Pricing strategies of transnational corporations

This paper uses data collected from 111 transnational corporations which operated 153 subsidiaries in the ASEAN region (Thailand, Malaysia, Singapore, Indonesia, and the Philippines) to analyze their pricing practices in the host country markets in relationship to the corporations home country and to the structural characteristics of the host country market. The data collected in this study is thus used to analyze the determinants of predatory pricing, intercountry price discrimination, and price leadership.The author is with the Centre for International Business Studies, School of Business Administration, The University of Western Ontario, London, Ontario, Canada.     

Economic and strategic considerations surrounding Chinese FDI in the United States

The growth of outward investment from China has generated expressions of concern from policymakers in the United States regarding the economic and national security impacts of such investments. While inward foreign direct investment (FDI) has come to be viewed by most observers as generally imparting net economic benefits to the host economy, acquisitions of US companies by Chinese multinational companies (MNCs) have been criticized on several grounds. One is based on the mode of entry itself: some critics believe that entry by acquisition brings lower benefits than greenfield entry. A second and more prominent concern is that acquisitions of US companies by Chinese state-owned enterprises (SOEs) may be motivated by non-commercial objectives which, in turn, make those acquisitions of questionable value to the host economy. In this paper, we argue that Chinese FDI in the United States is more likely to take the form of acquisitions than greenfield investments for the foreseeable future. However, there is no strong case to be made that the host country economic benefits from Chinese FDI would be larger if entry took place primarily through greenfield investments. Furthermore, most of the alleged costs to the US economy from inward FDI from China are either unlikely to occur or are already anticipated by existing US laws and regulations, thus necessitating no additional, specific legislation.

Foreign direct investments by Korean firms: An analysis with FDI theories

This paper analyzes data on foreign direct investment (FDI) by Korean firms in the light of eight propositions drawn from the literature on FDI which includes both the theoretical and empirical findings of studies on FDI by Third World Multinational Corporations (MNCs). The data concern FDI in manufacturing, natural resources, construction, banking and other industries. The propositions examined include the nature of ownership advantages, the trade-orientation of FDI, and motivations behind the overseas expansion of Korean banks. In addition, the geographical distribution and ownership patterns which arise as a result of these variables are also examined. The findings are generally consistent with many of those in previous theoretical and empirical studies and suggest that an eclectic approach, incorporating many explanatory variables, could adequately explain the patterns in Korean outward FDI.The authors are from School of Business Administration, The University of Michigan and School of Business Administration, Georgetown University, respectively. They gratefully acknowledge the valuable suggestions by Professors Sang Kee Min of Seoul National University and Adrian E. Tschoegl of The University of Michigan. They also acknowledge the cooperation of officers in the Bank of Korea, Korea.     

Estimating and comparing learning curves in three Asian economies

This paper consists of two parts. In the first, a method is suggested to isolate the effects of scale economies on learning phenomena by integrating the conventionally specified learning curve with the production function in neoclassical economics. The problem of establishing the variable for measuring experience is dealt with in the estimation procedure. Using this method we estimated the learning curves of 20 industries in the manufacturing sector in Singapore using data taken from 1961 to 1991. More modern industries like electronics, precision instruments and pharmaceutics have steeper learning curves than older industries. Among traditional industries, the food and beverage industry has a greater learning potential than others. In the second part of the paper, the learning curves for 11 common industries in South Korea, Japan and Singapore were estimated and compared. The Japanese industries are found to have steeper learning curves compared to those in Singapore and South Korea.The authors are from the Department of Business Policy, Faculty of Business Administration, National University of Singapore. The authors would like to thank Ms Tan Mui Lee for her assistance in preparing the time series data used for this study.     

