Lessons learned from Brazilian multinationals’ internationalization strategies

Internationalization of emerging market multinationals is a recent phenomenon gaining importance in the global economy. This foreign expansion of a new breed of companies has challenged established theories and practices in the field of international business (Cuervo-Cazurra, 2007). This article addresses the issue of whether or not there is something to learn from these emerging market companies and their foreign expansion. Focusing on the international trajectories of four Brazilian multinationals (i.e., Odebrecht, Embraer, Stefanini, and Marcopolo), this study analyzes their strategies and managerial processes during and after the recent economic crisis with regards to internationalization. Our qualitative fieldwork suggests that the trajectories of these Brazilian multinationals are quite unstructured and evolve as a reaction to the opportunities they face in international markets. It seems all four companies in our sample shared a strong entrepreneurial spirit and a high motivation to expand their international operations despite the crisis and the obstacles they faced. Our findings and suggestions in terms of lessons learned should provide valuable implications for multinational managers from other emerging markets by providing a better understanding of how Brazilian multinationals expand internationally, deal with economic crisis, and manage relationships with local and foreign institutions.     

International human resource management strategies of Chinese multinationals operating abroad

Strategic international human resource management (SIHRM) is crucial for the effective leveraging of human resources in organizations to achieve the desired business strategies. There is a rich collection of studies on western multinational corporations (MNCs) in China, but few studies that explore the SIHRM of Chinese MNCs operating overseas. This study utilizes cross-level, in-depth interviews to analyse SIHRM of three large Chinese multinationals. The paper contributes to literature by addressing two contextual SIHRM issues, namely the characteristics of the SIHRM for Chinese multinationals and how their SIHRM orientation facilitates their international investment and operation. The findings indicate that organizational transformation is the starting point for latecomers matching their international HRM strategies. Their SIHRM approaches, such as forming learning organizations, reliance on host-country nationals, reconciling both home and host-country effects and promoting ‘best practices’, facilitate their international operations.     

International knowledge spillovers through high-tech imports and R&D of foreign-owned firms

The international transmission of knowledge through import spillovers, as a source of Total Factor Productivity (TFP) growth, has received much attention in the literature. We investigate two additional direct channels through which R&D disseminates: the import of high-technology goods and the internationalization of business R&D. Building on an extensive data-set, covering both developing and industrial countries, we add foreign-owned patents as a proxy for R&D activities of foreign multinationals. While we confirm the significance of import spillovers for all countries included, we find additional spillovers for developing countries through the import of high-technology goods. Only developed economies seem to benefit from the diffusion of knowledge that originates through cross-border cooperation in R&D by multinationals.     

Strategic choices of firms in expanding overseas business

Based on a case study of Pfizer’s production scope evolution in China from 1993 to 2002, we propose that MNCs usually have to face dual pressures of keeping integration among global businesses on the one hand, and remaining responsive to local market conditions on the other. When there is large discrepancy between the two, due to the bounded rationality of the decision-makers, the development paths of the subsidiaries are likely to exhibit recursive pattern, instead of the sequential mode as suggested in the extant literature. On the other hand, we argue that companies can make strategic choices to facilitate the development of their overseas subsidiaries. By the adjustment of the strategic parameters pertaining to the content and processes of their development paths, companies can accumulate knowledge about the local market and strike a balance between the dual pressures they have to face. The implication of our study for the indigenous Chinese companies in their international expansion is that when facing unfamiliar business environment in overseas market, paying attention to the idiosyncratic local market condition and keeping strategic flexibility are pivotal to their success. __________ Translated from Guanli shijie 맜理世界 (Management World), 2005(10): 123–138     

欧盟在华标志性企业发展战略分析与启示

近年来,欧盟企业在中国发展迅猛且势头强劲,本文主要从欧盟在华标志性企业出发,就两个方面对其进行了探讨:一方面是中国加入WTO后快速增长的国内市场给欧盟在华企业创造了巨大的商机;另一方面是欧盟企业成功地实施了本土化战略和并购战略。深入分析这两方面因素对国内政府和企业具有重要的意义。     

Cross‐border expansion and competitive interactions of indigenous mobile network operators in sub‐Saharan Africa

Emerging‐market multinational enterprises (EMNEs) have become major players in the global economy, with an increasing share of global foreign direct investment (FDI). Indigenous mobile network operators (MNOs) in sub‐Saharan Africa (SSA) are not left out in this pursuit, as they seek growth and competitiveness beyond their domestic markets. We investigate the FDI location choices and competitive interactions of the five indigenous SSA MNOs that had internationalized as of 2014 and find that, contrary to the literature, these EMNEs, operating in a key and rapidly developing industry, did not tend to commence their cross‐border expansion in geographically close markets. In addition, the MNOs are more likely to invest in countries with stronger control over corruption and do not appear to engage in heavy head‐to‐head competition with their rivals. These findings contribute to the internationalization literature in the context of the investment and competitive behaviors of the currently underexplored indigenous SSA multinationals.     

