Financial constraints on export market exit of domestic firms versus foreign multinational corporation subsidiaries in South Korea

Using a Korean manufacturing firm-level data set covering a range of years from 2006 to 2013, this study investigates how the financial condition of firms, such as liquidity, leverage, and cash flow ratio, affects exit from export markets. It also analyses whether the financial status of foreign multinational corporation (MNC) subsidiaries differs from that of domestic firms with respect to the hazard of export market exit, especially during a global financial crisis. The empirical results confirm that, for domestic firms, the hazard of export market exit is affected by the firms’ financial condition only during a financial crisis. In other words, the financial vulnerability of domestic firms increases during the crisis, resulting in the hazard of export market exit. However, financial situations for foreign MNC subsidiaries do not affect exits from export markets, indicating a ‘finance-factor comparative advantage’.     

The dynamic role of small- and medium-sized multinationals in global production networks: Norwegian maritime firms in the Greater Shanghai Region in China

This article examines the role of small- and medium-sized multinational enterprises (MNEs) in the dynamic development of global production networks (GPNs) in the maritime industry. It studies the dynamism between subsidiaries of Norwegian maritime firms and regional actors and institutions in the Greater Shanghai Region of China from the perspectives of the subsidiaries. It argues that strategic coupling, recoupling and decoupling are partly the results of regional selection mechanisms. However, in the cases where the subsidiaries are embedded within the host region, the strategies and behaviour of MNEs are of decisive importance for the dynamic development of GPNs.     

Bridging the great divide? Making sense of the human rights-CSR relationship in UK multinational companies

Human rights (HR) and corporate social responsibility (CSR) are both fields of knowledge and research that have been shaped by, and examine, the role of multi-national enterprises in society. Whilst scholars have highlighted the overlapping nature of CSR and HR, our understanding of this relationship within business practice remains vague and under-researched. To explore the interface between CSR and HR, this paper presents empirical data from a qualitative study involving 22 international businesses based in the UK. Through an analysis based on sensemaking, the paper examines how and where CSR and HR overlap, contrast and shape one another, and the role that companies’ international operations has on this relationship. The findings reveal a complex and multi-layered relationship between the two, and concludes that in contrast to management theory, companies have bridged the ‘great divide’ in varying degrees most notably in their implementation strategies.     

Outward foreign direct investment by Polish state-owned multinational enterprises: is ‘stateness’ an asset or a burden?

State-owned enterprises (SOEs) are commonly associated with undue advantages due to preferential treatment by the state. Simultaneously they are often quoted as handicapped given the notorious state interference, management problems and agency tensions. They used to be regarded as a mainly domestic issue but in the context of globalisation and the fact that states enter treaties with new obligations, SOEs’ performance ceased to be solely a domestic problem, increasingly so as state-owned multinational enterprises (SOMNEs) emerge. This article presents the results of research on Polish SOEs’ outward foreign direct investment (OFDI). It offers an overview of overseas activities of nine major Polish firms with a state stake and aims to contribute to the conceptual literature on foreign investments conducted by SOMNEs. We distinguish between FDI by SOMNEs as specific – privileged (facilitated) or discriminated (hampered) – investments subject to the home country’s state power and the host country’s state perception.     

Unpacking the effect of strategic ambidexterity on performance: A cross-country comparison of MMNEs developing product-service innovation

This study tests whether strategic ambidexterity improves Product-service innovation (PSI) outcomes for manufacturing multinational enterprises (MMNEs). It also tests successful pathways to develop PSI properly by organizing exploitation and exploration activities. Data from a survey of 338 MMNEs are analysed through Structural Equations Modelling. The sample contains firms from five world regions, including emerging economies. This approach enables contrast to determine cross-country heterogeneity in PSI outcomes. The results show that, to maximise firm performance, PSI must be developed through a sequential Exploitation-Exploration pathway. Although this optimal sequence is consistent across all world regions (except Japan), noticeable contextual differences emerge in the relative importance of exploration and exploitation to firm performance. Our findings show that exploitation (i.e., cost efficiency through PSI design) and exploration (i.e., PSI R&D) capabilities are equally important in emerging economies.     

