The impact of home–host cultural distance on foreign affiliate sales: The moderating role of cultural variation within host countries

Research on how multinational firms deal with home–host cultural differences argues that cultural differences are minimized and assumes that foreign cultures are homogenous. In this paper we relax the cultural homogeneity assumption. In the presence of cultural variation in host countries the minimization of cultural differences leads existing mean-based indices of cultural differences to overestimate the actual cultural differences these firms have to deal with. We test this argument in a 25-year panel analysis of total US multinationals' foreign sales in 54 host countries. At the sample average of cultural variation, the use of mean cultural difference indices yields a 74% overestimate of the actual cultural difference effect. This suggests that home–host cultural differences are a substantially smaller barrier to multinational sales than hitherto assumed. The assumption of cultural homogeneity leads to conclusions in which a too large role is attributed to cultural differences.     

Chinese economic development,the next stage: outward FDI?

China's development path has been widely recognised as being unique, with gradual privatisation and marketisation, massive private capital inflows, and extensive exporting. All this has been achieved without political democratisation. This paper draws attention to a new emerging phenomenon—significant Chinese levels of outward FDI (OFDI)—and takes a first step towards understanding this development at an aggregate level.The question arises, is China's OFDI another unique characteristic of Chinese distinctive economic development path and reform policies, or does it follow an established, universal pattern, specifically Dunning's investment development path (IDP) hypothesis, or rather a refined version of the IDP? In other words, do Chinese OFDI patterns suggest refinements to established theories, or even their refutation?To address these questions, however, exogeneity tests reveal a need to use GMM estimation methods rather than straightforward regressions, since relations between economic development and OFDI are complex and inter-dependent.The GMM results suggest that the level of economic development, proxied by GDP per capita plus refinements, is still the main factor explaining China's rate of OFDI. This is quite consistent with the refined IDP hypothesis and patterns broadly noted elsewhere. Conclusions are drawn for theory, policy and international business.     

“First in first out” or “last in first out”: Presentation of information order on evaluation of utilitarian products

This study investigates how the presentation order of information may affect the evaluation of utilitarian products. Three experiments with different conditions (hedonic/utilitarian product; experience/search advertisement; unattractive/attractive packaging) were conducted with a total of 334 participants in Macau. This study tests both the affective and cognitive product evaluation. The findings indicate that assimilation effect occurs if the search advertisement of a utilitarian product is presented before and if the consumers have better cognitive evaluation. When an experience advertisement is presented before, contrast effect occurs and affective evaluation is reduced. However, when unattractive packaging is presented before, assimilation effect occurs, and cognitive evaluation is increased. When attractive packaging is presented before, the consumers demonstrate a positive cognitive and affective evaluation for the utilitarian product. These findings contribute to a better understanding of the role of presentation order on the consumers’ evaluation of utilitarian products from theoretical and managerial perspectives.     

Dealing with globalisation: the Nordic countries and inward FDI, 1900–1939

This article examines the different ways in which the four Nordic countries chose to regulate the inflow of foreign direct investments (FDI). By studying the laws regulating foreign ownership, as well as their implementation, it becomes clear that the four countries followed a pragmatic and tolerant policy towards inward FDI, but that the resource rich countries actively tried to prevent foreign ownership of their most important natural resources. The article also shows how the countries’ stricter policy on foreign ownership in the early twentieth century was not a casualty of World War I, but more predominantly a reaction to the increasing international economic integration before the war.     

