Does National Context Affect Target Firm Employees’ Trust in Acquisitions?

• In this study, we test the assumption that the way target firm employees respond to a takeover is contingent on their national origin.
• The antecedents of target firm member trust in the acquiring firm management were examined in a cross-national sample of German and Singaporean employees using a policy-capturing design.
• Five factors hypothesized to affect target firm member trust after a takeover were found to be significant influences on employees?? trust judgments in a decision-making simulation: (i) combining firms?? collaboration history, (ii) mode of takeover, (iii) whether it was a domestic or cross-border acquisition, (iv) degree of autonomy removal, and (v) attractiveness of the acquiring firm??s human resource policies and reward system. Further analyses suggest that the relative importance of these factors in predicting target firm employees?? reactions to a takeover varies depending on their national origin.
• We conclude that companies engaged in cross-border acquisitions need to consider contingencies in the cultural and institutional contexts in which the acquired firms are embedded and adapt their approaches for integrating them accordingly.

     

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.

     

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.

     

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.

     

Procedural Justice, Not Absorptive Capacity, Matters in Multinational Enterprise ICT Transfers

• This paper empirically tests the effectiveness of information and communications technology (ICT) knowledge transfer and adoption in the multinational enterprise (MNE) as an issue of critical importance to contemporary MNE functioning. In contrast to mainstream thinking on absorptive capacity, but in line with prevailing international business theory, our research supports the proposition that perceptions of procedural justice, rather than absorptive capacity, determine effectiveness, especially in cases of high tacit knowledge transfers.
• Data was collected from senior ICT representatives in 86 Canadian subsidiaries of foreign owned MNEs. Each of these subsidiaries recently experienced a significant ICT transfer imposed by the parent organization.
• Support was found for the main propositions: Procedural justice significantly predicted successful ICT transfer and adoption, while absorptive capacity was not significant. These findings are consistent even when knowledge tacitness was high.
• The perceived success of the ICT transfer as well as its adoption varied widely across these firms. The potential reasons for this divergence in effectiveness are manifold, but our findings suggest that in situations of substantial knowledge tacitness, a higher level of procedural justice, rather than a higher level of absorptive capacity, is critical to effective transfer and adoption.

     

The Impact of Psychic Distance on Chinese Outward Foreign Direct Investments

• The aim of this paper is to investigate the value of the well-known construct of psychic distance, developed to explain the internationalization path of firms from developed countries, for the internationalization of Chinese firms.
• Our research question is: Does psychic distance and its individual stimuli (differences in language, religion, culture, economic development, political systems, education, and geographic distance) explain Chinese investments abroad?
• We test hypotheses on the relation between psychic distance and its stimuli and Chinese outward direct investments with OLS regression analyses.
• We find that Chinese OFDI indeed is influenced by an aggregate construct of psychic distance and by certain psychic distance stimuli, but not by all; in particular, similarities or differences with regard to language and culture, the level of industrialization and the level of democracy relate to Chinese firms’ internationalization.
• Our findings suggest that psychic distance and its stimuli cannot be ignored as explanatory factors for Chinese outward FDI but that the explanatory value of these constructs depends on the context of the phenomenon under study.
• We conclude that it is important to understand how the home country context influences managerial perceptions and thereby patterns of international expansion from different regions.

     

Political Institutional Change, Obsolescing Legitimacy, and Multinational Corporations

• This paper studies the practice of integration of influential host country actors to a multinational corporation as a strategy to decrease problems of legitimacy to the foreign firm before the host country??s society.
• By developing the concept of obsolescing legitimacy, we argue that this strategy provides legitimacy to the foreign firm only in the absence of institutional changes at the macro-political level in the host country. Once these changes take place, an alliance by the multinational to an elite or a political system no longer ruling the host country will become a liability and will generate problems of legitimacy for the multinational.
• We illustrate our argument with the case of the US multinational United Fruit Company in Central America.

     

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.

     

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.

     

Does Centralising Global Account Management Activities in Response to International Retailers Pay Off?

