Local sourcing of multinational enterprises in China

Purpose – Local sourcing from indigenous firms by multinational enterprises (MNEs) is an important channel through which the former may benefit from the positive externalities generated by the latter. The purpose of this study is to analyze the extent and determinants of local sourcing of MNEs. Design/methodology/approach – Employing a survey dataset covering 493 multinational subsidiaries in China during 1999-2005, this paper applies the two-limit Tobit model. Findings – It is found that an MNE's local sourcing decision is influenced by its strategies, characteristics such as size and learning ability and country-of-origin. More specifically, export-orientation strategy, joint venture strategy and networking with local suppliers positively affect local sourcing. Small and autonomous subsidiaries tend to source more locally. Age has a non-linear effect. The importance of these determinants varies with regions. Research limitations/implications – Aiming at capacity building and competitiveness of indigenous firms, the Chinese government has initiated local content requirement. This study shows that such policy intervention could be counterproductive. The creation of a more competitive business environment by the government could promote more linkages. Originality/value – Given its critical role in economic development, local sourcing by MNEs has attracted much attention. Only limited research has been carried out on FDI linkage effects in China, and the location effect on FDI linkages has not been examined. This study aims to fill the gap by using Chinese survey data

Ethics and taxation : a cross-national comparison of UK and Turkish firms

This paper investigates responses to tax related ethical issues facing busines

Strategic Asset Seeking and Innovation Performance: The Role of Innovation Capabilities and Host Country Institutions

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Internationalization strategies of frontier Lusophone-African multinational enterprises: comparative case studies of Angola and Mozambique

Internationalization theories suggest that enterprises from emerging and frontier markets will adopt different entry modes than those in advanced economies. There are very few studies to date, however, examining the process of how multi-national enterprises (MNEs) from frontier markets internationalize or evaluating which factors influence their mode of entry into global markets. This research investigates the internationalization strategies of Lusophone Africa MNEs from Angola and Mozambique, more specifically their entry mode, to expand the framework for entry mode strategies to include the motivations and issues of MNEs from emerging and frontier economies. Surveys, as well as in-depth, in-country, qualitative interviews reveal that these frontier and emerging market MNEs opted for equity-based investment strategies as their preferred mode of entry. A significant group second group opted for e-commerce/e-business strategies, and direct and indirect exports. Finally, a smaller portion of the interviewees chose Greenfield investment as a mode of entry. Many of these MNEs could be classified as born global/INV.https://doi.org/10.1080/15475778.2017.1335127Accepted manuscriptPublished versio

Managerial satisfaction with subsidiary performance; the influence of the parent MNE's capabilities and the subsidiary's environment

Multinational enterprise performance is one of the most researched topics in the strategic management literature over the last thirty years. Despite the proliferation of studies, the dispute over the relation between firms’ international investment activities and corporate performance has not yet reached a consensus. This paper’s contribution is threefold. First, we focus on entry by West European multinational enterprises into Central and East European countries. Second, we develop a multi-theory argument, combining insights from transaction cost, new institutional, behavioral, resource-based and international strategy theories. Third, we estimate the determinants of managerial satisfaction with subsidiary performance with questionnaire data for a sample of 198 subsidiaries.

Export intensity of foreign subsidiaries of multinational enterprises: the role of trade finance availability

We examine the relationship between the role of trade finance availability and the export intensity of foreign subsidiaries of multinational enterprises (MNEs). In developing our hypotheses, we draw upon insights derived from “new” internalisation theory (international business literature) and international trade finance (international economics literature). We empirically test these hypotheses using survey data compiled from subsidiary managers in six ASEAN countries, supplemented with host-country level data. We conceptualise, empirically test, and establish that the subsidiary-level capability in combining and utilising internal and external debts is an important subsidiary-specific advantage to support export intensity. We find that subsidiaries employ intra-firm loans from MNE internal capital markets and, to some extent, bank loans from external financial institutions to boost their export intensity. Subsidiaries may have concerns about foreign exchange risks, but the use of appropriate foreign exchange risk management is positively associated with export intensity. We discuss the implications of our findings for theory and practice

Japan and Japanese firms: historical and modern lessons for international business and economic development

The obsession in both the popular and academic press about Japan, Japanese firms and their management practices lasted until the 1990s, after which there has been an inexplicable absence of curiosity. I argue here that there is still much to learn, not only from their contemporary activity, but from their historical actions. Less developed countries, in particular, can benefit from a careful study of the Meiji era, during which Japan built up the structure, institutions and organizations that underlay its economic success for much of the 20th century, and was a blueprint for many Asian success stories. The Meiji period was crucial in building up of Japan’s location advantages, and the rapidity of the reforms in this period underlined much of its subsequent growth. I also argue that despite Japan’s economic stagnation since the 1990s, its firms have not been stationary. There has been considerable evolution in the management and structure of Japanese firms and its innovation system. Such developments represent a useful preview of challenges ahead for the more advanced emerging economies such as China and India, as well as newer advanced economies, such as Korea

Determinants of Employment Growth at MNEs: Evidence from Egypt, India, South Africa and Vietnam

Foreign investors are expected to contribute to economic development through a variety of channels. However, many foreign investment operations are small, and almost insignificant in their impact on the local environment. An important indication of the potential contribution of foreign investors is thus their employment growth. Employees working for, and trained by, a multinational enterprise may become carriers of new technology and business practices. The more employees receive access to new knowledge, the more they in turn may spread the knowledge across the economy, for instance by setting up their own businesses. In this paper, we make a first step in investigating the determinants of this important mediating variable, employment growth. For a dataset covering four diverse emerging economies, we find that wholly-owned FDI operations have higher employment growth, while local industry characteristics moderate the growth effect.http://deepblue.lib.umich.edu/bitstream/2027.42/40093/3/wp707.pd

Regional Multinationals and the Korean Comestics Industry

This paper analyzes the market penetration and expansion strategy of cosmetics and toiletries multinational enterprises (MNEs) in South Korea from the perspective of regional strategy as developed recently by Rugman. We find that MNEs have different market entry and expansion strategies in the home region and in the foreign region. Home region MNEs (Japanese MNEs in this case), in general, utilize their firm-specific advantages (FSAs) better than foreign region MNEs (European and MNEs from the Americas in this case). Due to differences in transaction costs, home region MNEs exploit downstream FSAs while foreign region MNEs develop upstream FSAs. Market similarity also leads to a greater incentive to operate in the home region rather than in foreign regions. The home region effect significantly increases the likelihood of entry into foreign markets as the host country’s “diamond” significantly affects the market entry strategies of MNEs.regional strategy, market penetration, cosmetics industry, double diamond, South Korea

Reconciling internalization theory and the eclectic paradigm

The eclectic paradigm of Dunning (1980) (with its OLI and four motives for FDI framework) can be reconciled with the firm and country matrix of Rugman (1981). However, the fit is not perfect. The main reason for misalignment is that Dunning is focused upon outward FDI into host economies, whereas Rugman’s matrix is for firm-level strategy covering MNE activity in both home and host countries