International Activities of Emerging Market Firms

• During the last decade emerging market firms (EMFs) have increasingly attracted scholarly attention. Yet, the conclusions concerning the nature and the theoretical foundations of EMFs?? international expansion vary greatly thus calling for a critical assessment of the existing theorizing in this field.
• We examine publications on the internationalization of EMFs in fourteen top international management (IM) journals in the period of 2000?C2010 and use the inductive approach and the qualitative content analysis methodology.
• Our analysis shows that the published research can be classified into two groups: macro- and micro-level studies. The former predominantly employ macro-level institutional factors to examine the overall patterns of EMFs?? international expansion, while the latter build on a wider range of approaches, including the resource-based view, network and strategy perspectives to investigate various aspects of EMFs?? internationalization.
• The paper identifies a number of theoretical inconsistencies in the existing research that arguably cause ambiguity in findings and suggests future research directions to address these inconsistencies. By doing so the analysis contributes to the central debate in literature concerning whether conventional theories suffice to explain the EMFs?? internationalization or new theoretical approaches are needed.
• The analysis illustrates that the research on EMFs?? internationalization can be improved through refined application of a broader range of methodologies such as longitudinal and mixed-method studies. The geographic focus of studies needs to be widened as well. Currently it is clearly biased towards China, while other emerging markets remain under-researched.

     

Diverse Institutional Environments and Product Innovation of Emerging Market Firms

• This study unbundled institutional environment into two distinct aspects: institutional distance (the degree of dissimilarity between the institutional environment of a firm’s home country and an economy into which it expands) and institutional diversity (the variety of all the institutional environments to which a firm is exposed), and related them to product innovation performance of emerging market firms.
• Data on 917 Chinese manufacturing firms in multiple industries over 3 years was analyzed.
• The results show a positive relationship between institutional distance and product innovation success. An inverted U-shaped relationship was found between the institutional diversity of a firm’s foreign markets and its product innovation success.

     

The Quality of Domestic Legal Institutions and Export Performance

• Does the quality of domestic legal institutions matter for export performance? How does differential access to protections and privileges offered by informal institutions moderate the relationship between the quality of formal legal institutions and export performance? To answer these questions, we develop a theoretical framework drawing on insights from trade theory and institutional theory.
• We propose that higher-quality legal systems in an exporter’s location are associated with higher export performance, particularly when trade partners face higher levels of external and internal uncertainty. We further propose that firms that have less access to local informal institutions to reduce transaction costs and opportunism benefit more from better-developed legal institutions.
• Using information for more than 198,000 firms and legal quality information for 120 cities in China, we find strong support for our predictions. We discuss our contributions to the literature on institutions and export.

     

Market Orientation, Embeddedness and the Autonomy and Performance of Multinational Subsidiaries in an Emerging Economy

• This paper develops a conceptual framework for market orientation, embeddedness, autonomy and performance of multinational subsidiaries in an emerging economy.
• We argue that internal and external embeddedness has different performance implications for export- and local market-oriented multinational subsidiaries.
• Our results, based on a sample of 233 multinational subsidiaries from China, indicate that while external embeddedness has a positive impact on specialized resources of both types of subsidiary, such resources only positively affect the performance of local market-oriented subsidiaries. By contrast, internal embeddedness has a negative impact on specialized resources of both types of subsidiary.
• Managerial and policy implications are discussed.

     

Stopford and Wells were Right! MNC Matrix Structuresdo fit a “High-High” Strategy

• This paper seeks to address a primary question about matrix structures: under which strategic condition should multinational companies (MNCs) use matrix structures instead of other structures? To answer this question, the seminal Stopford and Wells Model (1972) is re-examined.
• Stopford and Wells (1972) predicted in their model that MNCs tend to use matrix structure to implement high levels of dual strategies??foreign product diversification and area diversification. Their prediction, however, has remained theoretically unclear and empirically unproven.
• To address this gap in the strategy-structure literature, we re-examine and revise the Stopford and Wells Model to explain the strategic condition in which MNCs tend to use matrix. The key of the revision is to use ??corporate integration?? instead of ??foreign product diversification??.
• The revised model is preliminarily supported by the data from a study of German MNCs. This suggests that corporate integration, together with area diversification, are the two over-riding strategies that lead to MNCs?? use of matrix.

