Global, local, or regional? The locus of MNE strategies

This paper provides an overview of the main insights arising from the ‘regional strategy’ literature. It also develops the contours of a new, rich research agenda for future international strategy scholarship, whereby the region should be introduced as an explicit, third geographic level of analysis, in addition to the country-level and the global level. Regional strategy analysis requires a fundamental rethink of mainstream theories in the international strategy sphere. This rethink involves, inter alia, internalization theory, with its resource-based view and transaction cost economics components, as well as the integration (I) – national responsiveness (NR) framework

Quantifying MNC Geographic Scope

This paper proposes a multidimensional index of regional and global orientation which can be used in confirmatory studies with econometric methodologies. Unlike extant measures, the index is objectively scaled and controls for home country orientation and market size differences. The index is shown to be consistent with models of internationalization that incorporate different assumptions about strategic choice and global competition. Preliminary results show that large multinationals follow home region oriented internationalization paths, although much of the regional effect reported by previous studies in fact reflects strong home country biases. Keywords: globalization; regional integration; global strategy; regional strategy; local strategy; triad; liability of foreignnes

Earlier Research and the Role of Frictions

This paper provides a counterpoint to Buckley and Hashai’s paper “Is competitive advantage a necessary condition for the emergence of the Multinational Enterprise?”. We agree with their conclusion that it is, in fact, not a necessary condition, but argue that the theoretical reasons behind this are different and more diverse than the ones they propose. We suggest that much extant economic theory is in fact consistent with their view that firms may internationalize without owning or achieving competitive advantages, and model various other ways in which imperfections can drive their overall result. We strongly applaud Buckley and Hashai’s attempt to add more rigor to International Business theory and call for future work to extend this debate

Corporate social responsibility in the global value chain: a bargaining perspective

Breaches of corporate social responsibility (CSR) in global value chains (GVCs) pose a managerial challenge for multinational enterprises (MNEs) and threaten both their reputations and global sustainability. While an MNE-centric perspective on these issues has dominated existing international business research, we show that a dynamic view of bargaining among actors in the GVC can yield novel insights. We draw on coalitional game theory and develop a model where an MNE collaborates, monitors, and negotiates prices with a supplier whose CSR breaches may be revealed by the MNE, external agents, or remain hidden. Our model illustrates how MNEs may face a hold-up problem when irresponsible actions by suppliers are made public, and the suppliers have the power to engage in opportunistic renegotiation. Interestingly, we show that greater monitoring by MNEs, if not combined with specific strategies, can have negative consequences by weakening the MNE's bargaining position and, in some cases, even prompting more irresponsible actions by the suppliers. Our model advances international business research on GVC sustainability and has important implications for managers and researchers alike

How do we capture "Global Specialization" when measuring firms’ degree of internationalization?

The IB literature informs us of several ways to measure firms’ degree of internationalization. In this paper we make the argument that in fact none of the existing indices really measure firms’ degree of "global specialization", that is, to what extent their allocation of resources is multidomestic or global. As argued, all the existing measures may gauge a purely multidomestic firm as having a high degree of internationalization, whereas a truly global firm may be ranked low. In order to remedy this we introduce a complementary index measuring how firms are configuring their value chains – whether they are replicating value chain activities from country to country or locating them in globally specialized units in order to exploit an international division of labor. In addition to mathematical modeling and numerical examples, we examine the relevance of the new index of global specialization on data of Danish MNCs by looking at the correlation between the new global specialization index and existing indices of firms’ degree of internationalization. We find that the index is able to identify a distinct group of firms with significantly higher degrees of global value chain configuration. Key words: Internationalization, value chain, global configuration. JEL Codes: F02, F23, L22, L2

Procedural Justice Constrains Harmful and Benefical Headquarters Intervention

Multi-business firms should design the task portfolio of their headquarters (HQ) and the way HQ tasks are carried out so that net value creation results. While the strategic management literature has emphasized such parenting benefits, less attention has been paid to the costs that may inadvertently be caused by HQ actions. Using a simple game theory model, we analyze the motivational costs that may result from HQ intervention in subunits. Along the lines of the procedural justice literature, we identify the conditions under which these costs may be influenced by the existence of fairness expectations among subunit managers. Our analysis of the dynamic game between HQ and subunits has novel and non-intuitive results. For example, we find that good parenting may involve forgoing opportunities for value-creation, and that procedural justice systems may sometimes be counterproductive. Our findings contribute to both the HQ and the procedural justice literatures

Strategic Belief Management

While (managerial) beliefs are central to many aspects of strategic organization, interactive beliefs are almost entirely neglected, save for some game theory treatments. In an increasingly connected and networked economy, firms confront coordination problems that arise because of network effects. The capability to manage beliefs will increasingly be a strategic one, a key source of wealth creation, and a key research area for strategic organization scholars. KEYWORDS: Interactive beliefs, coordination, network economy, common knowledge. JEL CODE: D84, M3