Search phase and the openness effects in MNEs

In this work we focus on the search phase that precedes the knowledge transfer process. We argue that it is important to closely analyze this phase as, the common understanding of problem developed in this phase has a significant im-pact on the stages that follow. In this analysis we focus on two key factors: open-ness and the richness of media of communication that foster the openness within Multinational Corporation (MNC) environment. Furthermore, we also try to ex-plore the degree of knowledge transfer due to an open environment. Openness is a change that can be induced at the MNE level by the Headquarter (HQ), the effects of this change are behavioral in nature and can be observed at the subsidiary level in the type of media of communication usedIn this work we focus on the search phase that precedes the knowledge transfer process. We argue that it is important to closely analyze this phase as, the common understanding of problem developed in this phase has a significant im-pact on the stages that follow. In this analysis we focus on two key factors: open-ness and the richness of media of communication that foster the openness within Multinational Corporation (MNC) environment. Furthermore, we also try to ex-plore the degree of knowledge transfer due to an open environment. Openness is a change that can be induced at the MNE level by the Headquarter (HQ), the effects of this change are behavioral in nature and can be observed at the subsidiary level in the type of media of communication usedMonograph's chapter

Climate risk and private participation projects in infrastructure: Mitigating the impact of locational (dis)advantages

Purpose The purpose of this paper is to investigate the impact of climate risk on the success vs failure of foreign direct investments (FDIs) in private participation infrastructure (PPI) projects. The authors also consider the extent to which project-level characteristics mitigate such risks. Design/methodology/approach The authors study a sample from the World Bank covering 18,846 projects in 111 countries from 2004 to 2013. The authors apply logistic regressions to determine the impact of climate risk and mitigating project characteristics on project failure. Findings The authors find that higher levels of climate risk at the host country level are associated with higher risk of project failure. The authors also find that the disadvantage of higher climate risk is weakened by two project-level characteristics, namely, the inclusion of host government ownership in the project consortium and the size of the project. Originality/value The research contributes to the current debate about the impact of climate risks on international business ventures. The authors demonstrate that climate risk is a locational disadvantage for FDI in PPI projects. The authors establish that the “fittest” projects in locations characterized by higher climate risk tend to be those that involve host government participation in their ownership structure as well as those of larger sizes

External relations, regional productivity, and exogenous shocks: lessons from the Italian experience

This study provides novel insights into the debate concerning the external drivers of productivity at local (NUTS-3) level. In particular, it explores the role played by global production networks, measured through ownership ties among multinational firms and their subsidiaries abroad, in shaping patterns of productivity growth of local economies. Focusing on the Italian experience and using spatial econometrics techniques, the article demonstrates that external relations play a crucial role in sustaining the productivity of Italian provinces, even during periods of severe economic downturns, like the Great Recession. In detail, productivity growth is positively correlated with the Intensity of the networks established by multinational firms and their geographical dispersion

Re-appraising the influence of location advantages in the political risk and foreign direct investment relationship: A conception

This paper takes a conceptual step to analyze the link between Foreign Direct Investment (FDI) and political risk by extending to include location and its potential advantages as possible risk mitigating factors earlier neglected by international investors and international business scholars.Where location factors are beneficial they are expected to override the mounting political risks as the best risk hedging mechanism. We re-appraised this relationship by supporting the existing literature on location dynamics, its determinants and decisions on international investment.The paper further contribute to literature by supporting the clamor for moving away from region or country analysis to within country assessment in order to favor available location benefits considered crucial in mitigating political risk.The growing relevance of within country analysis can lead to finding how best to minimize political risk impact on FDI inflow

Internationalization in the information age: a new era for places, firms and international business networks?

The new techno-economic paradigm of the information age has brought about new structures and processes in international business (IB). In this article, we examine the changing nature of the competitive advantages of places, the competitive advantages and strategies of firms, and the governance structure of IB networks in what has also been called the third industrial revolution. These three areas of change in IB activities can be mapped respectively to the location (L), ownership (O) and internalization (I) advantages of the eclectic paradigm. We interpret these OLI factors as dynamic constructs in order to depict analytically the shifts in the IB environment and their implications for IB

Advanced feature selection to study the internationalization strategy of enterprises

Firms face an increasingly complex economic and financial environment in which the access to international networks and markets is crucial. To be successful, companies need to understand the role of internationalization determinants such as bilateral psychic distance, experience, etc. Cutting-edge feature selection methods are applied in the present paper and compared to previous results to gain deep knowledge about strategies for Foreign Direct Investment. More precisely, evolutionary feature selection, addressed from the wrapper approach, is applied with two different classifiers as the fitness function: Bagged Trees and Extreme Learning Machines. The proposed intelligent system is validated when applied to real-life data from Spanish Multinational Enterprises (MNEs). These data were extracted from databases belonging to the Spanish Ministry of Industry, Tourism, and Trade. As a result, interesting conclusions are derived about the key features driving to the internationalization of the companies under study. This is the first time that such outcomes are obtained by an intelligent system on internationalization data.The work was conducted during the research stays of Álvaro Herrero and Roberto Alcalde at KEDGE Business School in Bordeaux (France

Does Excellence in Academic Research Attract Foreign R&D?.

We examine the role of host countries’ academic research strengths in global R&D location decisions by multinational firms. While we expect that a firm’s propensity to perform R&D in a host country increases with the strength of local academic research, firms are expected to be heterogeneously positioned to benefit from academic research strengths due to differences in the capacity to absorb and utilize scientific knowledge. We find support for these conjectures in an analysis of foreign R&D activities in 40 host countries and 30 technology fields by 176 leading European, US and Japanese firms during the periods 1995-1998 and 1999-2002. Controlling for a wide range of host country factors, the number of relevant ISI publications by scientists based in the host country has a substantial positive impact on the propensity to conduct foreign R&D. The effect of academic research is significantly larger for firms with a stronger science orientation in R&D - as indicated by citations to scientific literature in prior patents. For host countries with a strong relevant science base, this greater responsiveness of science oriented firms more than offsets a generally greater inclination to concentrate R&D at home. The findings appear robust across a variety of specifications.

Does distance matter in explaining international expansion? Evidence from the global mobile telecommunications industry [¿Cómo afecta la distancia a la expansión internacional de las empresas? Evidencia en la industria de las telecomunicaciones móviles]

The aim of this study is to analyse how the distance between countries determines host country selection. To explain foreign market entry we use two dimensions of the distance between countries: (1) geographic distance and (2) historical ties between the home and the host countries. We carry out descriptive, empirical and case study analyses in the mobile telecommunications industry to study how these two dimensions of distance determine the entrance of firms in foreign countries. Our work shows that geographic distance negatively affects the entrance of firms in host countries while historical ties between countries encourage firms to enter the host country. Moreover, historical ties positively moderate the relationship between geographic distance and market entry. El objetivo de este trabajo es estudiar el efecto que la distancia entre los países tiene sobre la selección del país de destino. En particular, hacemos uso de dos dimensiones de la distancia entre el país de origen y el de destino para explicar la entrada: (1) la dimensión geográfica y (2) la existencia de lazos históricos. Tomando como referencia la industria de las telecomunicaciones móviles, ofrecemos una aproximación en tres etapas a través de un estudio descriptivo en profundidad, un análisis empírico y una presentación de tres casos paradigmáticos en el sector. Nuestros resultados muestran que las empresas son más propensas a entrar en países que presentan una menor distancia geográfica o histórica. Además, concluimos que los lazos históricos moderan positivamente la relación entre la distancia geográfica y la entrada