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Article
Publication date: 1 January 1974

Sin‐Jee Chong

Contrasts the marketing practices of local and foreign firms in Malaysia. Finds that local firms show lower profitability and a visible management gap, while foreign firms, using…

Abstract

Contrasts the marketing practices of local and foreign firms in Malaysia. Finds that local firms show lower profitability and a visible management gap, while foreign firms, using advanced management skills, were able to seize new market opportunities. Progress that local firms would do well to examine the marketing practices of their foreign counterparts.

Details

European Journal of Marketing, vol. 8 no. 1
Type: Research Article
ISSN: 0309-0566

Keywords

Book part
Publication date: 22 June 2011

Lilach Nachum

This chapter seeks to explain cases whereby locationally advantageous countries do not give rise to internationally competitive national firms, as theory suggests. Rather, foreign

Abstract

This chapter seeks to explain cases whereby locationally advantageous countries do not give rise to internationally competitive national firms, as theory suggests. Rather, foreign firms enjoy equal access to the country resources and build strong competitive position based on them. It suggests that location resources vary in terms of the extent to which foreign firms experience liabilities in accessing them, and in the ability of MNE internal networks to provide substitute for them. It introduces a hierarchy of location resources along these two dimensions and suggests that the position of resources in the hierarchy determines variations between foreign and national firms in terms of their ability to access location resources. When critical advantages are based on location resources that are high on the hierarchy, that is, are exclusive to national firms, the latter are likely to take the lead in an industry, establishing strong competitive position based on these superior resources. In contrast, when critical advantages are based on location resources which foreign firms can access on similar terms to those of national firms, or else can rely on the MNE network for their provision, the leading firms in an industry are likely to originate in multiple countries and no apparent home country effect will be observed. This chapter outlines the implications of the findings for MNE location strategies and for policy makers.

Details

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

Book part
Publication date: 5 August 2022

Jong Min Lee and Yongsun Paik

This chapter discusses how firms can accrue unique advantages from their foreign status in the host country, with a particular focus on informal networks. Drawing on the…

Abstract

This chapter discusses how firms can accrue unique advantages from their foreign status in the host country, with a particular focus on informal networks. Drawing on the literature on the liability and asset of foreignness, this chapter argues that foreign firms can be in a better position to balance between the bright and dark side of informal networks than local firms. Foreign firms can deviate from local isomorphic pressures to minimize potential involvement in negative sides. Moreover, they can build more instrumental informal networks in which the dark side of informal networking is better controlled and regulated without losing social cohesion, flexibility, and other benefits of the bright side. This chapter contributes to our understanding of how foreign firms can turn foreignness into assets from liabilities when managing their informal networks in the host country.

Book part
Publication date: 15 July 2009

Jiatao Li and Jing Yu Yang

Drawing on organization theory perspectives, this chapter investigates how multinational enterprises (MNEs) based in different home countries influence each other's foreign entry…

Abstract

Drawing on organization theory perspectives, this chapter investigates how multinational enterprises (MNEs) based in different home countries influence each other's foreign entry decisions. The proposition that the subsidiaries of multinationals from different countries constitute a reference environment and that this environment provides important information for potential new entrants was tested with panel data on foreign entries from 55 home countries into China from 1979 to 1995. The rate of new entries from a focal home country was found to correlate with the number of foreign subsidiaries already established by firms from other home countries with cultures similar to that of the focal home country. This was interpreted as reflecting transnational learning and competition. Uncertainty derived from home-host-country trade ties and cultural differences was shown to moderate this transnational mimetic learning.