     

Venturing Early or Following Late?

• The concept of the establishment chain has been subject to extensive research during the last decades and has received support as well as criticism. We test this concept for market entries in Central and Eastern European countries. We also evaluate both the impact of following this pattern and the impact of the timing of market entry on the performance in the foreign market.
• We test our hypotheses with empirical data collected in a survey among German manufacturing companies that have entered markets in Central and Eastern Europe. The data covers 524 cases of internationalization from 204 companies.
• We find that most companies start with low-intensity market entry modes and increase their commitment over time. Yet, only a small fraction actually follows the path of internationalization described by the establishment chain. It seems that this pattern is more relevant for companies entering these markets early and loses relevance as foreign competition in the foreign market increases. Levels of performance tend to be higher for companies entering CEE markets early in comparison to later entries. However, we do not discover any performance impact of market entry according to the establishment chain.

     

Climate and Work Values

• A comparison among Chinese employees in three different climatic areas revealed different scores on five work values of Hofstede??s model.
• With regard to power distance, temperate regions showed greater scores than colder-than-temperate and hotter-than-temperate regions. In terms of masculinity, the results showed that temperate regions have greater scores than colder-than temperate and hotter-than-temperate regions. Regarding collectivism, hotter-than-temperate regions also showed a higher collectivism score than did colder-than-temperate regions. With regard to uncertainty avoidance, temperate regions showed greater scores than colder-than-temperate and hotter-than-temperate regions, even though colder-than-temperate and hotter-than-temperate regions did not present any significant differences.
• The results from this article show that China should not be considered as a homogeneous market and suggest that multinational corporations (MNCs) need to take differentiated management strategies across regions in China.

     

Process perspectives in international business research in CEE

Abstract

Internationalisation processes have been a core interest of international business research since the seminal contribution by Johanson and Vahlne (1977).

The unique context of economic transition in CEE directs the attention to dynamic aspects of these processes, and to the interaction with changing environmental conditions.

This introductory paper reviews the contributions of recent CEE research, and this special issue in particular, to advance our understanding of internationalisation processes.

     

Rethinking the Institutional Contexts of Emerging Markets Through Metaphor Analysis

• Recent literature recommends greater analysis of institutional contexts in order to better adapt strategies in emerging market economies. This paper explores cognitive challenges in understanding institutional contexts, and reveals an outdated vernacular around emerging markets. Unwittingly, we may be crafting strategies based on how we would like emerging markets to be, rather than on how emerging markets actually are.
• Institutional context is investigated through metaphor analysis. As conceptual constructions that link the abstract to the concrete, metaphors can yield rich insights when analyzed. The metaphor analysis performed finds powerful cognitive simplifications and preconceptions of emerging markets.
• Eliciting novel metaphors around the labels ??emerging markets??, ??developing countries??, and ??third world?? uncovers a fragmented rather than holistic view of institutional context. Strategies unresponsive to emerging markets may flow from a fragmented view of institutional context.
• In terms of theory, the use of metaphor analysis highlights the importance of considering subjective and even messy elements of institutional context. Prevailing discussions in the international business literature often focus on streamlined, objective measures of institutional context. This paper emphasizes that a complex process of institutionalization is being observed rather than a steady state of objective outcomes.

     

Understanding Organizational Practice Adoption at the Thai Subsidiary Corporation

• This study examines how, to what extent, and with what effect the indigenous cultural concept of kreng jai influences the Thai subsidiary assimilation of organizational practices transferred and mandated by its European-headquartered parent.
• Adopting qualitative methodological procedures we combined data sourced from interviews, observation and company information to explore empirically the continuing role and relevance of kreng jai on the adoption and use of three strategic organizational practices: E-communication, performance appraisal and empowerment.
• Our findings showed that the unique feelings and attitudes which characterize kreng jai variously complemented, reinforced, elaborated and contradicted the behaviors predicted by the traditional comparative etic dimensions of culture when applied to the Thai workplace environment.
• MNEs seeking to develop their operations in Asia can therefore benefit from an appropriately nuanced understanding of the influence of unique indigenous cultural norms and values to help manage effectively the often competing institutional pressures to which their subsidiaries are exposed. Failure to address adequately the subtle but pervasive facets of indigenous management constructs such as kreng jai may hold hidden but potentially critical dangers for the MNE developing its business across cultural borders.

