The organizational and geographical boundaries of the firm: Focus on labour as a major stakeholder

© 2017 Emerald Publishing Limited. Purpose: This paper aims to analyse the organizational and geographical (by nation-states) boundaries of the firm and their impact on labour and to develop a theoretical framework in which firms’ boundaries are analysed from the point of view of labour as a main stakeholder in the firm. Design/methodology/approach: The paper considers the boundaries in terms of: perspectives (legal/proprietary, responsibility and control); stakeholders (shareholders and managers as well as labour, governments and suppliers) and dimensions (organization of production, geographical/by nation-state and sectoral). The paper analyses various organizational forms of production in terms of control (over labour process and brand), responsibility for labour employed across the value chain and labour bargaining power. The firm is seen in the context of labour as main stakeholder and of strategic control versus the property rights view of the firm. The paper contains references to some real-life cases which support the arguments developed at the theoretical level. Findings: In terms of organizational boundaries, the paper analyses hybrid forms of firm organization and their implications for the position of labour. In the context of geographical boundaries, conclusions are drawn on the impact of transnational corporations (TNCs)’ direct activities on labour. Changes in organizational and geographical boundaries are seen as strategic moves that lead to the fragmentation of labour and to the weakening of its bargaining position. There is an analysis of the role of nation-state regulatory regimes in creating opportunities for TNCs’ advantages towards labour. The basic pillars of this theoretical approach are emphasis on labour as a main stakeholder as well as one of the main actors towards whom firms develop strategies and who, in turn, develops countervailing strategies; and the assignation of responsibility for labour over that part of the value chain – which could be the whole of it – over which the firm exercises strategic control. Research limitations/implications: More case study work would further support the arguments in the paper and lead to refinements of the theory. Social implications: For labour, cross-country strategies are developed, and it is argued that the principal firm should take responsibility for the labour force on the basis of the “control” perspective rather than the “legal/proprietary” one. At the macro level, it could be argued for policies that lead to more homogeneous regulatory regimes across countries and in particular within the EU. There are implications for the strategies of trade unions within and across countries. There is also a call for overcoming academic disciplinary boundaries in research specifically those between economics, business strategy and sociology of labour and industrial relations. Originality/value: The work puts labour at the forefront of analysis in the boundaries of the firm. It develops a theoretical framework for this analysis and for its policy implications including policies by trade unions

The organizational and geographical boundaries of the firm: strategic and policy issues for labour and governments

Analysis of the firm’s boundaries in terms of: perspectives – legal/proprietary; responsibility; control - ; stakeholders – shareholders and managers but also others and specifically labour and governments -; dimensions – organization of production; geographical/by nation-state; sectoral -. The organization of production in hierarchical as well as in a variety of hybrid forms and to the position of labour in the context of these hybrid forms. The geographical – by nation-states - dimension leads to a discussion of transnational companies, the advantages they derive from operating across borders and the source of such advantages. Detailed analysis of the position of two stakeholders vis-à-vis the changing boundaries of the firm: labour and governments. How organizational and geographical fragmentation of production lead to a more fragmented and weaker labour force. The geographical dimension and the position of governments in relation to transnational companies. How the changing boundaries of the firm particularly with respect to organizational forms and to the geography of direct foreign operations by TNCs put both labour and governments in a weaker position

Digitalization and the transnational corporations

Starting from an analysis of the impact of digitalization on transnationality, the paper examines the impact of the rise of ICT and digital TNCs for theory and policy. Conclusions include the following. (1) The rise of Tech - ICT and digital - TNCs makes it compelling that economists devote more time to the incorporation of the study of TNCs within the body of economics. (2) The theory of the TNC in itself may need reconsideration on the basis of changes in the real economy in terms of the growing relevance of digital TNCs. They pose theory challenges in that the foreign assets component of international production is becoming less relevant while liquid assets are increasing. We need to rethink our conceptualization and definition of TNCs to fit in with the growing digitalization of the economy. (3) There are also great policy challenges deriving from the differences in regulatory regimes between different nation-states and characteristics of these TNCs. These challenges allow TNCs in general - and the digital TNCs to an even higher extent – to: minimize their tax liability; avoid responsibility for their workforce; affect the democratic processes across countries

The impact of internationalization on innovation at countries’ level. The role of absorptive capacity

This paper analyses the impact of internationalization on the innovation performance of 40 countries. Internationalization variables are represented by outward and inward foreign direct investment, and by imports and exports; innovation is proxied with triadic patent applications. We take account of the influence of absorptive capacity – in both a linear and non-linear form - in the relationship between internationalization and innovation. Our results suggest that outward FDI is positively associated with patenting. Countries with high absorptive capacity benefit more, though there are diminishing returns. We find there is a negative association between inward FDI and patenting in countries with low absorptive capacity where FDI may displace local infant activities and stun further development of related local knowledge. We find support for the view that the innovation performance of countries with low absorptive capacity benefits from imports as well as from exports

