FDI location choice of Chinese multinationals in East and Southeast Asia: Traditional economic factors and institutional perspective

This paper investigates the factors determining foreign direct investment (FDI) location choices of Chinese multinational firms. We developed a conceptual framework that synthesizes traditional economic factors and institutional perspective. Then several hypotheses were developed in line with the framework and empirically tested using panel data of Chinese outward FDI to eight economies in East and Southeast Asia across a time period of thirteen years. Our findings suggest that institutional factors demonstrate a higher level of significance, complexity and diversity in determining FDI location choice in comparison with economic factors, while both types of factors influence the FDI location choice of Chinese multinational firms. We also found that the FDI location choices of Chinese firms have a dynamic nature, as statistical evidence indicates a heterogeneous response of Chinese FDI towards different economic groups and during different time periods.     

Co-evolution of emerging economy MNEs and institutions: A literature review

This paper provides a review of the existing literature about the co-evolution of emerging economy multinational enterprises (EMNEs) and institutions and proposes directions for future study. We find that many existing studies involving the institution-EMNE relationship focus on the impact of institutions on EMNEs, and the research on their co-evolution is very limited in terms of emerging economies involved and theories and research methods applied. Given varieties of the institution-EMNE relationship we call for more studies by applying more contextualized theoretical perspectives and innovative and multiple research methods to advance our knowledge about the topic.     

International entrepreneurship research in emerging economies: A critical review and research agenda

This article systematically reviews and critically examines international entrepreneurship research in emerging economies (IEEE research), and articulates its importance, timeliness and relevance in consideration of the growing influence of emerging markets in the global economy. A systematic analysis of eighty-eight journal articles published over the last two decades reveals that IEEE research is a vibrant and rapidly growing stream of the broader international entrepreneurship (IE) domain, and that it is methodologically and topically diverse. Our review also shows that IEEE research has a limited presence in premier journals, is highly skewed in its geographic coverage, and is somewhat fragmented. We therefore inventory and critically evaluate the extant IEEE research with the aim of increasing its quality, coherence, scope, and impact. On the basis of our critique, we develop an ambitious research agenda that addresses a number of emergent global phenomena and raises exciting new questions for scholars in entrepreneurship, international business, and other related disciplines.     

Bring institutions into FDI spillover research: Exploring the impact of ownership restructuring and institutional development in emerging economies

Extant studies exploring the influences of foreign direct investment (FDI) spillovers on the productivity of local firms have provided conflicting evidence. In particular, they have largely overlooked the important role of institutional mechanisms in the host market in understanding the sources of the variation in FDI spillover effects on the productivity of local firms, especially in the context of emerging markets. Using a comprehensive panel data set of manufacturing firms in China during 1998–2007, our paper presents an integrative framework of how FDI spillovers affect the productivity of local firms in emerging markets. We identify an inverted U-shaped relationship between FDI spillovers and the productivity of local firms in China. This result suggests the coexistence of and the interplay between the opposing mechanisms of FDI spillover learning opportunity and adverse competition. Drawing on the institution-based view, this study also develops contingency frameworks and arguments to explore the question of if FDI spillover effects are contingent on, or independent of, a local institutional context especially in emerging markets. We find that institutional mechanisms, such as the institutionally determined ownership restructuring and the different levels of subnational institutional development within the host emerging market, significantly shape the variation of FDI spillover effects on the productivity of local firms. This research highlights the importance of incorporating institutional effects in understanding the FDI spillover effects in emerging markets.     

A co-evolution perspective of EMNE internationalization and institutions: An integrative framework of 5Cs

While significant progress has been made on the contextual role of institutions, scholarly research on the dynamic process of emerging economy multinational enterprises’ (EMNEs) international activities interacting with home country and host country institutions still seems to be in its infancy. Therefore, in order to move the current academic debate forward, we examine the intersection between the internationalization of EMNEs and their institutional environments by undertaking a critical review of the existing literature, given that institutional forces not only shape organizational behavior but also affect EMNEs’ internationalization strategies and organizational outcomes. We propose an integrative framework of 5Cs (context, capability, change, concomitance and configuration) underlying the co-evolution of EMNEs’ internationalization and institutions, and position all the papers included in this Special Issue within this framework in order to point towards a number of directions for future scholarship.     

Engagement in entrepreneurship in emerging economies: Interactive effects of individual-level factors and institutional conditions

This paper examines individuals’ engagement in entrepreneurship in emerging economies. We conceive of such engagement as encompassing opportunity discovery, evaluation, and exploitation. We investigate the influence of individuals’ household income and level of education on their engagement in entrepreneurship, as well as the interaction effects between these individual-level factors and country-level regulatory, cognitive, and normative institutions. We test our hypotheses on a multi-source dataset from 22 emerging economies using a multilevel analysis technique. Our results indicate that the direct effect of individuals’ household income on their engagement in entrepreneurship is persistent, regardless of institutional conditions; but the influence of education level varies contingent upon various institutional conditions.     

