Effects of the Value Chain in International Joint Ventures

Summary

This paper examines differences in the resource profile and experience of Sino-foreign joint ventures located in the two sectors: non-consumer electronics and fast moving consumer goods [FMCG]. It identifies key dimensions along which the two sectors differ and considers the implications for joint ventures. The impact of sectoral differences suggests that the industrial sector of China into which a foreign company invests is of consequence, especially for the business priorities of Chinese partners and for the ease with which a joint venture can be managed through the foreign partner's corporate network. Foreign partners are likely to find more flexibility, and a greater opportunity to influence joint venture management in the FMCG sector compared with non-consumer electronic sector. The physical and infrastructural features of the sectors appear to be particularly consequential for managing an investment in China, and they may be more significant than institutional factors.     

Image risks of servitization in collaborative service deliveries

Although servitization is seen as a potential process for reputable goods manufacturers to expand their business, it also involves risks to company image. External partners, such as suppliers and third parties, have played an increasing role in manufacturing firms' service business, but their image effects are poorly understood. This paper discusses the image risks of servitization in manufacturing companies, particularly when they operate collaboratively with third parties. An embedded case study was conducted in two units of a case company in the engineering industry. The results revealed that a good company image plays a key role in customers' selection of service providers, but this image is strongly influenced by third-party performance during service delivery. As a key contribution, this study suggests that third-party image risks are strategic issues that can direct and guide the servitization process at the level of strategy, operations, and company identity.     

Rapidly with a Rifle or more Slowly with a Shotgun? Stretching the Company Boundaries of Internationalising ICT Firms

Small firms start operating internationally much more quickly than was previously the case. However, this requires that companies acquire resources and skills in a significantly shorter time than earlier. This paper discusses the pressures that such development puts on company boundaries from the viewpoint of Finnish ICT companies. Our findings indicate that the rapidity of internationalisation is positively correlated with the number of foreign partners but reverse to our expectations, i.e., the more partners the firm has, the slower its start of international operations. Additionally, the study confirmed that a rapidly internationalising firm has a narrowly defined core competence. Surprisingly, rapidly internationalising firms searched for partners with similar type of competence instead of complementary one. This indicates that the associations between core competence and rapid internationalisation deserves more attention.     

Regional location of multinational corporation subsidiaries and economic development contribution: Evidence from the UK

The regional location of multinational corporation (MNC) subsidiaries in their host country and their associated entrepreneurial output and networking activities are likely to affect their economic development contribution, measured in terms of technology and management know-how transfers; enhancement of innovativeness of other firms; and company spinoffs. This theme has considerable research and public policy value. We investigate the issue drawing from a large-scale study of 264 MNC subsidiaries based in the UK. The findings show that activities in developed regions are associated with higher economic development contribution than those in less developed regions. Moreover, entrepreneurial output and networking with partners external to the MNC system positively affect economic development contribution. Key implications of this study are that entrepreneurship critically influences economic development contribution, underlying the importance of the MNC subsidiary research stream; and that the policy practice of supply-side measures fostering entrepreneurial output and embeddedness in local networks seems to be appropriate to pursue.     

Getting Innovations Out of the Supplier Networks

Current research on purchasing is very much characterized by an interest in relationships. The earlier emphasis (within research as well as among practitioners) on the independence of the buying company-on handling suppliers at arm's length-has gradually been replaced by a more "cooperative" approach. Suppliers are generally more looked upon as external resources, which can be more efficiently used within the frame of close and long-term relationships. A corresponding interest for relationships can be found within research on technical development. There is an emphasis on the importance of relating their own development activities to the development of important counterparts and several studies point to the advantages of technical cooperation. The topic of this article thus involves two different, but in many aspects closely related problem areas, i.e., purchasing and innovation, and in order to treat them in an integrated way and to handle the connections that exist between them we use a network approach. The article is based upon two types of empirical data regarding corporate collaboration in technical development. First, material from a cross-sectional study is used to describe some general characteristics of innovative relationships. Secondly, there are two case studies which illustrate the situation where a buying company tries to combine several relationships in a development project. There are a number of opportunities and problems facing a company which tries to involve its suppliers in technical development, and this article puts forward four key issues concerning the handling of cooperative development processes: the problem of choosing partners as well as of trying to interest and engage those chosen; the problem of synchronization, in technical and other dimensions, of the actors involved in the development process; the problem of timing within and between various relationships; and, as there will always be some resistance to technical change within an industrial network structure, there must also be a mobilization of forces in favour of the development. In conclusion, a penetration of the four key issues in light of the empirical findings gives rise to some managerial implications regarding the use of network relationships in technical development.     

SANMENXIA OPENS ARMS TO Investment Outside

On March 10, Sanmenxia Economic Cooperation Projects Promotion Conference, sponsored by Sanmenxia Government and sported by China Chamber of International Commerce （CCOIC） and China Tourism Association, was opened in Beijing. 400 entrepreneurs in the industry of tourism, agriculture, textile, catering as well as chemical and metallurgy etc; from home and abroad partici-pated in the promotion conference.     

