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Book part
Publication date: 22 November 2017

Wiboon Kittilaksanawong

This research seeks to understand the drivers of outward foreign direct investments (FDIs) by state-owned emerging economy firms, the characteristics of their overseas FDI…

Abstract

Purpose

This research seeks to understand the drivers of outward foreign direct investments (FDIs) by state-owned emerging economy firms, the characteristics of their overseas FDI projects and investment locations, and the effects of home and host institutions on the market entry strategies, taking into account the legitimacy of state ownership.

Design/methodology/approach

The discussion is based on a comprehensive review of conceptual and empirical literature, as well as case studies available from recognized journals in the field.

Findings

State-owned emerging economy firms pursue outward FDIs to respond to policy incentives of the home government and to reduce its political influence over the firm. FDI projects are often large and risky and have low business values. They often enter countries where state ownership is perceived as more legitimate while engaging in legitimacy-building activities in these countries. When their home country has a high level of institutional restrictions, they are less likely to use acquisitions or hold high levels of equity control in foreign subsidiaries. To strengthen local legitimacy, they often use greenfield investments or share equity control with local firms in foreign subsidiaries, particularly when the host country is endowed with strategic assets or when it has a high level of institutional restrictions. However, when having high levels of state ownership or strong political connections, they often commit a high level of resources and hold a high level of equity control in foreign subsidiaries.

Originality/value

The literature mostly investigates the FDI of firms that are structurally separate from the institutions. When the institutions are endogenous as presented in this research, their strategic choices are substantially influenced by noncommercial political motives and perception on their political image.

Book part
Publication date: 2 September 2010

J. Ramachandran and Anirvan Pant

We contend that the concept of liability of foreignness is inadequate to describe the set of disadvantages faced by emerging economy multinational enterprises (MNEs) in…

Abstract

We contend that the concept of liability of foreignness is inadequate to describe the set of disadvantages faced by emerging economy multinational enterprises (MNEs) in international markets. In order to address this theoretical gap, we develop the concept of “liabilities of origin” (LOR). We propose that the concept of LOR explains how the national origins of the MNE shape its disadvantages in international markets through three distinctive contexts of the MNE's ongoing activity: the home country context, the host country context, and the organizational context. We argue that in order to understand how emerging economy MNEs overcome their LOR, we need to engage simultaneously with the theoretical perspectives provided by the institutional entrepreneurship and organizational identity literatures. We suggest, further, that the concept of LOR may be useful to understand the character of MNE disadvantage in any international foray where the national origins of the MNE engender legitimacy-based and capability-based disadvantages for the MNE in a host country.

Details

The Past, Present and Future of International Business & Management
Type: Book
ISBN: 978-0-85724-085-9

Book part
Publication date: 23 November 2017

Desislava Dikova, Ahmad Arslan and Jorma Larimo

We investigate the effect of distance – political, economic, cultural and spatial, on developed-economy multinational enterprises’ (MNEs’) ownership decisions in cross-border (CB…

Abstract

We investigate the effect of distance – political, economic, cultural and spatial, on developed-economy multinational enterprises’ (MNEs’) ownership decisions in cross-border (CB) acquisitions. We start with the premise that distance discourages full and majority ownership in CB acquisitions, and further investigate the moderating role of distance-reducing factors. We examine how the relationship between distance and acquisition ownership decision is moderated by firm-specific characteristics, such as firm size, general international experience, and specific host country experience. Our data sample consists of 1,041 CB acquisitions under taken by Finnish MNEs in 58 countries during the time period 1990–2010. We find substantial support for all our hypotheses and conclude that the negative effects of distance on CB acquisition equity stake are positively moderated by the three firm-specific resources but their individual importance is conditional on the host country type (developed or emerging).

Details

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

Keywords

Book part
Publication date: 24 October 2013

Franklin Allen, Xian Gu and Oskar Kowalewski

In this chapter we study the intra-group transactions between the parent bank and its foreign subsidiaries in European Union (EU) countries during the crisis. We use…

Abstract

In this chapter we study the intra-group transactions between the parent bank and its foreign subsidiaries in European Union (EU) countries during the crisis. We use hand-collected data from annual statements on related party transaction and find that they may create a serious problem for the stability of the foreign banks’ subsidiaries. Moreover, as some of those subsidiary banks were large by assets in some of the member states the related party transactions with the parent bank created a serious threat to the host countries’ financial system stability. We attribute this transaction to the weak governance in foreign subsidiaries. We suggest improvements in governance as well as greater disclosure of related party transactions in bank holding companies in Europe.