Seasonality and cultural influences on four Asian stock markets

We use daily returns to identify seasonality on the Kuala Lumpur Stock Exchange (KLSE), The Stock Exchange, Bombay (SEB), the Stock Exchange of Singapore (SES) and The Stock Exchange of Thailand (SET). On all four, we find strong day-of-the-week effects. Month-of-the-year effects exist on the KLSE and the SES but not on the SET or the BSE. Strong Chinese New Year effects are evident on the SES and the KLSE. The Chinese New Year effect on the SET is among small capitalization stocks. On the KLSE, we also find Islamic New Year and Vesak effects, but no Aidilfitri effect. Only weak holiday effects concerning several Indian lunar holidays are evident on the BSE. In general we find that cultural holidays evidence a stronger effect than state holidays. These results confirm the importance of cultural influences in the pricing of stocks.M. W. L. Chan is Professor of Finance and Business Economics at McMaster University, Canada, Anya Khanthavit Associate Professor of Finance, Thammasat University, Thailand and Hugh Thomas Assistant Professor of Finance, McMaster University, Canada. The authors would like to thank the Association of Deans of Southeast Asian Graduate Schools of Management for the financial support that enabled this research to be undertaken and an anonymous referee for his many insightful and constructive suggestions. Please direct all correspondence to Hugh Thomas, School of Business, McMaster University, 1280 Main Street West, Hamilton, Ontario, L8S 4M4, Canada, tel: (905) 522-6861 ext 23983 or email thomas@mcmaster.ca..     

Service innovation adopters: Multiple discriminant analyses of automatic teller machine cardholders versus nonholders

This article reports a study of the differences between ATM cardholders and nonholders in terms of demographic, attitudinal, social, computer-related product experience characteristics. The findings reveal differences between cardholders and nonholders which can be useful in the refinement of banks' marketing strategies for ATM.William R. Swinyard, a visiting faculty member at National University of Singapore when this research was conducted, is a Professor of Business Management at Brigham Young University, Provo, Utah, USA. Leow Ger Ghee is a B.B.A (Honours) graduate of the National University of Singapore.     

Book Review

This issue's book review addresses the important topic of networking. Despite their informal understanding of the need for networks, new product managers have seldom if ever been able to access a formal treatment of this topic. Nor have conferences or seminars included this topic in their development of critical management skills. Blair Little, a professor in the School of Business Administration at the University of Western Ontario, reviews a new book that reports some very intersting Swedish thinking about networking. He reports that the book is worth considering by JPIM's readers, even in light of some unique characteristics of the Swedish environment.     

Japanese horizontal keiretsu and the performance implications of membership

Our study investigates the effect of Japanese horizontal keiretsu group membership on firm risk and return. Like prior studies, our results show that horizontal keiretsu membership has a negative effect on firm profitability. However, we find that horizontal keiretsu networks are likely to increase the gap between targeted and realized returns, which we call the outcome–aspiration gap. Moreover, in contrast to prior studies, our results indicate that keiretsu membership does not enable member firms to reduce risks by smoothing profitability. Instead, our findings provide evidence that is counter to the conventional notion that Japanese horizontal keiretsu allows their member firms to trade off profits for reduced risk.

Capital investment practices: A survey of large corporations in Malaysia,Singapore and Hong Kong

This paper presents the results of a survey on the capital investment practices of large corporations in Malaysia, Singapore and Hong Kong. Our findings are fairly consistent with those from similar U.S. surveys. However, Malaysia, Singapore and Hong Kong companies seem to use multiple techniques, both simple and sophisticated, in evaluating investment projects, while U.S. companies appear to make great use of discounted cash-flow rate of return. Although Malaysia, Singapore and Hong Kong companies often make annual cash-flow forecasts over the life of a project, they do not undertake much analysis of risk involved in the project. Moreover, there is room for improving the practice of project implementation, the post-audit of implemented projects, and the use of post-audit data.Dr Wong Kie Ann is with the School of Management, National University of Singapore; Dr Edward J Farragner is with the Department of Finance, DePaul University, U.S.A.; and Mr Rupert K.C. Leung is with the Department of Business Management, Hong Kong Baptist College.     