Country of origin and network effects on internationalization: A comparative study of SMEs from an emerging and developed economy

This study examines the internationalization of high technology small and medium enterprises (HTSMEs). It explores how they develop and use networks to penetrate their first foreign market relying on information collected via direct interviews with the CEOs or founders of 58 high technology small firms that operate internationally. It uses mixed methods to discuss the network building mechanisms identified — client–supplier relationships, existing personal contacts, contacts acquired by chance, and contacts acquired through specific strategies. The findings provide the basis for developing propositions for further comparative analyses of the internationalization of HTSMEs based in emerging and developed markets. The study contributes to the literature on networks, internationalization and international entrepreneurship.     

Entrepreneurship in post-socialist economies: A typology and institutional contexts for market entrepreneurship

There is growing recognition among post-socialist (PS) economies that free-market entrepreneurship is essential for ultimately improving their economic future. The promotion of market entrepreneurship, however, has been a challenging experience for these economies. This paper examines various forms of entrepreneurship in PS economies. Drawing upon the institutional theory, we also highlight the clear contexts and attendant mechanisms associated with institutions–entrepreneurship nexus in PS economies’ contexts.

Institutional investors and international investments in emerging economy firms: A behavioral risk perspective

While the extant literature has examined the influence of controlling and non-controlling principals on the internationalization decisions of emerging market firms, heterogeneity among non-controlling principals is largely ignored. The risk characteristics of different groups of owners, shaped by their institutional environments, could contribute to the differences in their preferences for firm internationalization. In this paper, we draw insights from institutional theory and behavioral risk perspective to examine the risk propensities and risk perceptions of various non-controlling principals, such as pressure-resistant (FIIs and mutual funds) and pressure-sensitive (banks, insurance companies and lending institutions) institutional investors. Empirical results from a sample of 2364 unique Indian firms during the 2005–2014 time-period show that, after controlling for firm-level resources and capabilities identified in prior literature, the ownership share of different types of institutional investors is associated with firms’ international investments differently. While pressure-sensitive institutional investors, such as banks and insurance companies, are not supportive of foreign investments by firms, pressure-resistant institutional investors, such as FIIs and mutual funds, are supportive of this strategic decision. Furthermore, our results show that the family ownership in a firm (measured in terms of family shareholding) further lowers the preference of pressure sensitive institutional investors for internationalization, whereas family ownership positively moderates the pressure resistant investors towards internationalization.     

Competing to be innovative: Foreign competition and imitative innovation of emerging economy firms

We examine the effect of increased competitive pressures within and outside the home market on the innovation of local firms. We argue that the relationship between exposure to foreign competition in domestic and international markets and firm innovation is better captured by imitative innovation than by radical innovation. We hypothesize that exposure to foreign competition inside and outside the home country is positively associated with local firms’ imitative innovation. Further, we argue that this relationship is contingent on institutional factors, including the role of the government, the legal system, and natural resource endowment. Using a dataset of 949 firm-year observations in the Middle East and North Africa (MENA) region, we find empirical support for the positive impact of competitive pressure on imitative innovation.     

Networking responses to different levels of institutional void: A comparison of internationalizing SMEs in Egypt and the UK

This paper reports a comparative qualitative study of how decision-makers in internationalizing SMEs respond to relevant institutions in their domestic environment through networking activity. Twenty SMEs are compared respectively from a developing economy (Egypt) and a developed economy (UK). The two countries contrast both in the effectiveness of their institutional support for SMEs and in their cultural norms towards network relationships. Substantial differences are found between the two national samples in SME decision makers’ networking behaviour in response to specific institutional conditions. The links between institutional conditions, national cultural norms and SME networking responses are explicated in a new theoretical model.     

Fostering integration through HRM practices: An empirical examination of absorptive capacity and knowledge transfer in cross-border M&As

Transfer of knowledge-based resources from acquirers to the acquired units has been ubiquitously emphasized as an important driver of post-acquisition integration. Equally emphasized is the importance of recipient unit’s absorptive capacity for the success of knowledge transfer and the facilitating role of HRM practices in developing absorptive capacity. In this paper, we integrate different streams of research on post-acquisition integration, knowledge transfer, absorptive capacity and HRM practices. Different from most past research, we pay attention theoretically and empirically to the multi-dimensional nature of both knowledge transfer and absorptive capacity. We test our hypotheses on a sample of acquired Chinese subsidiaries of 181 multinational corporations from seven countries. We find that successful inflow and implementation of knowledge require the acquired unit to have distinct types of capabilities each of which can be developed by a specific HRM practice. These results contribute literature by recognizing absorptive capacity as a manageable capability and identifying how different components of this capability could be developed by specific HRM practices. Furthermore, our results shed light on human side of M&As by examining how companies can foster post-acquisition integration by fine-tuning the absorptive capacity of acquired units.     