Ethical aspects of “Japanese leadership style”

This article describes three characteristics of the Japanese Leadership Style (JLS): self-realization, appreciation of diverse abilities, and trust in others, which have both positive and negative ethical implications. In addition to illustrating how JLS allows Japanese corporations to avoid some of the ethical problems plaguing U.S. corporations, the authors will explain how these characteristics engender the loyalty and initiative of Japanese employees which promote incremental innovation and competitive advantages. Implicit in this discussion is the premise that both the American and Japanese business communities, by analyzing their own ethical issues and leadership styles, can learn from each other.Iwao Taka is a Visiting Research Fellow in the Department of Legal Studies at The Wharton School. He is an Assistant Professor in the International School of Economics and Business Administration, Reitaku University in Japan. His publications include Business Ethics: A Japanese View, Intuitive Decision-Making and Creative Destruction, and Japanese Entrepreneurship after World War II.Wanda D. Foglia, Esquire, is a Teaching Fellow in the Department of Legal Studies at The Wharton School where she is pursuing a Ph.D. in Criminology. A former Assistant District Attorney, her research focuses on approaches for promoting the individual's commitment to ethical and law-abiding behavior. She has recently coordinated a Project to Integrate Ethics Into the Wharton Undergraduate Curriculum.     

Expatriates on the run: The psychological effects of the COVID-19 pandemic on expatriates’ host country withdrawal intentions

Extant research on expatriation in high-stress environments where stress is caused by ongoing and unexpected natural crises remains limited. Drawing on stress theory, in this study, we develop a model to examine the stress-inducing effects of intra-family concerns and workplace discrimination on the intentions to leave the host country among expatriates in the high-stress environment of the ongoing COVID-19 pandemic. We also explore whether gender and the level of work adjustment moderate the propensity of intra-family health concerns and workplace discrimination to induce psychological stress. Based on our analysis of 381 expatriates living and working in the United Arab Emirates, we find the model to be generally supported. We also reveal an intriguing moderating effect of work adjustment on the relationship between intra-family health concerns and psychological stress. Overall, the analysis is among the first ones to shed light on the role of natural crises’ stressors in defining expatriate outcomes.     

Does state ownership facilitate outward FDI of Chinese SOEs? Institutional development,market competition,and the logic of interdependence between governments and SOEs

Outward foreign direct investment (OFDI) of manufacturing state-owned enterprises (SOEs) from emerging economies (EE) has emerged as a significant phenomenon in global markets. Although previous research has emphasized the bright-side of state ownership in facilitating SOEs’ OFDI, the stream of research largely overlooks its dark-side effects. Drawing on resource dependence theory (RDT), we argue that state ownership creates dependence of SOEs on their home governments, which may undermine manufacturing SOEs’ willingness to conduct OFDI, autonomy and market orientation, and legitimacy in overseas markets. Thus, substantial state ownership may counteract with manufacturing SOEs’ OFDI from EE. Our empirical results, based on a sample of 507 Chinese publicly-listed manufacturing SOEs during 2007–2013, show that a high percentage of state-owned shares exerts negative effects on SOEs’ OFDI. Relative to local SOEs, central SOEs are less likely to engage in OFDI. Further, the negative effect of the percentage of state-owned shares on SOEs’ OFDI will be alleviated by institutional development and competition intensity. The study contributes to literature by making a real theoretical case for the dark-side effects of state ownership on manufacturing SOEs’ OFDI from EE.     

“Sorry,the product you ordered is out of stock”: Effects of substitution policy in online grocery retailing

Postpurchase out-of-stock (PP-OOS) often happens in an online grocery context, where products appear to be available at the time a consumer places an order, but become OOS when the order is to be dispatched. This paper investigates two substitution policies that can mitigate negative responses: substitutions can match (i) on the dominant attribute and (ii) with a product from the consumers’ past purchase portfolio. According to data collected through two computer-simulated purchase experiments, involving more than 3,000 households and five product categories, matching the substitution on the dominant attribute increases acceptance, but this dominant attribute varies across category differentiation level (flavor for horizontal differentiated categories like cereals or crips vs. brand for vertical differentiated categories like margarine or ketchup). Category differentiation also informs acceptance of national brand or private-label flavor substitutes, such that, same-flavor private label is prefered more in horizontal differentiated categories. Matching on the basis of previous purchases has positive effects for both category differentiation levels, and when combining both policies, the previous purchase matching effect grows stronger for same flavor, rather than same brand, matching. These detailed insights establish several key managerial implications for substitution policies in online grocery contexts.     