The Investment Development Path and FDI From Developing Countries: The Role of Pro-Market Reforms and Institutional Voids

We study the applicability of the investment development path to multinationals from developing countries and illustrate these arguments by analyzing the evolution of Brazilian outward foreign direct investment. This model argues that as countries develop, their firms will develop sophisticated capabilities and eventually become multinational firms. In the case of emerging countries, two additional factors accelerate this process. One is the push of pro-market reforms, whereby firms upgrade their capabilities to compete in the home country, thus becoming multinationals earlier than expected. The second is the push of institutional voids, whereby firms avoid excessive and misguided regulations of the local institutional environment.     

Strategy and structure of service multinationals and their impact on linkages with local firms

Drawing on case studies of two leading UK service firms in five host countries (Argentina, Brazil, China, Korea and Malaysia), we examine how the strategy and organization of service multinationals shape the development of linkages with local firms in host economies. We find that there is reduced autonomy of subsidiaries to engage with local firms as a result of relatively centralized strategies of multinationals. Because of global policies ensuring consistency of services or global sourcing policies to reduce costs, service multinationals tend to prefer global suppliers. Backward linkages occur in a few cases when the relationship can be a vehicle for market expansion for the multinational in a particular host market. Local governments play an important role in the cases where backward linkages are developed.     

French multinational companies' HRM in China: strategic orientation and integration approaches

The purpose of this qualitative study is to identify strategic orientation and integration approaches of French companies in implementing the headquarters-based human resource management (HRM) practices in their Chinese subsidiaries. Through a study of 16 French multinationals’ HRM, our findings reveal that a majority of sample companies tend to standardize the HRM practices in their Chinese subsidiaries to a great extent. This strategic orientation is supported by a combination of specific integration approaches at the subsidiary level. The results add knowledge to international management theory and allow us to develop implications in managing employees in China.     

Measuring the diversification benefits of investing in highly internationalised firms

A vast literature exists investigating if Multinational Companies (MNCs) provide indirect international exposure to investors. These studies produce mixed results. Unlike previous studies, we distinguish between various types of MNCs, in particular firms that are consistently international versus firms that are in the process of internationalising. We provide a unique longitudinal dataset of firm-level multinationality of 396 Russell 1000 firms between 1996 and 2010, and estimate the diversification benefits of investing in these firms using mean variance spanning and Sharpe ratio tests. We find that the most consistently international firms provide the greatest diversification benefits. Rapidly internationalising firms provide little benefit, suggesting that the costs of rapid firm-level internationalisation are substantial. This distinction between firms at differing stages of internationalisation adds to the debate on the benefits of investing in MNCs and provides a possible explanation to the conflicting findings in the literature.     

Multinational firms and host country market structure: A review of empirical literature

We address the impact of multinationals on host country market structure through reviewing existing empirical literature. Our main conclusion is that the majority of studies focus on samples of manufacturing industries/firms, neglecting the service sector, despite its importance. Future research should be directed to this sector and explore the possibility of bidirectional causality between foreign presence and host country industry concentration. Studies concerning the impact of multinationals on entry, exit and survival of host country firms must use more recent data, investigate the role of vertical linkages and taking into account other control variables that may affect the exit rate. Finally, future work should take into account the mode of foreign firm establishment in the host country.     

Outward Foreign Direct Investment,Interindustry Networks,and U.S. Trade Politics

This article investigates how outward foreign direct investment by U.S. multinational corporations influences industry lobbying for trade protection in the United States, focusing on interindustry structure of goods sales networks between upstream and downstream sectors and also on the multinationals’ input procurement patterns. If foreign affiliates of U.S. multinationals switch input sources from U.S. to host-country suppliers, U.S. suppliers should receive a negative demand shock, ceteris paribus. An empirical test finds that those U.S. upstream sectors that are highly dependent upon U.S. multinationals for goods sales tend to lobby more as the multinationals’ overseas production and sales increase.     

Terrorism as an external threat factor in global value chains

Global terrorism incidents and business‐related threats have intensified in scale and scope over the past 17 years. Multinational corporations are thus exposed to direct and indirect negative impacts on their international activities. Previous research lacks thorough theoretical frameworks to analyze these impacts. The global value chain (GVC) framework offers a perspective that is both comprehensive and quantifiable for the evaluation and expansion of this prior research. The GVC enables us to assess terrorism impacts on international business overall and at each stage of the value chain. On this basis, we develop a “terrorism resilience theory”) that can be used in future theoretical and managerial analyses of the response to terrorism risk.     