Details

Managing, Subsidiary Dynamics: Headquarters Role, Capability Development, and China Strategy
Type: Book
ISBN: 978-1-84855-667-6

Book part
Publication date: 16 June 2023

K.C. Lin, Jared A. Moore and David R. Tree

We examine the stock market reaction to the Tax Cuts and Jobs Act (TCJA) of 2017 during its enactment process, focusing on its international provisions. Consistent with extant…

Abstract

We examine the stock market reaction to the Tax Cuts and Jobs Act (TCJA) of 2017 during its enactment process, focusing on its international provisions. Consistent with extant evidence, we find lower returns for high-foreign-activity firms, indicating a negative market reaction to the international provisions overall. Considering specific international provisions, we find that the market reaction was more positive (negative) for firms likely most affected by the shift to a quasi-territorial system for taxing foreign earnings (the transition tax on existing unrepatriated earnings, the tax on global intangible low-taxed income, and/or the base erosion and antiabuse tax) than for other firms. Our findings imply that investors are able to disentangle the economic implications of complex and interactive tax law changes.

Book part
Publication date: 21 October 2019

Sara Melén Hånell, Emilia Rovira Nordman and Daniel Tolstoy

Is a born-global strategy reflective of high performance or are there merits in a regional strategy? In studying a sample of 32 internationalizing small-and medium-sized…

Abstract

Is a born-global strategy reflective of high performance or are there merits in a regional strategy? In studying a sample of 32 internationalizing small-and medium-sized enterprises (SMEs), we find that many of the early internationalizing firms that formally meet the accepted “born-global criteria” are actually regional. With this concept as a starting point, this study aims to contribute to the literature on early internationalizing firms by comparing how born globals (BGs) and born regionals (BRs) differ in terms of the liability of foreignness, networking activities and performance. Our results indicate that both liability of foreignness and knowledge development in networks is more challenging for BGs than for BRs, and for this reason, BRs are likely to perform better than BGs. Hence, we identify a “born global disadvantage” stemming from a lack in the capacity of acquiring relevant foreign-market knowledge and tackling foreign-market institutions. The implications of the study highlight the need for researchers and practitioners to be more careful when using the concept of BG and to acknowledge that differences do exist between regional and global business strategies.

Details

International Business in a VUCA World: The Changing Role of States and Firms
Type: Book
ISBN: 978-1-83867-256-0

Keywords

Book part
Publication date: 23 November 2017

Michael J. Mueller, Guus Hendriks and Arjen H.L. Slangen

In this chapter, we aim to shed more light on the role of formal institutional distance in firmsforeign entry mode choices by accounting for the direction of that distance…

Abstract

In this chapter, we aim to shed more light on the role of formal institutional distance in firmsforeign entry mode choices by accounting for the direction of that distance. Specifically, we distinguish between foreign entries where the host country is institutionally less developed than the investing firm’s home country (negative institutional distance) and those where the host country’s institutions are comparatively more developed (positive institutional distance), and explore whether these different types of entries are implemented through different equity-based modes. We take an information economics perspective to develop hypotheses on the effects of positive and negative formal institutional distance on firms’ choices between greenfields and acquisitions, and between full and partial ownership of greenfield and acquired subsidiaries. We test our hypotheses on a sample of 1,070 foreign entries made by 796 emerging market multinationals originating from 14 countries. Controlling for the host country’s formal institutional quality and other factors, we find that negative institutional distance increases the likelihood that a foreign entry takes the form of a greenfield investment rather than an acquisition and that positive institutional distance decreases that likelihood. We also find that negative institutional distance increases the chances that firms choose greenfield joint ventures over wholly owned greenfields and full over partial acquisitions. Finally, we find that positive institutional distance does not affect firms’ ownership stake choices, neither for greenfields nor for acquisitions. Overall, these findings argue for a nuanced, contingency view of the role of formal institutional distance in foreign entry mode choices. To the best of our knowledge, this study is the first to use information economics to construct a holistic picture of firms’ equity-based entry mode choices, taking into account both establishment and ownership modes.

Details

Distance in International Business: Concept, Cost and Value
Type: Book
ISBN: 978-1-78743-718-0

Keywords

Book part
Publication date: 1 October 2008

Ngo Van Long

Purpose – In this chapter we study the welfare effects of relaxing government restrictions on bidding by foreign firms for government procurement contracts.Methodology – We use a…

Abstract

Purpose – In this chapter we study the welfare effects of relaxing government restrictions on bidding by foreign firms for government procurement contracts.