• This study provides insights into how manufacturers adopt their Global Account Management (GAM) activities in response to the increasing expansion of retailers. Specifically, we focus on the manufacturers?? central coordination of two types of GAM activities: strategic and tactical activities.
• We analyse the manufacturers?? associations with international retailers and with GAM effectiveness and efficiency by using data from 172 manufacturers. Moreover, we consider the suppliers?? dependence on their key retail accounts to be an important moderator within the consumer goods sector.
• In particular, manufacturers respond to the centralisation of the retailers?? purchasing activities by centralising strategic GAM activities, such as customer strategy, information processing, or price systems. Additionally, manufacturers respond even stronger by centralising tactical activities, such as category management, marketing, or logistics. Although the centralisation of strategic activities drives GAM effectiveness and efficiency, the centralisation of tactical activities does not. This finding might be explained by the specific context of manufacturer-retailer relations. Finally, we find that, although the decision to centralise GAM activities pays off, the benefits are contingent on the particular type of GAM activity and the level of customer dependency.

     

Progressive Focusing and Trustworthiness in Qualitative Research

• The business and management community increasingly recognises that qualitative research is a ??messy??, non-linear and often unpredictable undertaking. Yet, a considerable proportion of the qualitative research published in top journals is still presented as the result of a linear, predictable research process, thus wrongly suggesting deductive reasoning.
• In this paper, we focus on a particular type of ??messiness?? where during fieldwork, the research context is revealed to be more complex than anticipated, forcing the researcher to gradually refine/shift their focus to reflect ??what really matters??. We adopt Stake??s notion of progressive focusing for this gradual approach.
• Progressive focusing is well-suited to qualitative research in international business requiring complex iteration between theory and data, and the truthful yet coherent presentation of the research process. We propose that this dual challenge of complexity and trustworthiness may be addressed by using computer-assisted qualitative data analysis software (CAQDAS).
• We present conceptual considerations and guidelines and offer a view on a ??messy??, non-linear doctoral research project conducted using a progressive focusing approach, to demonstrate how CAQDAS can help to develop and re-negotiate insights from theory and interview data, as well as enhance trustworthiness, transparency and publication potential.

     

Robust identification of pneumatic servo actuators in the real situations

Intensive research in the field of mathematical modelling of the pneumatic cylinder has shown that its mathematical model is nonlinear and that a lot of important details cannot be included in the model. Selection of the model and the identification method have been conditioned by the following facts:

1. The nonlinear model of the system can be approximated by a linear model with time-variant parameters.
2. There is the influence of the combination of heat coefficient, unknown discharge coefficient and change of temperature on the pneumatic cylinder model. Therefore it is assumed that the parameters of the pneumatic cylinder are random (stochastic parameters).
3. In practical conditions, observations have a non-Gaussian distribution.

Due to the abovementioned reasons, it is assumed that the pneumatic cylinder model is a linear stochastic model with variable parameters. The Masreliez-Martin filter (robust Kalman filter) was used for identification of parameters of the model. For the purpose of increasing the practical value of the filter, the following two heuristic modifications were performed:

1. It was adopted that T(k)=1 holds for the scalar transformation of residuals.
2. Fisher information was approximated by a derivative of the Huber??s function.

The proposed modifications were confirmed through intensive simulations. In order to provide persistent excitation, the autocovariance function ??1/f?? of the signal was used. The behaviour of the new approach to identification of the pneumatic cylinder is illustrated by simulations.     

Management Compensation Systems in MNCs and Domestic Firms

• This is a study of the relationship between institutional settings and managerial compensation systems, based on extensive cross-national survey evidence.
• We compare differences in practices between Multinational Corporations (MNCs) and domestic firms across a range of capitalist archetypes.
• We find that MNCs are more likely to promote compensation systems that incentivise managers in line with organisational performance compared to domestic firms. Our findings also reveal persistent diversity reflecting firm type and institutional setting. We find that the gap between MNCs and domestic firms in terms of the usage of incentive-related compensation is less pronounced in Liberal Market Economies than in other settings. This suggests that it is a combination of being an MNC and the specific home locale that moulds approaches to managerial compensation. This reflects considerable hybridisation of practices within and between settings.

     

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.

     

Mode Combinations and International Operations

• An enduring characteristic of extant literature on foreign operation modes is its discrete choice approach, where companies are assumed to choose one among a small number of distinctive alternatives.
• In this paper, detailed information about the operations of six Norwegian companies in three key markets (China, UK and USA) is used as the basis for an exploration of the extent to which, and how and why, companies combine clearly different foreign operation modes. We examine their use of foreign operation mode combinations within given value activities as well as within given countries.
• The study reveals that companies tend to combine modes of operation; thereby producing unique foreign operation mode ??packages?? for given activities and/or countries, and that the packages are liable to be modified over time??providing a potentially important optional path for international expansion.
• The data show considerable variation across cases; ranging from extensive use of mode combinations to a singular focus on a specific mode of operation. The study contributes to a refinement of our understanding of the path of internationalisation, and throws up a number of awkward theoretical questions about the process.