中国企业的学习型组织文化:基于人口统计变量、企业属性、工作满意度和组织绩效的实证分析

By using a Western concept—the instrument called dimensions of learning organization questionnaire (DLOQ), and the data collected from 919 employees in nine companies located in Guangdong Province, China, the present empirical study explores the culture of learning organizations in Chinese business settings. Findings suggest that the DLOQ is applicable to the context of China as well, and those demographic variables, such as age and educational level, together with the types of ownership of Chinese companies, such as state-owned enterprises (SOEs) and privately-owned enterprises (POEs), suggest differences in the culture of learning organizations. Results also indicate that the learning organization culture of a firm has strongly positive impact on employees’ job satisfaction and perceived organizational performance. Two implications should be noted. First, as employees in middle age and with college education show the strongest sense of improving the learning culture, it can be inferred that demographic characters and groups may influence the organization’s learning culture differently. Second, as POEs have a better learning atmosphere than SOEs, it can be inferred that POEs have a stronger competitiveness than SOEs in terms of learning ability and organizational performance. To indigenize the Western construct and instrument of learning organizations, the present study, as an exploratory research, gives substantial knowledge on the subject and seeks to fill the gap in the literature, despite the limitations of cultural nuances and a narrowly-concentrated sample.     

Mapping the impact of home‐ and host‐country institutions on human resource management in emerging market multinational companies: A conceptual framework

While there is a growing literature concerned with multinational companies from emerging markets (EMNCs), it does not contain a robust conception of how institutions shape human resource (HR) practices in such firms. We contribute to filling this gap through developing a framework of how institutions create a range of constraints and opportunities for EMNCs. Specifically, our framework contains three key elements of how MNCs from emerging markets interact with institutions: EMNCs develop approaches that to some extent reflect the perceived strengths and weaknesses of the institutions in the home country (institutional conditioning); the strategies of actors in EMNCs can overcome the weaknesses of the home country by drawing on institutions in other countries (institutional arbitrage); and the actions of EMNCs can reinforce, or create pressures for change in, the institutional context in the countries in which they operate (institutional change/consolidation). By mapping this set of strategies of EMNCs, we contribute to a fuller understanding of the relationship between institutions and HR practices, and we outline how the rise of EMNCs reshapes the global landscape by adding new kinds of firm behavior to capitalist diversity.     

The impact of salespeople's relational behaviors and organizational fairness on customer loyalty: An empirical study in B-to-B relationships

Although customer loyalty has proved to be a powerful determinant of firms' profits, the drivers of loyalty in B-to-B relationships are still unclear. Recognizing that both interpersonal and interorganizational level variables are needed to predict customer loyalty, the aim of this study is to investigate the combined effects of salespersons' relational behavior and organizational fairness in predicting customer satisfaction and loyalty. Results from a field survey in a B-to-B setting show that buyer loyalty is largely determined by the quality of the interpersonal relationship with the seller. Perceived fairness is central for building overall customer satisfaction and loyalty toward the supplier.     

A comparative analysis of location and non-location-bounded strategic asset seeking in emerging and developed market MNEs: An application of new internalization theory

Do emerging market (E)MNEs have a stronger strategic asset seeking FDI orientation than developed market (D)MNEs? If so, what are the properties of the strategic assets they actually seek and are they similar or dissimilar to those of DMNEs? Drawing from new internalization theory, we show that lying concealed within some mainstream EMNE models are important predictions regarding differences in the location-boundedness properties of the strategic assets sought by EMNEs compared with DMNEs. Using multinomial logit modelling on 2414 international M&A deals, we explore how acquirer characteristics shape location-bounded (trademark) and non-location bounded (patent) strategic asset seeking choices. In general, we find evidence that EMNEs have a comparatively stronger patent but weaker trademark seeking orientation than DMNEs. We discuss implications for EMNE related theory, focusing on the qualitative differences in asset seeking orientation between EMNEs and DMNEs.     

National culture, networks and ethnic entrepreneurship: A comparison of the Indian and Chinese immigrants in the US

This paper uses a combination of national cultural frameworks and social capital theory to explain the formation and management of entrepreneurial ventures among immigrant communities. The varying rates of venture formation and performance among different ethnic groups points to the role that the different dimensions of culture play in how immigrants use their social networks to start such firms. We use the specific example of the Indian and Chinese communities in the US to demonstrate this effect and explain how businesses created by members of these communities could have potentially different ways of starting and operating that can be directly traced to the differences in cultural orientation of their owners. What emerges can be summarized as: (a) different immigrant communities have different ways of accumulating and using social capital in starting and managing their ethnic ventures; (b) these dissimilarities manifest themselves in variations in the motives for forming these ventures, human resource practices and termination rates; and (c) that these variations can partly be explained by the differences in their respective national cultures.