A race to lower standards? Labor standards and location choice of outward FDI from the BRIC countries

Scholars argue that multinational corporations tend to locate their investment in countries with lower labor standards, but empirical results are highly inconsistent. In this paper, we investigate the effect of differential labor standards on the location choice of outward greenfield foreign direct investment (FDI) from Brazil, Russia, India and China (i.e. the BRIC countries). We find robust evidence that while there is a tendency toward the attraction of FDI by lower labor standards in developed countries, such a “race” is absent in FDI directed to developing countries. Location choice is highly path dependent upon previous trading relations between the home and the host country, which hampers the MNCs’ ability to arbitrage. Conversely, capital mobility at the industry level is found to intensify the race to lower standards.     

“Ought” implies “can”, or,the moral relevance of a theory of the firm

Since ought implies can, i.e., one cannot be obligated to do what one cannot do, the question of corporate responsibility cannot be discussed intelligibly without an inquiry into the range of corporate or managerial discretion. Hence, the moral relevance of a theory of the firm. Within classical or neo-classical economic theory, for instance, firms which act other than to maximize profit are eliminated. They cannot do otherwise, and thus either have no obligations at all or only the duty to maximize profit. The thesis of the Managerial Revolution, if true, establishes only that management is free from direct stockholder control. By asserting that corporations have responsibilities to do other than maximize profit, philosophers assume a wide degree of managerial discretion, without considering recent developments in the theory of the firm which suggest that new incentives and constraints radically restrict managerial liberty in a capitalist society. John R. Danley is Associate Professor at the Southern Illinois University at Edwardsville. He is the author of three articles: The Fundamental Assumption of Hypothetical Process Arguments, Philosophical Studies 34 (1978); Robert Nozick and the Libertarian Paradox, Mind 88 (1979); and Toward a Theory of Bribery, Business and Professional Ethics Journal 3.     

Nostalgia,reflexivity, and the narratives of self: reflections on Devine's “Removing the rough edges?”

This paper offers some theoretical insights into Devine's account of the Riverside Museum in Glasgow. It elaborates on three interrelated themes the authors have derived from Devine's report: (1) how historical representations arouse nostalgic sensations and sensibilities in museum visitors (2) the role of narratives in visitors' development of their nostalgic experiences (3) the importance of engagement to the creation of such nostalgic experiences. The paper contributes to the existing literature on nostalgia, experiential consumption, and the museum experience literature by establishing a relationship between nostalgia, reflexivity, and individuals' narratives of self in the conditions of (post/late/high) modernity.     

Is the cure worse than the disease? The effect of emerging market MNEs on host country corruption

In recent years, there has been an exponential increase in the amount of foreign investment by emerging market multinational enterprises (EMNEs). While it has been debated whether EMNEs strengthen or weaken the institutions in host countries they invest in, the literature has paid limited attention to how EMNE investment impacts corruption in other emerging markets, one of the most significant destinations of EMNEs. Following Hoskisson et al. (2013), we categorize two types of emerging markets as targets of EMNE investment, a) low-income emerging markets and b) middle-income emerging markets, based on their institutional and market development. Building on the theory of firm-specific advantages (FSAs) and the institutional advantage (IA) of EMNEs, we reason that EMNEs enter foreign markets in accordance to where their skills and competencies can be effectively utilized, and this impacts corruption in the host country. We make two key arguments: (1) EMNEs predominantly use their IA in low-income emerging markets, which in the long term increases corruption in the host market, and (2) EMNEs predominantly use their FSAs to gain competitive advantage in middle-income emerging markets, which decreases corruption in the host market. Empirical analysis of Chinese outward FDI from the 2008-2018 period supports our hypotheses. Our research contributes to both the literature on EMNEs and corruption.     