     

Effective Persuasion of International Business Sales Letters

• Language usage has attracted increasing research attention in international business studies. Yet scarce research has been done on the use of language in sales letters across cultures.
• Our paper, using a combined etic-emic approach aims to compare Chinese and New Zealand managers’ reflective accounts of persuasive strategies and the function of sales letters used in these two countries. In particular, we seek to contribute to an improved in-depth cross-cultural understanding through an investigation using emic sources of language and persuasion.
• Our findings indicate that language and persuasion play a significant role in sales letters, the Chinese managers focusing more on building qing (positive affect) with the reader whereas the NZ managers sought a more immediate reaction to their sales pitch and informal engagement with the reader.
• Furthermore, also based on the insights gained reflectively and reflexively from our discussion, these differences were closely related to persuasion strategies which are also important parameters influencing cross-cultural adaptations.

     

Family Management and Internationalization: The Impact on Firm Performance and Innovation

• Researchers in international business have long been interested in understanding the impact of internationalization on firm performance and innovation. However, because international diversification offers both advantages and agency problems, prior studies of this research stream offer mixed results.
• Based on a sample of Taiwan’s publicly listed firms during the period of 2000–2009, this study contributes to this research stream by examining the impact of family management on firm performance and innovation implications of internationalization.
• This study finds that family management positively moderates the relation between internationalization and performance/innovation. These findings suggest that family management helps mitigate the agency problems associated with internationalization so that family firms experience positive benefits from internationalization in terms of innovation and performance.

     

The Impact of Cultural Distance on Bilateral Arm��s Length Exports

• Prior studies have argued and regularly found that cultural distance is negatively related to bilateral export flows, which are the sum of arm??s length and intra-firm exports. However, these macro-level studies overlook the firm-level insights that arm??s length exports are a substitute for arm??s length affiliate sales, and that firms?? choices between these substitutes are influenced by cultural distance.
• Moreover, intra-firm exports are a complement to arm??s length affiliate sales and hence likely to respond in the same way to cultural distance as such sales. The inclusion of intra-firm exports in export flows has thus obscured the effect of cultural distance on aggregate arm??s length exports.
• We overcome these conceptual and methodological deficiencies by examining how cultural distance influences aggregate arm??s length exports, while simultaneously considering its impact on aggregate arm??s length affiliate sales. Drawing on several strands of firm-level international business (IB) research, we argue that while arm??s length affiliate sales are likely to decline with cultural distance, this is not necessarily the case with arm??s length exports, which may in fact increase with cultural distance.
• Analyzing a panel dataset of US foreign affiliate sales and US exports to unaffiliated parties, we find that cultural distance negatively affects arm??s length affiliate sales but positively affects arm??s length exports. Our study thus shows that the explicit consideration of firm-level entry mode choices helps us better understand and explain macro-level IB activity.

     

What Do HR Managers Really Do?

• The contribution of the HR function in supporting international business operations has received limited attention to date, with even less attention paid to HR roles.
• This article seeks to address this by studying the role of HR managers on international projects.
• We identify five IHR roles: service provider, policy police, strategic partner, change agent; and welfare officer.
• We also identifyhow these roles are enacted, questioning the prevailing divide between strategic and operational roles; and adding another dimension??emotional.
• We also argue that role enactment is context-specific; and show how context constrains as well as enables IHR role enactment.

     

Subsidiary Interdependencies and International Human Resource Management Practices in German MNCs

• Using the resource-based view, this paper links the degree of interdependence that exists between subsidiaries of multinational corporations (MNCs) to the use of various International Human Resource Management (IHRM) practices.
• We assume that in many MNCs this interdependence has increased the need for cross-border coordination.
• We analyze to what extent MNCs use IHRM practices in order to enhance their coordination capability across national borders.
• We present a framework that addresses these effects and empirically test it using data from a questionnaire survey among 142 majority-owned overseas subsidiaries of German MNCs.
• The findings show that the degree of interdependence is related to the level of international experience of staff employed in subsidiaries, the use of third-country nationals, the provision of training, the use of cross-cultural management teams, and the choice of employee evaluation and reward methods.
• We conclude by discussing the implications of our findings for IHRM practitioners and scholars as well as the limitations of our study.

