How does experience change firms' foreign investment decisions to non-market events?

We examine how experience with two types of non-market risks (e.g., natural disasters and armed conflicts) changes foreign direct investment (FDI) decisions. Extending research on organizational learning and FDI, we hypothesize that the greater the experience with recent, frequent and high-intensity risk, the more likely that experience can moderate the relationship between non-market risks and firm international expansion. Given a sample of 625 Fortune Global 500 firms and their investments in 117 countries between 1999 and 2008, we find that experience with recent, frequent, and high-intensity risk can change a firm?s FDI decision from risk avoidance to risk management

Marketing as a means to transformative social conflict resolution: lessons from transitioning war economies and the Colombian coffee marketing system

Social conflicts are ubiquitous to the human condition and occur throughout markets, marketing processes, and marketing systems.When unchecked or unmitigated, social conflict can have devastating consequences for consumers, marketers, and societies, especially when conflict escalates to war. In this article, the authors offer a systemic analysis of the Colombian war economy, with its conflicted shadow and coping markets, to show how a growing network of fair-trade coffee actors has played a key role in transitioning the country’s war economy into a peace economy. They particularly draw attention to the sources of conflict in this market and highlight four transition mechanisms — i.e., empowerment, communication, community building and regulation — through which marketers can contribute to peacemaking and thus produce mutually beneficial outcomes for consumers and society. The article concludes with a discussion of implications for marketing theory, practice, and public policy

Multinational enterprises, risk management, and the business and economics of peace

Purpose The purpose of this paper is to reconceptualize how managers of multinational enterprises (MNEs) manage risk, particularly in fragile and/or conflict-affected areas of operation. The authors suggest that MNEs consider reducing risk at its source rather than trying to avoid or react to risks as they occur. By incorporating peacebuilding strategies, managers may not only reduce investment risk but also contribute to stability and prosperity in the communities where they operate, and gain a competitive advantage in doing so. Design/methodology/approach The authors show how firms can take a more holistic approach to working in conflict-affected areas. They do so by overlaying conceptualizations of risk with those of peacebuilding and then use case examples to illustrate how such actions work in practice. Findings Using a series of examples, the authors find that MNEs that incorporate peacebuilding frameworks in their risk calculations in complex settings tend to have a better understanding of local environments and how they affect firm operations and profitability. These same MNEs may hold a long-term advantage over international competitors that do not share the same understanding. Originality/value The authors argue that the study of relationships between international businesses and society in conflict-affected or fragile areas of operation is under-developed and tends to focus on negative (risk-aversion) aspects as opposed to positive (value-added) opportunities. This paper offers new ways in which these relationships can be reconceptualized. The authors’ main takeaway is that a peacebuilding approach does not require corporations to be arbitrators of peace at the expense of profit. Rather, it is instead a broader way to conceptualize and weigh risk when working in the world’s most challenging regions. This approach is more likely to be in the long-term interest of both the firm and the local society where the firm operates

Why and how might firms respond strategically to violent conflict?

The aim of this study is to investigate factors – specifically stakeholder pressures – that may affect the likelihood that firms will respond to violent conflict. Survey and archival data on respondents from 471 multinational and local firms operating in 80 countries were used to explore these issues. Key findings include: (1) local stakeholder pressure is associated with the likelihood that firms will respond directly to violent conflict, collaborating with other organizations or working alone when doing so; and (2) international stakeholder pressure is associated with the likelihood that firms will respond indirectly to violent conflict, collaborating with other organizations or working alone.

MNEs and development: a review and reconceptualization

In this paper, we review and critique two prominent theories in the international business and international economics literatures regarding the role of multinational enterprises (MNEs) in host country development: the "spillovers" perspective on the impact of MNE investment in host countries and the liabilities of foreignness (LOF) view that specifies the constraints MNEs must overcome to succeed in local, developing country markets. We then propose an alternative conceptualization of MNE-host country relations in which MNEs and local nongovernmental organizations (NGOs) pursue collaborative relationships that make a positive, collective contribution to host country development and to MNE and NGO strategic goals in ways that neither sector is positioned to do alone.Economic development Liabilities of foreignness (LOF) Economic spillovers Multinational enterprises (MNEs) Nongovernmental organizations (NGOs)

Private Provision of Infrastructure in Emerging Markets: Do Institutions Matter?

Governments in developing countries have encouraged private sector investment to meet the growing demand for infrastructure. According to institutional theory, the role of institutions is paramount in private sector development. A longitudinal dataset of 40 developing economies between 1990 and 2000 is used to test empirically how different institutional structures affect private investment in infrastructure, in particular its volume and frequency. The results indicate that property rights and bureaucratic quality play a significant role in promoting private infrastructure investment. Interestingly, they also suggest that countries with higher levels of corruption attract greater private participation in infrastructure. Copyright 2006 Overseas Development Institute.