Details

Global Banking, Financial Markets and Crises
Type: Book
ISBN: 978-1-78350-170-0

Keywords

Book part
Publication date: 4 March 2021

Gilbert Kofi Adarkwah

This study examines the effect of host government interference with foreign investors’ assets on foreign direct investment (FDI) inflow. The author hypothesizes that the…

Abstract

This study examines the effect of host government interference with foreign investors’ assets on foreign direct investment (FDI) inflow. The author hypothesizes that the relationship between host government interference and FDI inflow takes the form of an inverted U shape. The author tests this hypothesis using data from the International Centre for Settlement of Investment Disputes between 1996 and 2017. The results support the above hypothesis. While host government interference with the assets of a few foreign investors may not deter FDI inflow, frequent interferences, which result in an increasing number of host state–foreign investor disputes, reduces FDI inflow in a host country. The analysis also shows that when faced with an increasing host country uncertainty, investors adopt a wait and see strategy. However, how long investors wait depends on the economic situation of the host country. For high-income countries, investors wait until approximately 10 disputes before reducing investments level in a host country, while for low-income countries, this waiting period is a mere two disputes. The findings of this study suggest that countries seeking to attract more FDI should not interfere with the activities of foreign investors, however, if they do, disputes should be settled at home, not in international arbitration courts, because doing so frequently may poison the host environment and deter other foreign investors from investing in the host country.

Details

The Multiple Dimensions of Institutional Complexity in International Business Research
Type: Book
ISBN: 978-1-80043-245-1

Keywords

Open Access
Article
Publication date: 3 May 2023

Sajad Noorbakhsh and Aurora A.C. Teixeira

This study aims to estimate the impact of refugee inflows on host countries’ entrepreneurial rates. The refugee crisis led to an increased scientific and public policy interest in…

517

Abstract

Purpose

This study aims to estimate the impact of refugee inflows on host countries’ entrepreneurial rates. The refugee crisis led to an increased scientific and public policy interest in the impact of refugee inflows on host countries. One important perspective of such an impact, which is still underexplored, is the impact of refugee inflows on host countries entrepreneurial rates. Given the high number of refugees that flow to some countries, it would be valuable to assess the extent to which such countries are likely to reap the benefits from increasing refugee inflows in terms of (native and non-native) entrepreneurial talent enhancement.

Design/methodology/approach

Resorting to dynamic (two-step system generalized method of moments) panel data estimations, based on 186 countries over the period between 2000 and 2019, this study estimates the impact of refugee inflows on host countries’ entrepreneurial rates, measured by the total early-stage entrepreneurial activity (TEA) rate and the self-employment rate.

Findings

In general, higher refugee inflows are associated with lower host countries’ TEA rates. However, refugee inflows significantly foster self-employment rates of “medium-high” and “high” income host countries and host countries located in Africa. These results suggest that refugee inflows tend to enhance “necessity” related new ventures and/ or new ventures (from native and non-native population) operating in low value-added, low profit sectors.

Originality/value

This study constitutes a novel empirical contribution by providing a macroeconomic, quantitative assessment of the impact of refugee from distinct nationalities on a diverse set of host countries' entrepreneurship rates in the past two decades resorting to dynamic panel data models, which enable to address the heterogeneity of the countries and deal with the endogeneity of the variables of the model.

Details

Journal of Enterprising Communities: People and Places in the Global Economy, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1750-6204

Keywords

Article
Publication date: 24 August 2021

Yanxi Li, Heng Zhao and Shanshan Ouyang

The privatization of infrastructure promotes efficiency and service standards. While cross-border private participation infrastructure (PPI) projects hosted in emerging markets…

Abstract

Purpose

The privatization of infrastructure promotes efficiency and service standards. While cross-border private participation infrastructure (PPI) projects hosted in emerging markets have become more prevalent in recent years, there have also been more failures. The purpose of this paper is to investigate how governance distance affects the survival of cross-border PPI projects.

Design/methodology/approach

The authors provide theoretical justification and empirical evidence to verify our views. The authors test the hypotheses on a sample of 4,678 cross-border PPI project investments made in emerging market countries between 1990 and 2016. Estimation techniques consist of a binary logistic regression model and a rare events logistic model.

Findings

The findings suggest that increased governance distance can lead to project failure. The study results show that governance distance is negatively correlated with the probability of project survival. Greenfield investment intensifies the negative effect of governance distance while competitive contracts mitigate the negative effect of governance distance.

Practical implications

The results reveal that transnational investment in infrastructure projects is susceptible to institutional differences between home and host countries. Therefore, both private enterprises and host government should pay attention to the impact of inter-country differences on negotiations and project operation. Competitive contracts mitigate this negative effect, but entering in the form of greenfield investment amplifies the negative effect of distance.

Originality/value

Transnational industrial engineering projects are easily affected by the differences in governance levels between the two countries. This study introduces governance distance into the field of infrastructure projects, focusing on the impact of differences between home and host countries on transnational projects. The findings on infrastructure projects that are closely related to host government contribute to the literature by broadening the research of institution and distance.

Details

International Journal of Managing Projects in Business, vol. 14 no. 7
Type: Research Article
ISSN: 1753-8378

Keywords

Article
Publication date: 10 December 2021

Ling Eleanor Zhang, Jakob Lauring and Ting Liu

This paper aims to explore the interplay between burnout, national identity and career satisfaction among diplomats. In particular, the authors focus on the roles of home and host

Abstract

Purpose

This paper aims to explore the interplay between burnout, national identity and career satisfaction among diplomats. In particular, the authors focus on the roles of home and host country identification as an emotional resource for overcoming the negative effects of job-related burnout.

