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

Regulator Vulnerabilities to Political Pressure and Political Tie Intensity: The Moderating Effects of Regulatory and Political Distance

This study applies the institution-based view and neo-institutional theory in addressing how managerial perceptions of regulator vulnerabilities to political pressure, and institutional distance, influence intensification of political ties. Our analysis of 181 wholly owned foreign subsidiary (WOFSs) operating in the Philippines suggests that managerial perceptions of regulator vulnerability to political pressures positively enhance the intensification of political ties. Our results also reveal that regulatory distance and, more importantly, the simultaneous presence of political and regulatory distance diminish the positive relationship between managerial perceptions of regulator vulnerability to political pressures and a WOFS’s propensity to enhance the intensification of political ties. Managerial implications and future research directions are discusse

Behaviour of fabric-formed concrete beams reinforced with FRP bars

Casting non-prismatic optimised concrete beams in flexible fabric formwork can lead to a significant saving of concrete material and reduction of the embodied energy in concrete structures. It also offers the possibility to create interesting architectural features. However, the flexibility of this formwork may not allow an adequate control for ensuring the protective concrete cover, while the curvilinear profiles of such beams require a labour intensive pre-bending of the conventional steel reinforcement. Therefore, using Fibre Reinforced Polymer (FRP) materials as internal reinforcement in fabric-formed concrete beams might offer a number of advantages mainly in terms of avoiding the durability concern of steel corrosion. The light weight and flexibility of FRP bars, in addition, contribute to the overall low selfweight of the construction system and allow innovations such as supplying the FRP bars attached to the fabric and using the fresh concrete selfweight to pull down the bars into their design position without compromising the concrete cover. Nevertheless, reinforcing structurally optimised shallow beams with FRP bars is likely to result in large deflections and design governed by serviceability criteria. This paper presents the results of an experimental study on the structural behaviour of optimised fabric-formed beams reinforced with glass and carbon FRP bars. The use of self-compacting concrete is considered in order to aid the construction process. Other important aspects related to the structural design and predictability of deflections, such as the construction accuracy of fabric-formed beams, are also examined. © 2013, NetComposite Limited

Overcoming institutional voids via arbitration

Extending the literature on institutional voids, we introduce theory from law that highlights the ability of firms to choose the laws and enforcement mechanisms that govern their international joint ventures (IJVs). Specifically, firms may overcome institutional voids by borrowing institutions via binding international commercial arbitration (BICA) rather than relying on host-market institutions. Leveraging an institution-based view, we develop a theoretical framework to articulate the conditions under which IJV partners may choose BICA as opposed to domestic courts to overcome institutional voids in host markets

Rapid expansion of international new ventures across institutional distance

Rapid export expansion into institutionally distant locations has become more possible in the era of digital economy. Will such rapid expansion bring desirable outcome to firms? In a context of international new ventures (INVs) from emerging markets, we reconceptualize export expansion speed as the pace of exporting across institutional distance over a certain period of time. We then examine the relationship between rapid export expansion across institutional distance and overall firm performance. We incorporate directionality into export expansion and hypothesize the relationship to be positive when INVs export upwardly to more open countries, yet the relationship to be negative when INVs export downwardly to less open countries. We also hypothesize that the degree of market liberalization in subnational regions of origin of the INVs moderates the above speed–performance relationships. Instrumental variable models based on data of Chinese indigenous INVs during 2000–2009 support these hypotheses. This study both zooms in and zooms out the analytical lens along the location-related institutional axis, examines the joint effect of institutions involved in supranational directions and subnational origins on firm performance, and advances institutional theory

Diplomatic and corporate networks: Bridges to foreign locations

Firms and governments operate in broad networks in which the home government and its diplomatic service are a critical node – or a “referral point” – between firms and potential partners in foreign locations. Thus diplomatic relations between countries matter for the choice of foreign investment location. Using a network perspective, we argue that the extent to which good diplomatic relations induce firms to invest in friendly host countries depends on their political connections to home governments. Those with stronger ties to home governments can better access and leverage intergovernmental diplomatic connections, thus benefiting potentially from enhanced access to information, reduced political risks, and increased legitimacy. Such ability of politically connected firms is more useful where weak institutional impartiality in the host country inhibits neutral treatment of foreign investors. Empirically, using overseas investment location decisions by Chinese firms, we find that the types of home government ties (i.e., whether they are organizational or personal and whether those relationships are with central or local goverments) and the impartiality of host institutions are both important contingencies affecting firms’ utilization of diplomatic relations. We discuss the implications of our study to research on network theory, political ties, and internationalization of emerging market firms. 公司和政府在广阔的网络中运营,其中本国政府及其外交服务是公司和在外国地点的潜在合作伙伴之间的关键节点或“引荐点”。因此,国家之间的外交关系对外国投资地点的选择是重要的。使用网络视角,我们认为,良好的外交关系引导公司投资友好东道国的程度取决于它们与本国政府的政治联系。那些与本国政府有着更密切联系的公司可以更好地获得和利用政府间的外交关系,从而潜在地得益于增加的信息获取,减少的政治风险和增加的合法性。有政治关系公司的这种能力在脆弱的东道国制度公正性抑制对外国投资者的中立待遇的情况下更为有用。实证上,采用中国公司海外投资定位决策,我们发现,本国政府关系的类型(无论是组织上的还是个人的,无论是中央的还是地方政府的)和东道国制度公正性都是影响企业利用外交关系的重要的偶发事件。我们讨论我们的研究对网络理论,政治关系以及新兴市场公司国际化研究的启示。公司和政府在广阔的网络中运营,其中本国政府及其外交服务是公司和在外国地点的潜在合作伙伴之间的关键节点或“引荐点”。因此,国家之间的外交关系对外国投资地点的选择是重要的。使用网络视角,我们认为,良好的外交关系引导公司投资友好东道国的程度取决于它们与本国政府的政治联系。那些与本国政府有着更密切联系的公司可以更好地获得和利用政府间的外交关系,从而潜在地得益于增加的信息获取,减少的政治风险和增加的合法性。有政治关系公司的这种能力在脆弱的东道国制度公正性抑制对外国投资者的中立待遇的情况下更为有用。实证上,采用中国公司海外投资定位决策,我们发现,本国政府关系的类型(无论是组织上的还是个人的,无论是中央的还是地方政府的)和东道国制度公正性都是影响企业利用外交关系的重要的偶发事件。我们讨论我们的研究对网络理论,政治关系以及新兴市场公司国际化研究的启示