Making implicit CSR explicit? Considering the continuity of Japanese “micro moral unity”

While there are many studies that address how well Japanese companies have adopted explicit CSR practices, our understanding of their own views on such practices is still limited, particularly of the difference in their views before and after the process of making implicit CSR explicit. The present research thus aims to address this apparent change by providing comparative case studies of two Japanese companies selected from two different time periods. The findings indicate there is a continuity observable in the mindset of these companies not a change. This contradicts existing literature and suggests that the process of making CSR explicit has not been accompanied by any real change in their mindset. The result shows that ethically questionable practices have been going on behind the explicitly articulated CSR policies and implies the difficulties of delegating the power to address societal issues to business organisations. This is important particularly now when the expectations of the public regarding the responsibilities of business towards society are on the rise.     

Is export promotion effective in developing countries? Firm-level evidence on the intensive and the extensive margins of exports

How effective are export promotion activities in developing countries? What are the channels through which export promotion affects firms' exports, the intensive margin or the extensive margin? Empirical evidence in this respect is scarce. We aim at filling this gap in the literature by providing evidence on the impact of export promotion on export performance using a unique firm-level dataset for Peru over the period 2001-2005. We find that export promotion actions are associated with increased exports, primarily along the extensive margin, both in terms of markets and products. This result is robust across alternative specifications and estimation methods.     

Multiple interpretations of “national culture” and the implications for International business: The case of Taiwan

This paper considers the implications for international business of cases whereby a country may have two, or more, conflicting interpretations of its “national culture”. A case study of the different ways in which Taiwanese self-initiated expatriates of the benshengren and waishengren social categories use their status as “Taiwanese” to do business in London suggests that the varying interpretations which people of the same national origin and ethnic group have of their “national culture”, as a symbol of identity, affects the social resources they can use. The paper concludes by considering new directions for studying national culture in international business, and for re-evaluating earlier research.     

Measuring the impact of online reviews on consumer purchase decisions – A scale development study

Consumers' exposure to online reviews influences their online retail shopping behavior. They search for reviews while evaluating products for purchase decisions. Past studies have indicated that online reviews affect the credibility and trust of the sellers and the products they sell on online platforms. Keeping this in view, the current paper aims to develop and validate a scale to understand the impact of online reviews on consumer purchase decisions. Data were collected from 431 young online shoppers for this research. The initial exploratory factor analysis (EFA) results helped identify four factors, viz. source credibility, volume, language and comprehension, and relevance which constitute the scale. The scale was validated by confirmatory factor analysis (CFA). The study's findings fill the gap of having a standardized scale that online retailers can use as indicators to assist consumers in their online decision-making. The discussions and implications support consumers' susceptibility to online reviews, an essential source for product and brand information in facilitating online consumers' purchase decisions.     

“New Normal” implications for global talent in the wake of economic nationalism and slowdown

As a result of global economies' protectionist policies, followed by economic nationalism and a downturn, there is a shortage of talent with the requisite skills, knowledge, and abilities to meet the contingencies amid COVID-19. The recent developments have necessitated multinational businesses to manage their talent in a new international business context. Therefore, the purpose of this paper is to explore the implications of the “New Normal” for global talent which is manifested by economic nationalism and slowdown. This study used an inductive method to qualitative research, conducted in-depth interviews with 28 top executives from multinational corporations. The implications for the global talent emerged from the current study as skill enhancement based on the emerged business model; training and development pertinent to new responsibilities and activities; adaptability to changes in the macroenvironment; emphasis on employee proactivity, experimentation, and risk-taking; emphasis on hyperspecialization to take on contract positions; global talent needs to participate in remote learning; global talent must emphasize on mental health issues; and registering in talent exchange programs to fill talent skill shortages.     

Long- vs. short-term performance perspectives of Western European,Japanese, and U.S. countries: where do they lie?

This paper examines the differences between Eastern and Western companies regarding long- vs. short-term orientations. Utilizing Hofstede’s long-term orientation index, this study scrutinizes both long- and short-term performance measurements for companies from Western Europe, Japan, and the United States. The findings suggest that Western European companies place an equally higher priority on both long- and short-term measures of performance compared to companies from Japan and the United States. Additionally, Japanese companies were postulated by the literature to employ a long-term orientation toward company performance greater than U.S. companies. However, our results do not support this statement, as U.S. and Japanese companies were not statistically significantly different.