Design/methodology/approach

Survey responses from 123 diplomats were used to assess the moderating role of home and host country identification on the relationship between burnout and career satisfaction.

Findings

Various combinations of high or low home or host country identification were tested, and the findings suggest that the negative effect of burnout on career satisfaction is reduced for those individuals that have high identification with both the home and the host country, while this is not the case for other combinations. This points to the beneficial effects of dual national identifications even for diplomats – a group that would normally be expected to identify strongly with the home country alone.

Originality/value

No existing study that the authors know of has explored the relationship between burnout, national identity and career satisfaction among diplomats or other types of expatriates. This is unfortunate because a better understanding of national identity could guide practitioners in finding ways to reduce the negative consequences of burnout in international organizations.

Details

Journal of Global Mobility: The Home of Expatriate Management Research, vol. 10 no. 1
Type: Research Article
ISSN: 2049-8799

Keywords

Article
Publication date: 1 March 2022

Abrahim Soleimani and K. Michelle Yang

Drawing on the institutional theory and organizational learning literature, the purpose of this study is to investigate the relationship between prior acquisition experience and…

Abstract

Purpose

Drawing on the institutional theory and organizational learning literature, the purpose of this study is to investigate the relationship between prior acquisition experience and the duration of the deal completion stage in cross-border acquisitions and the impacts of the quality of business institutions in the host country and the institutional distance between home and host countries on this relationship.

Design/methodology/approach

This study uses the sixth wave of mergers and acquisitions, the first truly global wave that covered a wide range of institutional settings, to test the hypotheses. Using a panel data regression method, it analyzes 8,175 cross-border acquisitions from 2003 to 2009, conducted by acquirers from 47 advanced and emerging economies in 56 advanced and emerging economies.

Findings

This study finds that host-country acquisition experience has more impact on shortening deal completion duration. Home-country acquisition experience is more effective in host countries with less developed business institutions than in those with more developed ones. The results of this study show that the quality of business institutions in the host country and the institutional distance between the home and host countries amplify or attenuate the effect of past acquisition experiences, depending on their origin and the quality of business institutions and institutional distance of where they are used.

Originality/value

The growing popularity of cross-border acquisitions among emerging country acquirers calls for a systemic study of the cross-border acquisition process. One of the critical and less understood stages in this process is the deal completion stage. This study examines how the institutional environments in the home and host countries impact the effectiveness of past acquisition experiences on shortening this stage.

Article
Publication date: 7 January 2019

Bikash Ranjan Mishra and Pabitra Kumar Jena

The purpose of this paper is to examine the determinants of foreign direct investment (FDI) flows from some leading developed countries (the USA, Japan, Germany, the Netherlands…

1486

Abstract

Purpose

The purpose of this paper is to examine the determinants of foreign direct investment (FDI) flows from some leading developed countries (the USA, Japan, Germany, the Netherlands, the UK and France) into major four Asian economies (China, Korea, India and Singapore).

Design/methodology/approach

Using one basic and four augmented versions of gravity model technique, the authors tried to examine the determinants of bilateral FDI flows in four major Asian economies. The study used World Development Indicators, CEPII, KOF and Heritage Foundation data for period 2001–2012.

Findings

The results revealed that besides the market size for host and source country, other criteria such as distance, common language and common border also influence foreign investors. Other macroeconomic factors such as inflation rate and real interest rate are among the key factors that attract more FDI. In addition to economic factors, institutional and infrastructural factors such as telecommunication, degree of openness, index of globalisation and index of economic freedom also stimulate the international investors from the developed world to the major Asian countries.

Research limitations/implications

It is altogether possible that only a set of home country specific characteristics or host country specific characteristics does not matter when determining FDI. Most empirical studies using indices such as the index of globalisation and economic freedom are subject to certain methodological limitations such as model selection, parameter heterogeneity, outliers and moral hazard.

Practical implications

More distance between the host and source country would result in less FDI flows due to more managerial and raw material supply chain cost. Similarly, more gross domestic product (GDP) and per capita income (PCI) are leading to more FDI flows into Asian economics. Therefore, major Asian economies should frame their economic policies in such a manner where these counties can strengthen their GDP as well as PCI. Furthermore, above countries should open its economy more and more for better FDI flows as it seems that economic globalisation and economic freedom are major determinants of bilateral FDI flows. The negative impact of inflation and interest rate should be controlled.

Social implications

From policy perspective, higher scores of economic, social and political globalisation also attract high FDI to the host country. On the same line higher scores in economic freedom mean that less restrictions in terms of economic policies and the policy environment are conducive for free trade and resource transfers. Higher scores in trade freedom, investment freedom and freedom from corruptions also show more developed and conducive policy environment. In the same reasoning higher scores in the composite index of economic freedom which takes information from trade freedom, investment freedom and freedom from corruption and others also encourage flow of FDI in to the host country.

Originality/value

This is the first paper which combines the globalisation index, economic freedom index and distance along with some major macroeconomic variables.

Details

Journal of Economic Studies, vol. 46 no. 1
Type: Research Article
ISSN: 0144-3585

Keywords

1 – 10 of over 39000