Global investments and regional development trajectories: the missing links

Global investments and regional development trajectories: the missing links. Regional Studies. Regional economic development has been long conceptualized as a non-linear, interactive and socially embedded process: these features were traditionally regarded as spatially mediated and highly localized. However, unprecedentedly fast technological change coupled with the intensification of global economic integration has spurred the need to place regional development in a truly open and interdependent framework. Despite substantial progress in the academic literature, rethinking regional development in this perspective still presents a number of challenges in terms of concepts, empirical evidence and policy approaches. Following an interdisciplinary assessment of how openness and connectivity – proxied by one of the many cross-border flows, i.e., global investments – interact with regional economic development trajectories, this paper presents a picture of the geography of foreign investments from and to the European regions and its change after the financial and economic crisis in 2008. This simple exercise sheds some initial light on how the operationalization of regional connectivity can improve one’s empirical understanding of the evolution of regional economies and the policy approach needed to support their reaction to change

Changing perspectives on the internationalization of R&D and innovation by multinational enterprises: a review of the literature

Internationalization of R&D and innovation by Multinational Enterprises (MNEs) has undergone a gradual and comprehensive change in perspective over the past 50 years. From sporadic works in the late 1950s and in the 1960s, it became a systematically analysed topic in the 1970s, starting with pioneering reports and “foundation texts”. Our review unfolds the theoretical and empirical evolution of the literature from dyadic interpretations of centralization versus decentralization of R&D by MNEs to more comprehensive frameworks, wherein established MNEs from Advanced Economies still play a pivotal role, but new players and places also emerge in the global generation and diffusion of knowledge. Hence views of R&D internationalization increasingly rely on concepts, ideas and methods from IB and other related disciplines such as industrial organization, international economics and economic geography. Two main findings are highlighted. First, scholarly research pays an increasing attention to the network-like characteristics of international R&D activities. Second, different streams of literature have emphasized the role of location- specific factors in R&D internationalization. The increasing emphasis on these aspects has created new research opportunities in some key areas, including inter alia: cross-border knowledge sourcing strategies, changes in the geography of R&D and innovation, and the international fragmentation of production and R&D activities

The organizational and geographical boundaries of the firm: Focus on labour as a major stakeholder

© 2017 Emerald Publishing Limited. Purpose: This paper aims to analyse the organizational and geographical (by nation-states) boundaries of the firm and their impact on labour and to develop a theoretical framework in which firms’ boundaries are analysed from the point of view of labour as a main stakeholder in the firm. Design/methodology/approach: The paper considers the boundaries in terms of: perspectives (legal/proprietary, responsibility and control); stakeholders (shareholders and managers as well as labour, governments and suppliers) and dimensions (organization of production, geographical/by nation-state and sectoral). The paper analyses various organizational forms of production in terms of control (over labour process and brand), responsibility for labour employed across the value chain and labour bargaining power. The firm is seen in the context of labour as main stakeholder and of strategic control versus the property rights view of the firm. The paper contains references to some real-life cases which support the arguments developed at the theoretical level. Findings: In terms of organizational boundaries, the paper analyses hybrid forms of firm organization and their implications for the position of labour. In the context of geographical boundaries, conclusions are drawn on the impact of transnational corporations (TNCs)’ direct activities on labour. Changes in organizational and geographical boundaries are seen as strategic moves that lead to the fragmentation of labour and to the weakening of its bargaining position. There is an analysis of the role of nation-state regulatory regimes in creating opportunities for TNCs’ advantages towards labour. The basic pillars of this theoretical approach are emphasis on labour as a main stakeholder as well as one of the main actors towards whom firms develop strategies and who, in turn, develops countervailing strategies; and the assignation of responsibility for labour over that part of the value chain – which could be the whole of it – over which the firm exercises strategic control. Research limitations/implications: More case study work would further support the arguments in the paper and lead to refinements of the theory. Social implications: For labour, cross-country strategies are developed, and it is argued that the principal firm should take responsibility for the labour force on the basis of the “control” perspective rather than the “legal/proprietary” one. At the macro level, it could be argued for policies that lead to more homogeneous regulatory regimes across countries and in particular within the EU. There are implications for the strategies of trade unions within and across countries. There is also a call for overcoming academic disciplinary boundaries in research specifically those between economics, business strategy and sociology of labour and industrial relations. Originality/value: The work puts labour at the forefront of analysis in the boundaries of the firm. It develops a theoretical framework for this analysis and for its policy implications including policies by trade unions

What do Internationalisation Indices Measure?

The paper analyses two different indicators of internationalisation. The transnationality index developed by the UNCTAD links the internationalisation process to the dichotomy home versus foreign production. The network spread index considers internationalisation in relation to the number of countries in which the companies have production facilities. Following an introduction to the two indicators, estimates are considered and comparisons made at the level of countries and industries. More detailed data are developed for nine of the largest UK TNCs on both indicators. An analysis of meaning and significance and of the relative advantages of the two indicators follows.internationalisation indices

Earnings From Foreign Direct Investment: Possible Effects on Domestic Economies and Patterns in EU Countries

The paper deals with the flow of earnings from inward and outward foreign direct investment. The paper starts with a review of some works which stress the intertemporal effects on the balance of payments and from it on the real sector of the economy. This is designed to give an introduction to the possible effects of earnings. Patterns of direct investment and earnings in the EU as a whole and in each member country are analysed.. The EU countries show different patterns with regard to both the size and the underlying trends of net incomes from foreign direct investment. This is followed by a more detailed analysis of the UK earnings position with each country of the European Unionforeign direct investment effects on EU economies