Size and marketing centralization in multinational companies

A large-scale mail survey of some 200 Australian subsidiaries of multinational organizations aimed to identify a possible relationship between organizational size-related variables and the degree of centralization enforced by the multinational in relation to marketing decision making. The findings—that size and centralization are not correlated for each marketing mix variable—enhance previous literature on this issue, whose studies combined all marketing tasks with inconsistent results. This suggests that using organizational size-related variables as means of assigning the appropriate level of decision-making autonomy to each of the traditional marketing areas is not appropriate.     

Alliances,Acquisitions and Multinational Advantage

This paper reviews recent empirical evidence to assess the implications of alliance formation and increasing merger and acquisition activity of multinationals in the context of the eclectic paradigm. Specifically, the paper will concentrate on the performance implications of international expansion via alliances and mergers, and their relationship to the so-called asset-augmenting foreign direct investment. It has been argued in the literature that the way in which multinationals are able to build on their existing advantages and to add to them by virtue of their international activities confers specific benefits to multinationality. We argue that the growth of cross-border acquisitions and alliances as modalities for international expansion has resulted from the continuing convergence of value-adding capabilities within the Triad, and while such activity can help to augment the asset base of the investing firms, it also has potentially anti-competitive implications.     

民族企业与跨国公司竞争的模型分析

立足于我国的实际情况,分析民族企业与跨国公司之间的竞争状况,并在此基础上建立民族企业与跨国公司竞争的分部模型和整体模型及其演化模型。分部模型分为价格竞争模型、产品和成本竞争模型以及研发竞争模型;整体演化模型分为螺旋上升模型、恶性循环模型和维持现状型。通过上述模型分析为我国产业的成长提供理论支持并为民族企业的成长提出决策建议。     

Like it or not? How the economic and institutional environment shapes individual attitudes towards multinational enterprises

This paper analyses the determinants of people's attitudes towards foreign direct investment (FDI) using a survey‐based data set that covers a wide range of rich and poor countries. We find that both individual socioeconomic characteristics and macroeconomic and institutional factors shape agents’ attitudes towards multinational firms. Moreover, we find that the influence of an individual's characteristics—such as education and the status as an entrepreneur—on her/his perspective on multinationals depends on the respective country's per‐capita income. Our results confirm the conjecture that relative individual attitudes towards multinationals reflect distributional interests as suggested by economic theory.     

中国跨国公司"全球导向-渐进式"国际经营战略思考——以97家中国跨国公司营销战略的实证资料为依据

本文提出和阐述了中国跨国公司基于全球导向的渐进式国际化战略的思想。依据跨国公司全球营销理论,结合97家走在国际化最前列的中国跨国公司的实证资料数据,针对处于不同国际化阶段的中国企业,提出了新型出口营销战略、新型多国营销战略和全球营销战略,并为中国企业就各阶段战略量身定做出整体规划和具体方案。战略模式的提出贯彻了"全球导向-渐进式"的核心思想,以期对中国跨国公司的国际化战略发展有所启发。     

On the Marketing of Nations

Abstract

Deciding on how and where to begin a new regional expansion is a highly important and complex task for multinational companies. The importance and complexity stems from the fact that these decisions involve relatively high uncertainty (i.e., risk) and, at the same time, require an intensive multidimensional evaluation process. Many countries, however, particularly in emerging markets, work to encourage multinational companies to establish a base of operations there or to enlarge existing regional headquarters. Consequently, multinationals and countries have a common interest in identifying key elements in this multidimensional decision process and estimating the likelihood that a particular country will be more suitable to fill this task than others. In order to gain a deeper understanding as to the attractiveness of a host country for establishing a base of operation (BOO) of multinational corporations, we explore the perceptions of corporate managers of different Mediterranean countries. Our analysis highlights the different country characteristics that contribute to the difference in perceptions. In addition, we find specific attributes that contribute the most to these differences. We conclude with a discussion of actions that can be taken by a specific country to close, or expand, some perception gaps.     

Managing MNC-Government Negotiations in Saudi Arabia: The Key Role of Elites

This article explores the relationships between multinational corporations (MNCs) and a host country, in this case Saudi Arabia (the Kingdom). The interests of Saudi businesses and the political elite, along with the evolution of their relationship are surveyed. Furthermore, the validity of traditional and two-tier models of bargaining between MNCs and developing countries are assessed in the context of the Kingdom. It is argued that while both models may be useful, the two fail to capture the nature of MNCs-Saudi Arabia bargaining process. These two models are revised and enriched to adequately reflect the Kingdom's specific advantage, the nature of its national firms, and the unique relations it has with MNCs and their home countries. The study concludes that under current global political and economic conditions, the elite and MNCs interests appear to converge around business objectives.