The Impact of Formal and Informal Institutional Distances on MNE Corporate Social Performance

Does country selection affect the corporate social performance (CSP) of multinational enterprises (MNEs)? In this study we suggest that greater institutional diversity within an MNE’s operating environment may adversely affect its ability to maintain higher levels of CSP. Using institutional distance and organizational learning as our theoretical lenses, we investigate the impact of institutional differences on CSP. We conceptualize the MNE as a unique portfolio of locations and use the MNE’s entire operating footprint to explore the effects of average portfolio formal and informal institutional distances on CSP. We hypothesize and find that firms with greater average informal institutional distance within their portfolios have lower overall levels of CSP. Findings also confirm the moderating influence of formal institutional distance; greater formal institutional distance within the MNE portfolio reduces the CSP benefits of international scope

Stakeholder Management

Individuals and groups who are impacted by a work outcome can be considered stakeholders. As the name implies, stakeholders have a ‘stake’ in or a claim to some aspect of an organization’s efforts. In the broadest sense, a corporation’s stakeholders are comprised of “any individual or group who can affect or is affected by the achievement of the firm’s objectives” (Freeman, 1984, p. 46). This chapter first considers the concept of stakeholder at the firm level, examining and contrasting the stakeholder orientation with other more traditional views of the firm. Upon this foundation stakeholder principles will be applied to a functional management level (e.g., managing a group, department, project, etc.). The intent is to reinforce a principle-driven but very practical and relevant set of stakeholder management principles and techniques that the reader can apply at multiple levels and contexts of management

Major Theories of Business Strategy

This chapter summarizes some of the most influential theories of business strategy, tracing their intellectual development within the strategic literature. A framework for comparing and contrasting the different theories of business strategy is introduced by categorizing individual theories into four dominant theoretical paradigms: product/market-based, industry-based, resource-based, and competition-based theories. Key thought leaders, basic premises, and limitations of each strategy are discussed

Exploring corruption impacts on MNE performance through the lens of risk and uncertainty

Purpose: This paper aims to apply a risk/uncertainty lens to corruption to explore how different types of corruption (formal vs informal) in a multinational enterprise’s (MNE) operating environment have different relationships to firm performance. Design/methodology/approach: This paper uses a portfolio approach to measure the formal and informal corruption impacts of an MNE’s entire set of operating locations and test the hypotheses using both accounting- and market-based measures of performance on a sample of 648 firms. Findings: This study hypothesizes and finds that because formal corruption represents risk, it is typically included in the a priori evaluations of trade-offs between market attractiveness and costs made by MNEs prior to market entry, higher formal corruption in the firm’s environment is positively related to its financial performance. Conversely, the uncertainty associated with the generally intangible and pervasive nature of informal corruption prevents similar, accurate cost consideration before entering the market, resulting in a negative relationship between higher levels of informal corruption and firm performance. Originality/value: This study provides unique empirical support for the notion that MNEs can both gain and lose by investing in corrupt institutional environments, grounded in an understanding of the differences between risk and uncertainty, reinforcing the importance of considering the potential impacts of both the formal and informal dimensions of corruption in a firm’s operating environment

The Marketing Ethics Course: Current State and Future Directions

Many of the critical issues facing modern businesses can be considered marketing ethics issues. It follows that as the field of business ethics has evolved, marketing has played a key role in the development of business ethics education. Despite a general trend of increasingly larger amounts of ethical content included in business curricula, prior studies have shown there are no significant numbers of courses specifically designed with a focus on marketing ethics in university business programs. This exploratory study examines the current implementation of the stand-alone marketing ethics course. Using a comparative case study method, we describe a variety of different approaches currently being used in the definition and delivery of stand-alone marketing ethics courses. We offer recommendations for the future of the marketing ethics course and discuss related research opportunities. Our goal is to inform and inspire further development and refinement of marketing curricula that incorporate marketing ethics content

Top management team diversity, individualism–collectivism, and MNE performance

Existing theories of diversity typically focus on a limited range of usually American research settings and on a relatively narrow range of types of diversity. Here, we examine a less commonly used measure of diversity, top management team (TMT) functional diversity, for a sample of non-US multinational enterprises (MNEs) from a cross-cultural perspective. We theorize and empirically test the notion that the individualism–collectivism dimension of national culture moderates the relationship between TMT diversity (measured by functional heterogeneity) and firm performance such that greater functional diversity among TMTs in collectivistic national cultures improves firm performance, while greater functional diversity among TMTs in individualistic national cultures weakens MNE performance. Our empirical results based on a sample of MNEs from 25 countries support our hypotheses. The relationship between TMT functional heterogeneity and firm performance is strongly negative in highly individualistic national cultures but positive in collectivistic national cultures. Managerial implications, limitations, and future research directions are discussed

RIMS: A new approach to measuring firm internationalization

Understanding the antecedents to, and consequences of, a firm\u27s degree of internationalization is integral to international business research. In order to be accepted by scholars, empirical research that tests hypotheses regarding drivers and / or consequences of firm internationalization needs to use a valid measure of firm internationalization. In this paper, we develop a new measure, the ratio of international market shares (RIMS); RIMS measures a firm\u27s degree of conformance to the theoretically grounded characteristics of a maximally internationalized global firm. RIMS is theoretically and empirically compared to three widely used measures of firm internationalization: foreign sales to total sales (FSTS), international diversification, and international scope. Each of the three is shown to have serious limitations while RIMS does not. In addition to being theoretically based, RIMS also has the advantages that it: measures the degree to which a firm has penetrated the rest of the world\u27s market relative to the degree it has penetrated its primary market; captures the combined effects of the breadth and average depth of internationalization; is easy to calculate; is easy to interpret, and is calculable for more firms than measures of diversification or FSTS. All four measures are tested on a sample of large manufacturing firms. and is calculable for more firms than measures of diversification or FSTS. All four measures are tested on a sample of large manufacturing firms. and is calculable for more firms than measures of diversification or FSTS. All four measures are tested on a sample of large manufacturing firms

Isomorphic Pressures, Peripheral Product Attributes and Emerging Market Firm Export Performance

The article discusses the study on the use of potential product strategies to improve the export performance of emerging market firms (EMF). The study uses hierarchical regression analysis to evaluate the adaptation strategies based on proposed peripheral products. The result of the study shows that EMFs that modify their packaging or brand name to adapt with the local market norms, are highly satisfied to the performance of their export compare to those that use different strategies