     

The optimization test environment

The Optimization Test Environment is an interface to efficiently test different optimization solvers. It is designed as a tool for both developers of solver software and practitioners who just look for the best solver for their specific problem class. It enables users to:

Choose and compare diverse solver routines;

Organize and solve large test problem sets;

Select interactively subsets of test problem sets;

Perform a statistical analysis of the results, automatically produced as , PDF, and JPG output.

The Optimization Test Environment is free to use for research purposes.     

How Firm Performance Affects Internationalization

• Only a few studies have investigated whether a firm’s performance has an effect on its internationalization. These studies, focusing on actual firm performance, have suggested a resource-based argument and generally found non-significant results.
• In this paper, we argue that relative firm performance is critical in determining a firm’s internationalization because it influences a firm’s attitude toward risk-taking. We apply prospect theory to predict this relationship.
• Using time-series, cross-sectional analysis of 701 Japanese firms from 1993 to 1998, we uncovered an inverted-U shaped relationship between a firm’s relative performance and its degree of internationalization using its historical performance target. As compared to the industry target, relative performance showed a positive impact on a firm’s internationalization.

     

The Effects of Legal, Normative, and Cultural-Cognitive Institutions on Innovation in Technology Alliances

• Adopting an institutional lens, this paper examines the interaction between different levels of legal, normative and cultural-cognitive institutions on the level of innovation associated with the choice of alliance governance mechanism as equity or contractual.
• Using patent data, this paper undertakes multilevel modelling of 314 technology alliance portfolios located in Europe, North America and the Asia-Pacific region.
• Key findings indicate normative and cultural-cognitive institutions do affect the performance outcomes of alliances. Equity alliances provide supporting mechanisms that quell fears about organizational risk in alliances under conditions of uncertainty avoidance as the dominant cultural-cognitive frame, and hence contribute to better innovation performance. Contractual alliances are associated with higher levels of innovation under normative contexts that value collectivism rather than individualism.
• Contrary to expectation, the results do not support the literature of a fit between equity alliances and weak intellectual property rights protection on innovation. However, the presence of highly formalized legal processes for enforcing contracts is associated with higher levels of innovation from alliances.

     

Foreign Direct Investment vs. Foreign Portfolio Investment

• We examine the effect of a country??s governance environment on the foreign investment it attracts. We classify countries based on the dominant mode of governance into three types: (1) rule-based (strong public rule of law), (2) relation-based (weak rule of law and strong informal networks), and (3) family-based (absence of both public rules and informal networks).
• We then examine how different governance types affect foreign investment patterns among 45 countries. Our main argument is that the choice of investment??direct or portfolio??is influenced by the type of property protection associated with different governance modes.
• We find that rule-based countries attract the lowest amount of FDI relative to the total amount of foreign investment, and they have the largest stock market size relative to their economies.
• Our study contributes to the foreign investment literature by bringing the governance environment into the equation and more successfully explaining why some countries have relatively large foreign direct investment ratios and relatively small foreign portfolio investment ratios.

     

Home Region Focus and Technical Efficiency of Multinational Enterprise

• The transaction costs economics (TCE) perspective on regionalization suggests that multinational enterprises (MNEs) would experience advantages from regionalization and, hence, greater technical efficiency from a high home region focus (HRF). We extend this TCE perspective by proposing that whether a regional (i.e., higher HRF) or global (i.e., lower HRF) strategy leads to greater technical efficiency depends on the degree of regional integration (i.e., economic and policy) of the MNEs?? home regions.
• This is the first study in the regional/global strategies literature to analyze the effects of HRF and regional integration (economic and policy) on firms?? technical efficiency performance. We suggest that advantages from regionalization arise when firms align their HRF strategy with the degree of regional integration; disadvantages from regionalization can arise when the two are misaligned.
• Our empirical analysis on a sample of 645 manufacturing Triad MNEs during 2000?C2006 provides overall support for our conceptual framework.