Methodology – We use a modified version of the Tullock model of rent contests. Firms spend resources to influence decisions of awarding contracts. We consider the case where firms are heterogeneous in terms of lobbying effectiveness.

Findings – The opening of the bidding opportunities to foreign firms can, under certain conditions, improve social welfare of the liberalizing country. The gain partly comes from reduced aggregate domestic lobbying efforts, which implies lower social waste, and partly from tax revenue on the profits of winning foreign firms.

Practical implications – Our analysis indicates that when negotiating on opening up trade in services, governments should take into account the effects of foreign entry on domestic lobbying costs.

Details

Globalization and Emerging Issues in Trade Theory and Policy
Type: Book
ISBN: 978-1-84663-963-0

Keywords

Book part
Publication date: 30 December 2004

Shigeru Asaba and Hideki Yamawaki

This study examines the determinants of performance of foreign manufacturing subsidiaries in Japan. The study finds that a foreign parent’s size, the subsidiary’s age, and a…

Abstract

This study examines the determinants of performance of foreign manufacturing subsidiaries in Japan. The study finds that a foreign parent’s size, the subsidiary’s age, and a complicated distribution system influence a subsidiary’s performance. There was little significant change in these determinants over a 20-year period. However, for subsidiaries that survived over the observation period of this study, some determinants changed. We also found that by forming joint ventures with Japanese firms, foreign firms can overcome the obstacle of distribution and circumvent the disadvantage of inexperience. Moreover, the mitigating effects of joint ventures vary, depending on the type of Japanese partner.

Details

Japanese Firms in Transition: Responding to the Globalization Challenge
Type: Book
ISBN: 978-0-76231-157-6

Article
Publication date: 7 April 2023

Besnik Krasniqi, Nick Williams, Iraj Hashi, Fisnik Reçica, Ermal Lubishtani and Liridon Kryeziu

This paper aims to examine the influence of formal and informal institutional quality on country-level variations in foreign equity shares in transition economies (TEs).

Abstract

Purpose

This paper aims to examine the influence of formal and informal institutional quality on country-level variations in foreign equity shares in transition economies (TEs).

Design/methodology/approach

Drawing on institutional theory and transaction cost theory, this paper examines the influence of formal and informal institutional quality on country-level variations in foreign equity shares in TEs. The authors use a two-step empirical strategy, identifying clusters of explanatory variables and running generalized least squares random effect estimations to test for the influence of explanatory and control variables on foreign equity shares.

Findings

Foreign equity share is positively affected by informal institutions and negatively by formal institutions. However, when control for stage of transition we find that the the presence of informal institutions in more rapidly or advanced transforming economies negatively influences foreign equity shares. Complex infrastructure discourages foreign equity shareholdings, and foreign companies use informal practices to overcome unfavourable host country conditions. Government size has a negative effect, and gross domestic product per capita positively affects foreign equity shares.

Research limitations/implications

The study is the new groundwork for the re-enactment of a fruitful discussion on foreign equity. The study has practical implications for managers, too – managers of foreign-owned firms operating in weakly installed institutional environments should carefully analyse the entry strategies because of the high presence of informal institutions. Furthermore, managers could understand the various facilitation roles of informal institutions in any firm internationalisation effort to arrive at optimal ownership holdings for better internationalisation performance. Although the study is based on a sample of transition countries, the findings have implications for other emerging economies’ contexts sharing similar institutional settings.

Originality/value

This study provides a unique empirical investigation and evidence based on country-level indicators on the effect of formal and informal institutions on foreign equity shares holdings in TEs, reinforcing the importance of impacts of both the formal and informal dimensions on ownership decisions of foreign investors.

Details

Review of International Business and Strategy, vol. 33 no. 4
Type: Research Article
ISSN: 2059-6014

Keywords

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