Profit shifting and tax-rate uncertainty

Using firm-level data for 1,084 parent firms in 24 countries and for 9,497 subsidiaries in 54 countries, we show that tax-motivated profit shifting is larger among subsidiaries in countries that have stable corporate tax rates over time. Our findings further suggest that firms move away from transfer pricing and toward intragroup debt shifting that has lower adjustment costs. Our results are robust to several identification methods and respecifications, and they highlight the important role of tax-rate uncertainty in the profit-shifting decision while pointing to an adjustment away from more costly transfer pricing and toward debt shifting.     

The distinct contribution of investment promotion agencies’ branch offices in bringing Chinese multinationals to Europe

This study uncovers the distinct contribution of investment promotion agencies’ (IPAs) overseas branch offices in advancing and even creating foreign direct investment. It offers a novel categorisation of IPAs depending on location and headquarter/branch status, and conceptually connects the known functions of IPAs with the advantages set out by the OLI paradigm. Empirical examination of longitudinal data from 29 European IPAs finds that the activities of their branches in China instilled greater awareness and confidence in Chinese multinational enterprises about their ownership- and European location-specific advantages. This contribution of IPA branches is especially salient in emerging economies with newcomer investors.     

Chinese multinationals on the New Silk Route: Managing political risk by branding the nation

Though Chinese multinational enterprises (CMNEs) have brought investment and opportunities to countries along the Belt and Road Initiative, there has been scepticism regarding the content and context of their investment. On the one hand, infrastructural development contributes to GDP formation and enhances the efficiency of productive inputs where international trade enhances technology and export development, which jointly provides a path to economic growth. On the other hand, critical issues such as debt sustainability and national sovereignty among countries that have gone through the decolonization process mean that CMNEs need to grasp the implication of political risk when investing. This article focuses on South and Southeast Asia, where China has historical socio‐economic relationship, and proposes a nation branding model combining tradition and modernity which can be the way forward for CMNEs to mitigate political risk in relation to the Belt and Road Initiative (BRI) investment. Nation branding of BRI could be seen as a continuity of China's unfinished business in globalization that has preceded the modern polity; nevertheless, there is a need to communicate a coherent and authentic message that reflects the reality of business operations.     

Local integration and co‐evolution of internationalizing Chinese firms

This study investigates the integration of internationalizing Chinese firms into local host markets. We explore the market‐driven investment of a new wave of Chinese private and local state‐owned firms in Australia since 2012, which has replaced the initial large‐scale investment in resources by central state‐owned enterprises. Using an in‐depth analysis of nine Chinese firms operating in various sectors of the Australian market, we argue that market integration, adaptation, and bilateral institution‐building through co‐evolution and empowerment of local subsidiaries of Chinese multinational enterprises results in entrepreneurial autonomy and characterizes a new generation of Chinese investors. We propose that Chinese multinational subsidiaries have transferred domestic practices to the Australian market and have reconfigured domestic and host market resources to gain a competitive advantage in their original investment industry and new industries. Our study advances middle‐range theory building and provides a practical understanding of the strengths and weaknesses of Chinese investors, their potential to disrupt local markets, and their responsiveness to market‐oriented institutional guidance. The results of this study suggest that the bilateral institution‐building and resource reconfiguration capabilities of Chinese enterprises can be transferred to other developed and developing markets, including Belt and Road Initiative countries.     

跨国公司对华投资独资化影响与对策探析

近年来,跨国公司在华直接投资数量不断增多,进入模式已由当初的合资、合作转为独资。独资化趋势不是偶然现象,主要是由跨国公司的全球发展战略和避免技术外溢以及在华投资环境的改善引起。跨国公司独资化对中国经济既有积极影响,又有消极影响,需要区别对待,促进积极影响的发挥,最大限度降低消极影响。