MNEs in the Digital Economy

Technological advances are changing many aspects of business activity and in particular the meaning of distance and geography. Such changes are likely to have profound impact on firms whose activities take place over distance, namely MNEs. Using the motivations for FDI identified in the literature as a theoretical framework, this study examines the motivations of firms producing and selling products that can be transferred electronically in real time and at little or no cost, to establish operations outside their home countries. The paper advances a set of hypotheses regarding the likely motivations for foreign activity under such circumstances and provides some statistical testing for their prevalence in US inward and outward FDI. The findings suggest that the investment motivations of firms operating in the digital economy differ from those of firms in the traditional world. The most important motivations for FDI in the digital economy appear to be efficiency and the quest for intangible assets, especially those embedded in human capital, while market seeking and the search for low cost export platforms appear to be the dominant motivations for FDI in the traditional economy.digital economy, FDI motivations, US FDI

Acceptable Risk: A Study of Global Currency Trading Rooms in the US and Japan

In this study, I explore the idea of "acceptable risk" at the organizational level of analysis in a sample of currency-trading rooms embedded in different national cultures, and develop and test a multi-level model of how national culture and the organizational context, in particular the control strategies and the norms of acceptable risk within risk-taking units, shape their risk-taking behavior and performance. The results show that "acceptable risk" as defined within the micro-environment of the trading room does influence actual organizational risk-taking, though national culture does not. In addition, market control strategies were related to better risk-transformation in these trading rooms.

The role of language in knowledge transfer to geographically dispersed manufacturing operations

This study proposes a model of the effects of language on knowledge transfer to geographically dispersed operations. Rather than focusing on the distance between two language groups, we look at the commonalities between their languages, introducing the construct of linguistic relatedness as a way to measure the overlap in the structural features of the dominant languages at play between firms and their overseas manufacturing operations. We focus on the structural aspects of language (e.g., grammar, pronunciation, and word formation), rather than the functional aspects that deal with usage and interpretation. This allows us to separate the effects of language from those of culture and test whether linguistic distance may be more or at least differently relevant in communication-related tasks. We test our model of knowledge transfer and linguistic relatedness through a survey of international operations managers representing US-owned multinational enterprises with manufacturing plants in 22 countries. While linguistic relatedness shows the expected positive relationships with ease of knowledge communication and normative integration, it is negatively related to knowledge understanding — an echo of the psychic distance paradox and a reminder that distance can sometimes be beneficial, as it signals the need for attention to complex processes such as communication of knowledg

Tapping a Foreign Subsidiarys Competence: An Empirical Test of Subsidiaries of Multinational Corporations in South Korea

This study examined the conditions under which a foreign subsidiary becomes the competence center within the multinational corporation (MNC)s network. We developed an integrated framework by investigating effects of both subsidiary-level factors and headquarter (HQ)-level factors on subsidiarys competence development. Survey data from 76 foreign subsidiaries of MNCs in South Korea largely supported our hypotheses. We found that subsidiaries with high management autonomy and high network embeddedness in the local market (South Korea) tend to build superior capabilities that would be useful throughout the entire MNC network. Concerning an MNCs management system, our results suggested that technological and managerial knowledge transfer from HQ to subsidiaries plays important roles in helping a subsidiary evolve into a competence center in the MNCs global network

Organizational context and risk-taking in a global environment : a study of foreign-exchange trading rooms in the U.S. and Japan

Thesis (Ph. D.)--Massachusetts Institute of Technology, Sloan School of Management, 1992.Includes bibliographical references (leaves 191-207).by Srilata A. Zaheer.Ph.D

Circadian Rhythms: The Effects of Global Market Integration in the Currency Trading Industry

This essay assesses the impact of global market integration in the currency trading industry as the market interfaces with states, with firms and with individuals, and raises questions for research from a variety of disciplines. Issues discussed include the question of state control in global markets, the impact of globalization on firm structures and processes, how firms can derive competitive advantage from global circadian rhythms, and the influences of the circadian rhythms of the global market on the individuals who work in this industry.© 1995 JIBS. Journal of International Business Studies (1995) 26, 699–728

Catching the Wave: Alertness, Responsiveness, and Market Influence in Global Electronic Networks

This paper introduces the concepts of alertness and responsiveness as key capabilities for firms in fast-moving, information-intensive environments such as global currency trading. Hypotheses drawn from the resource-based view of the firm, from network theory, and from Austrian economics are tested on objective cross-section and time-series data for the population of 4,088 banks engaged in foreign-exchange trading on the Reuters dealing system. Results strongly support the hypotheses that banks that are alert, i.e., use their information networks in ways that expand the range of information they are exposed to, and responsive---those that act quickly in volatile markets---tend to exercise greater market influence in this industry.alertness, responsiveness, capabilities, network theory, resource-based view, Austrian economics, electronic networks, currency trading, financial services

Country Effects on Information Seeking in Global Electronic Networks

We examine the existence of country effects on information seeking in response to market volatility, and explore the institutional factors underlying these effects. The empirical setting is the use of an electronic inter-bank network over twelve months by 3,266 banks located in twenty-five countries. We find significant differences across countries in banks' information-seeking behavior in response to market volatility, influenced both by differences in national industry arrangements and by national culture. However, national industry arrangements and national culture influence banks' information seeking in distinct ways.© 1997 JIBS. Journal of International Business Studies (1997) 28, 77–100