Explaining foreign firms' approaches to corporate political activity in emerging economies: the effects of resource criticality, product diversification, inter-subsidiary integration, and business ties

Despite the increasing scope for transactional approaches to corporate political activity (CPA) in emerging markets and rising concerns about the use of relational approaches, foreign firms in emerging economies appear to be reluctant to adopt transactional approaches to CPA. Using Resource Dependence theory we argue that criticality of resources, product diversification, integration with other foreign subsidiaries, and business ties may explain why foreign firms adopt a transactional or a relational approach to CPA. We test our hypotheses using a sample of 105 subsidiaries of foreign firms in India. We find that unrelated diversification and close integration with other subsidiaries of their parent firm makes subsidiaries more likely to adopt a transactional approach, whereas local resource criticality and ties to local businesses makes subsidiaries less likely to use a transactional approach to CPA. Our findings enhance our understanding of the factors that determine foreign firms’ choice of approaches to CPA in emerging economies

Home institutional imprinting and lobbying expenditure of foreign firms: moderating effects of experience and technological intensity

The issue of whether a firm’s ‘home’ environment influences its nonmarket activities in a ‘host’ country is being increasingly discussed in the international business literature. In this paper, we use institutional and organisational imprinting theories to argue that multinational enterprises (MNEs) founded in countries with stronger regulatory institutions are likely to spend more on lobbying in a host country as compared to MNEs founded in countries with weaker regulatory institutions. We also argue that this effect is moderated by the MNE’s overall experience, its experience within the host country, and its technological intensity. We test our hypotheses using a sample of 378 foreign MNEs (among the largest 500) operating in the United States (U.S.), spanning the 8 year period 2006-2013, and representing 29 home countries. Our results support our hypothesis on the relationship between home-institutional imprinting and overseas lobbying expenditure, as described above. Our results also support our arguments that MNEs’ overall experience and technological intensity reduce the imprinting effect of home institutions on lobbying expenditure; however, our moderating effect of host-country experience on this relationship is not supported

Regulatory institutional distance and MNCs' subsidiary performance: climbing up Vs. climbing down the institutional ladder

We investigate the possibility of regulatory institutional distance exerting an asymmetric effect on multinational corporations' (MNCs') subsidiary performance depending on the direction of institutional distance. We use the term ‘institutional ladder’ to differentiate between upward distance, referred to as when the subsidiary is operating in a relatively stronger institutional environment than its parent-firm's home country, and downward distance for vice versa. Combining institutional theory with organisational imprinting and learning perspectives, we argue that the implications of regulatory institutional distance on subsidiary performance are relatively more positive (or less negative) when MNCs are climbing down the institutional ladder as compared to when MNCs are climbing up the institutional ladder. We also argue that subsidiary ownership strategy – i.e. the choice of a wholly owned subsidiary (WOS) versus joint venture (JV) – moderates the above-mentioned implications of institutional distance on subsidiary performance. We test these hypotheses based on a panel data-set of 1936 foreign subsidiaries representing 70 host countries and 66 home countries and spanning the 12-year period: 2002–2013

Institutional distance and foreign subsidiary performance in emerging markets: moderating effects of ownership strategy and host-country experience

Institutional distance has been known to be an important driver of Multinational Enterprises’ strategies and performance in host countries. Based on a large panel dataset of 10562 firms operating in 17 emerging markets and spanning 80 home countries, we re-examine the relationship described by Gaur and Lu (2007) between regulatory institutional distance and subsidiary performance. We extend this research by (1) examining this relationship in the context of emerging markets, (2) examining the moderating effects of ownership strategy and host-country experience within the context of emerging markets and (3) accounting for a greater variety of institutions by including a large number of home and host countries. We find that institutional distance negatively affects subsidiary performance in emerging markets. Our findings also show that the negative effects of institutional distance on subsidiary performance are lesser for subsidiaries with partial ownership (than for subsidiaries with full ownership) and for subsidiaries with greater host-country experience. We discuss our findings with respect to Gaur and Lu’s model, which explores the relationships between these variables in a general context

Corporate political strategies of multinational enterprises in emerging economies

No description supplie

Political CSR in India: analysis of Indian participants in the United Nations Global Compact in the pre and post mandate period

Research on the political connotations of Corporate Social Responsibility (CSR) has been gaining momentum. Political CSR includes social and philanthropic activities undertaken by firms that enable them to access political stakeholders while safeguarding their legitimacy and reputation at the same time. One such activity includes participation in the United Nations Global Compact (UNGC), which, since its inception in 2000, has provided an opportunity for organisations to voluntarily participate in addressing social challenges from a global multi-stakeholder perspective. However, governments in several emerging-market countries have been making CSR mandatory to address social and environmental issues at a local (or domestic) level. In this study, I analyse the Indian participants in the United Nations Global Compact in the pre and post CSR mandate period (passing of the Section 135 of the Companies Act, 2013). By doing so, this study aims to explore how the CSR mandate could potentially have implications on Political CSR

The effect of resource tangibility, unrelated diversification and business ties on MNE-subsidiaries’ non-market approaches in emerging economies

No description supplie

Corporate political strategies of MNEs – a resource dependence perspective

No description supplie