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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…

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

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…

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: 19 April 2022

Hamizah Abd Hamid and André M. Everett

This paper aims to refine the concept of community/ethnic resources for migrant communities by focusing on the way ethnic migrant entrepreneurs (EMEs) use co-ethnic-based…

Abstract

Purpose

This paper aims to refine the concept of community/ethnic resources for migrant communities by focusing on the way ethnic migrant entrepreneurs (EMEs) use co-ethnic-based (CEB) resources in their entrepreneurial activities, taking into account their migration contexts. Migrants are usually considered as disadvantaged individuals given their restricted opportunities in the labor market and in the business arena; thus, they rely on ethnic resources for survival in the host country.

Design/methodology/approach

Through Bourdieu’s (1986) forms of capital model, the authors compare the experiences of EMEs from three migrant communities in Malaysia (specifically, the Indonesian, Pakistani and South Korean communities) with regard to their ethnic resources. The authors used a qualitative approach in analyzing our data, which includes interview narratives with 41 individuals consisting of EMEs, community leaders, embassy representatives and trade experts.

Findings

This study’s findings indicate that migration contexts influence the differences in the way ethnic resources are used by EMEs. The findings are synthesized into a framework of ethnic resources within the context of ethnic migrant entrepreneurship.

Research limitations/implications

Adopting a qualitative approach was useful in studying the subject, but the findings are still limited within the context of the study. As such, future research is encouraged to test the proposed framework and examine the underexplored aspects of migration in influencing the utilization of ethnic resources for entrepreneurial migrant communities.

Practical implications

A practical implication of this paper lies in the illustration of migrants’ usage of alternative routes for resources through co-ethnic networks, which is useful for policymakers and businesses focusing on migration and trade.

Originality/value

This framework contributes to the discourse of ethnic migrant entrepreneurship through further clarifying aspects shaping the utilization of community ethnic resources.

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…

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…

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: 15 December 2021

Shilin Yuan, Haiyang Chen and Wei Zhang

This paper aims to examine the impact of host country corruption on foreign direct investment (FDI) from China to developing countries in Africa. With the opposing…

Abstract

Purpose

This paper aims to examine the impact of host country corruption on foreign direct investment (FDI) from China to developing countries in Africa. With the opposing arguments that corruption is detrimental to or instrumental in FDI and mixed empirical evidence, this paper contributes to the literature by providing new evidence on the issue. Additionally, little research has been done on the impact of corruption on FDI made by developing country multinationals to developing countries. This paper fills a void in this area.

Design/methodology/approach

Based on the published literature, as well as China and Africa contexts, the authors develop hypotheses that host countries with low corruption receive more FDI and resource-seeking investments weaken the relationship. The annual stock of Chinese FDI in 35 African countries, host country corruption data and other control variables from 2007 to 2015 are collected. Feasible generalized least squares models are used to test the hypotheses. Additional robustness tests are also conducted.

Findings

The findings support the hypotheses. Specifically, Chinese investors make more investments in host countries with low corruption except for resource-seeking investments in resource-rich host counties. The results are statistically significant accounting for various control variables. The results of the robustness tests show that the main findings are robust.

Originality/value

First, this study provides new evidence on the impact of corruption on FDI. Second, this study also fills a void by examining FDI from a developing country, China to other developing countries in Africa. Finally, this study also has a practical implication for Chinese multinationals investing in Africa.

Details

Chinese Management Studies, vol. 16 no. 4
Type: Research Article
ISSN: 1750-614X

Keywords

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