Swedish managers' perceptions of Singaporean work-related values

The purpose of this paper is to identify some of the fundamental work-related cultural values of middle managers of Chinese ethnic origin employed in Swedish companies in Singapore, and to draw comparisons with the perceptions of those values among the Swedish top managers. Using the same set of questionnaire items for both sets of respondents, the Swedish managers were asked to respond as they imagine their Chinese subordinates would do, as a projective technique. The main finding of this study is the considerable amount of misjudgment on the part of Swedish top managers in assessing work-related values of the Singaporean middle managers.Dr. Jan Selmer is Associate Professor of Business Administration at the Företagsekonomiska Institutionen, University of Stockholm, Sweden. He is a Board Director of the Center for Pacific Asia Studies, University of Stockholm. Presently Dr Selmer is a Visiting Senior Teaching Fellow at the School of Management, National University of Singapore.Acknowledgement is given to the Swedish Embassy in Singapore for help and support. The participation of the management of the Swedish companies included in the study (Appendix) is deeply appreciated.     

Linear programming for bank portfolio management in Singapore

James Tobin's portfolio theory can be applied to bank portfolio management in that a bank would maximise the rates of return of its portfolio of assets, subject to the expected degree of risk and liquidity. Chambers and Charnes (1961), Cohen and Hammer (1967), Booth and Dash (1979) and others apply the linear programming model to the management of bank funds. This paper carries out a linear programming analysis on the consolidated balance sheets of commercial banks in Singapore for the period 1978–1983. The results show that by and large banks do try to maximise the returns of their portfolio, subject to legal, policy, bounding and total asset constraints, which denote riskiness and liquidity of the portfolio of assets. In a direct way, banks conform to the portfolio choice theory; they have to balance yield and liquidity against security. Although the computer cannot replace a manager, linear programming can serve as a useful guide.Dr Lee Sheng-Yi is an Associate Professor (retired) in the National University of Singapore and a Visiting Senior Research Fellow in Chung Hua Institution for Economic Research, Taipei; and Dr Yeong Wee Yong is a Senior Lecturer, School of Management Faculty of Business Administration, National University of Singapore.     

新加坡对华直接投资与双边产业内贸易关系的实证研究

本文概述了新加坡对华直接投资和双边产业内贸易的现状,重点利用计量模型分析国际直接投资与产业内贸易的相关性,论证了新加坡企业对华直接投资与双边产业内贸易存在着正相关关系,得出两个重要结论:新加坡在中国的直接投资诱发并扩大双边的产业内贸易、垂直一体化直接投资是现阶段中国与新加坡产业内贸易发展的重要动力。最后,在上述研究的基础上提出中国更好地吸引和利用外商投资、提高产业内贸易水平的政策建议。     

Alternative concepts of management: Insights from asia and africa

Some Asian and African concepts including the logic of mutual benefit among heterogeneous elements, polyocular vision, self-heterogenization, ability to think in one another's mind, interpersonal aidaschaft, situational adaptability and overlapping responsibility are compared with the European and North American concepts of unity by homogeneity, individual identity, boundary, specialization, separation, opposition, hierarchy, tension and extension.The author is Visiting Professor of International Business and Business Policy at the National University of Singapore.     

Japanese joint ventures with western multinationals: Synthesising the economic and cultural explanations of failure

Many research studies have been done to explain the reasons for the tensions and failures observed in joint ventures between Japanese and Western multinational enterprises. These studies have identified, with various degrees of sophistication, the existence of cultural differences as a primary determinant of failure. Alternative explanations focus upon a transaction cost approach, emphasising opportunism and the danger of cheating in such strategic alliances. This paper synthesises the literature through the development of a new conceptual framework. This framework, which distinguishes between economic and cultural reasons for failure, provides a new lens to view the literature. It is demonstrated that the simple view of cultural incompatibility needs to be replaced by an awareness of the combined impact of cultural and economic forces on the viability of joint ventures between Japanese and Western firms.Lee T. Brown is a doctoral candidate in the Faculty of Management at the University of Toronto. Alan M. Rugman is Royal Bank Visiting Professor at the University of Alberta and Professor of International Business at the University of Toronto. Alain Verbeke is Assistant Professor of International Business at the University of Toronto. Helpful comments have been received from Nancy Adler, Mark Casson, Martin Evans, Tom Roehl, Mark Warner and Ken Watson.     

