some new perspectives for further research.

Porter's generic strategies are true almost by definition. Yet they do not allow us an understanding of the means by which low cost or differentiation can be achieved. This paper deals with the various ways of achieving sustainable competitive advantage or creating firm specific advantages (FSA) by a multinational enterprise (MNE). The paper shows that the means of achieving sustainable competitive advantage are based on different factors in different firms, because of such variables as size, degree of rivalry in the market, and the importance of technology. It analyzes the components of strategy of firms operating in what is termed Heckscher-Ohlin industries, using mining as an example; differentiated industries competing on the basis of achieving brand advantages and Schumpeterian industries, in which competitive advantage is based on innovation. Moreover, the paper distinguishes between external factors impinging on strategy, such as the industry, and internal factors or resources. It argues that one major characteristics of Schumpeterian firms is the creation of the environment and that of the industry in which they operate. The unique abilities, to innovate and to learn, allow major and often sustainable advantages. The paper recognizes the importance of government in creating and sustaining competitive advantage in each one of the three industries—be it by closing markets or by subsidies to R&D. Despite this recognition, the role of government in creating and sustaining competitive advantage is considered beyond the scope of the paper.

Over the past decade internationalisation by banks from emerging market economies has accelerated. The purpose of this study is to examine the role of government and home country institutions in the international expansion process of Chinese commercial banks (CCBs).

By employing qualitative research method, data was collected via interviews from 30 senior managers based on a sample of 10 CCBs involved in international expansion over the 2001–2013 period.

The study finds that the Chinese government and home institutions play an important role in motivating CCBs’ internationalisation. Evidence from this research illustrates the effect institutional factors have in emerging economy firms’ internationalisation.

The managerial implication of these findings is that CCBs could take great advantage of government policy by developing proper internationalisation strategies and capabilities that would enhance CCBs’ competitiveness in global market. On the institutional front, removal of the institutional constraints imposed on Chinese banking industry is required. Using market-oriented management and regulatory rules rather than imposing administrative restrictions could therefore accelerate CCBs’ adaption and integration in the international market and enhance their competitive power.

The traditional view of the multinational firm, from the early analyses in the 1960s and early 1970s, is one of a large industrial company with operations in multiple countries and a centralized chain of command. By definition, a multinational firm has activities in more than two countries. Although this simple definition is not widely used, it is a reasonable baseline from which to begin thinking about such firms. If the firm has sales operations in multiple countries, production in multiple countries, or some other permutation of international business activities physically present in multiple countries, then it is multinational.