     

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.

     

How International Firms Conduct Societal Marketing in Emerging Markets

• This study tests the relationship between activities of societal marketing and firms’ CSR legitimacy in terms of corporate social responsibility (CSR). It also examines the effects of the CSR legitimacy on firm performances in marketing. In addition, the study considers the relative importance of different activities of societal marketing.
• Based on data from a large sample of firms operating in both southern and northern China, this study compares the relative importance of three dimensions of societal marketing activities which influence a firm’s CSR legitimacy.
• Different from research findings from developed economies, our data show that the social dimension of societal marketing activities is the most effective when it comes to influencing a firm’s CSR image in an emerging economy. This image, in turn, has a positive effect on its marketing performances.
• This study suggests that, in an emerging economy such as China, firms that pay more attention to the social dimension of societal marketing are likely to be more effective in terms of building CSR legitimacy and achieving good performances.

     

Isomorphic Pressures, Peripheral Product Attributes and Emerging Market Firm Export Performance

• Drawing upon the neo-institutional theory of mimetic isomorphism and the concept of the extended product, we identify and empirically evaluate two potential product strategies that emerging market firms (EMFs) may use to improve their export performance while also addressing the financial, managerial expertise, and international experience limitations that they frequently face.
• Hierarchical regression is used to test our proposed peripheral product adaptation strategies on a unique dataset of 106 Chinese and Romanian exporters.
• We find that EMFs that change either of two visible peripheral product attributes (the brand name or the packaging) to conform to local market norms, on average, are more satisfied with their export performance than those that pursue other strategies. Our results also suggest that changing the brand name to conform to local market norms has more than twice the impact on EMF performance than does changing the packaging.
• Consistent with the tenets of neo-institutional theory, EMFs managers may be able to improve their firms’ export performance by changing the peripheral attributes of their products to conform to local market norms.

     

Born-Globals and Culturally Proximate Markets

• In this paper we focus on the differences between born-globals and older firms. We compare whether cultural proximity is important for born-globals and older firms and whether international or technological knowledge drives their internationalisation. In addition, we compare whether born-globals and older firms are proactive or reactive in their choice of culturally proximate markets.
• Our research suggests that born-globals tend to internationalise rapidly into markets ready to adopt their technology. This is driven by the need to establish a revenue stream (cash flow) as quickly as possible. These born-globals usually seek larger advanced economies, which are often culturally similar (proximate) and offer economies of scale; reducing risk for inexperienced firms. Indeed, born-global firms are more willing than older firms to move from culturally proximate to culturally non-proximate markets very quickly.
• Utilising an abductive approach based on case studies, our findings show that born-globals use their technological knowledge and networks and are proactive when they enter culturally non-proximate markets. Born-globals must assess a new market for its ability to provide a revenue stream very soon after entry. If the culturally proximate market does not offer this, then they will leverage technological knowledge and networks to move rapidly into nearby non-proximate markets where they perceive better opportunities for building a customer base or new funding alternatives to sustain the firm in their early foreign market forays.
• Our research significantly extends theory in highlighting that born-globals rely more on technological experience and display proactive behaviour more than older firms which can draw on previous international experience.

     

The Social Influence of Executive Hubris

• Executive hubris—an important psychological bias—affects the strategic decisions of a firm as well as their implementation. Yet executive hubris brought about by social influence in different cultural environments is not well understood.
• Anchored in the upper echelons theory and the cross-cultural management literature, this study investigated the social influence of executive hubris among peer executives in two different cultural contexts: China and the US.
• Using a large set of survey data on Chinese firms and a large archive of US firm data, we found that the social influence of executive hubris is stronger in the Chinese context than in the US. The social influence among Chinese executives tends to be moderated by their similarity in categorical factors indigenous to the Chinese context: executives who are managing state-owned firms or were politically appointed are more strongly influenced by each other than by those managing non-state-owned firms or were not politically appointed.
• We illustrate that cultural contexts give rise to differences in the social influence of executive hubris.