Intraregional foreign direct investment in the asian pacific region

This article attempts to identify the emerging pattern of Foreign Direct Investment (FDI) and/or international production in the Asian Pacific region. The internationalisation of production has accelerated in the Asian Pacific region as competitive advantage has shifted and as protectionist measures have changed traditional source patterns. The Asian Pacific region has evolved into an interactive international production system comprising three tiers of countries: Japan, the four Asian Newly Industrialized Countries (ANICs), and the four developing countries of the Asian Pacific region (Indonesia, Malaysia, the Philippines and Thailand). The fundamental economic reality which has molded this system is the dynamic complementarity in location advantages of the three tiers.The authors are in the Department of International Business at The University of Michigan. W. Chan Kim is the author of a forthcoming book on Asian Business. Vern Terpstra is a former president of the Academy of International Business and the author of books on international business.     

Korea's Direct Investments in China: Technology, Experience, and Ownership Factors in Performance

This paper is designed to empirically examine what determines the performance of Korea's foreign direct investment (FDI) in China. Three main determinants are hypothesized to influence the performance of Korea's FDI. They include technology, internationalization experience, and ownership patterns associated with Korea's investments in China. Data were collected from surveys with 91 Korean investors. Our empirical analysis suggests that the labor intensity of technology involved in FDI and the appropriateness of manufacturing technology to the local conditions influence the investment performance. In addition, the results indicate that the internationalization experiences of the Korean investors also affect the profitability of FDI. Another finding of note is that the level of local ownership had a positive impact on performance. But, more interestingly, its effects were moderated by the investor's prior internationalization experiences; in other words, the investors with limited internationalization experiences performed well on a minority ownership venture.     

Risks and returns of acquiring and acquired firms in Singapore: An empirical analysis

This paper investigates the risk profiles of target and acquiring firms and the impact of the takeover process on them. It was found that corporate takeovers generally increased the systematic risk of the acquiring firms after the event while lowering the systematic risk of the target firms. There were large and statistically significant returns obtained by the shareholders of the target firms due to the takeover event. The shareholders of the acquiring firms did not suffer any negative returns.The authors benefitted from the discussions at the Academy of International Business South-east Asia Regional Conference, 26–28 June 1986, where an earlier version of this paper was presented. The authors also like to acknowledge the financial support from the National University of Singapore.     

FDI distribution within China: An integrative conceptual framework for analyzing intra-country FDI variations

The literature on foreign direct investment (FDI) has evolved in separate theoretical silos and a holistic conceptualization is yet to emerge. Research has focused mostly on inter-country differences and not much on explaining intra-country FDI variations. Traditionally FDI locations have been evaluated through country-level FDI determinants even though provinces differ widely in infrastructure and other attributes. Further, neither is the varying importance of FDI determinants to different industries factored in, nor are the differing FDI incentives from national and provincial governments integrated into a single framework. To address these gaps this study synthesizes insights from three streams of FDI research and develops an integrative conceptual framework that can comprehensively analyze intra-country FDI inflows. We demonstrate the usefulness of the framework by empirically analyzing FDI trends within China’s 31 provinces. The study thus makes a substantive contribution by offering scholars, policy-makers, and practitioners a holistic conceptual and methodological approach for understanding FDI trends within a country.     

The role of the ideal organization in comparative management: A cross cultural perspective of Japan & Korea

It is popular to talk of the Confucian Work Ethic when explaining the successes of Japan, Korea, Taiwan, Hong Kong and Singapore. This is not an accurate impression. The authors of this article found significant differences in management practices — both actual and ideal — between Japan and South Korea.Professors Lane Kelley, Reginald Worthley and Harry Lie are from the College of Business Administration, University of Hawaii while Professor Arthur Whatley is from the College of Business Administration & Economics, New Mexico State University.     

Union Growth in Malaysia and Singapore

This paper examines the determinants of trade union membership growth in Malaysia and Singapore for the period 1965–1983 and finds that the standard Western-based aggregate model of trade union growth applies to these countries. However, regression results suggest that the model's key variables have differential effects in the two countries.