The path to competitiveness: Strategies for investment in Central Europe

The author, who has consulted widely on investing in Central Europe over the past 10 years, is upbeat on the prospects for investors in the region, provided they bear in mind several caveats. The most important requirement, he contends, is to find strong local support and partners for any enterprise. In this article, the author takes a close look at two post-privatization companies and finds that some of Central Europe's industries are more adaptive to the market environment than others. The privatized Borsodi brewery in Bôcs, Hungary has grown profitable as the beneficiary of Western marketing savvy since its acquisition by the Belgian Interbrew, S.A., the world's fourth largest brewer. But the Polish Star truck company has failed to adapt its trucks to wider markets since private investors took an equity position in the company. The author finds that the main failures were due to poor partner selection. Weak foreign leadership, failure to create a strong collaborative climate with local target companies and lack of training have also plagued many investments in the region. The success of foreign investors, he argues, also lies in granting the proper respect to the nationalism that is prevalent in Central Europe.     

Industrial groupings and foreign direct investment

We explore worldwide foreign direct investment (FDI) location decisions by Japanese manufacturing firms from 1985 through 1991. Our conditional logit estimates provide evidence that firms' location decisions are affected by membership in either vertical or horizontal keiretsu. Consistent with previous studies that stress agglomeration effects on firms' location decisions, we find that the stock of investment in a region by a firm's vertical keiretsu partners increases the probability of location. Further, we find that the recent flow of investment into a region by a firm's horizontal keiretsu partners increases the probability of investment to the region, providing evidence of networking effects.     

Betriebliche Bündnisse für Besch?ftigung in der Krise 2008/2009 erfolgreich

The favourable employment records of the German economy during the crisis 2008/2009 is related to the pacts for employment and competitiveness concluded at the company level and characterized by concessions from both bargaining partners. In these pacts work councils agree to company-specific deviations from an industry-level contract such as reduced wages in exchange for employment guarantees. In our analysis we use the IAB-Establishment Panel Survey data from the years 2006 to 2010. We find evidence suggesting that companies which adopted these pacts during the crisis reduced the number of employees less since they were more active with respect to specific measures to cope with the crisis.     

The core-customer concept

The purpose of this paper is to define and discuss the core-customer concept. This concept examines how a company develops its operations around a single or only a few customers. The customer steers what products and services the supplier develops, which means that it is the customer that dictates the supplier's operations. The core-customer concept may be one method for designing a company's operations, but the paper also aims to challenge companies to consider how they think about customers. The paper contributes to research on customer value and extended service offerings by indicating a business-development strategy based on the customer rather than the supplier's operations. Building a company around a single customer, requires flexibility and competences in finding collaboration partners or in adjusting the organisation to new requirements. The paper refers to these as secondary/supporting competences, while the core competence upon which the company builds its operation is the customer.     

8848“魂”归何处?

一个中国电子商务历史上曾经辉煌耀眼的8848令人痛惜地“倒下”了,一些电子商务企业又在这些原8848创始人的手中站起来     

At the intersection of markets: EFTA investments in the area of Hamburg/Schlesivig-Holstein

About a year ago Herr Kurt Ladendorff, auditor in Hamburg, caused quite a sensation with his projected establishment of “europoint”, an international conference centre in the Hamburg suburb of Wedel, located in Schleswig-Holstein. Whilst the interest of local papers concentrated on the projected super-hotel, the restaurants for gourmets, bowling-alleys, and other recreation centres, the interest of experts focussed on the question of why it should be the Hamburg region where such an international meeting centre is to be established. According to the wishes of its planner “europoint” is to be an international meeting centre not only between the economic blocs—i.e. above all between EEC and EFTA — but over and above this a show-window, a permanent trade fair for EFTA firms establishing themselves in the Common Market. Particularly in view of this latter task no better location could be thought of. Last years’ company promotions in the EEC area, initiated by firms domiciled in EFTA countries, have been concentrating conspicuously on the Hamburg/Schleswig-Holstein region. In the following contribution our author investigates kind, size, and importance of these company promotions.     

Parent control mechanisms,knowledge attributes,knowledge acquisition and performance of IJVs in Taiwan service industries

The study explores parent companies' use of control mechanisms in their international joint venture (IJV), IJV knowledge acquisition and IJVs' performance. Traditionally, control mechanisms are criticized for potentially limiting autonomous learning. However, we propose that knowledge-oriented control mechanisms used by the parent company on its subsidiaries could facilitate knowledge acquisition and learning. This study takes samples from 104 Sino-foreign joint ventures in service industries in Taiwan. The results of the study indicate that in IJV, parent companies require a ‘personnel training’ control mechanism as a guide for gaining codified knowledge from foreign partners. MNCs should apply ‘culture’ and ‘performance’ control mechanisms to gain non-codified knowledge. In turn, the tacit knowledge of IJV results in a better economic, competency-based performance, while explicit knowledge more significantly influences the synthetic performance.     

Analyzing the likelihood and the impact of earnout offers on acquiring company wealth gains in India

The study seeks to assess the likelihood and impact of earnout offers on the acquiring company wealth gains in cross border acquisitions in India. The study highlights two cases where earnouts are preferred choices of the acquirer. Firstly, in those cases where the target company is in hi-tech and services sector employing high level of intangible assets that are difficult to value. Secondly, in those cases where the acquirers are mature and already have some international exposures. The results of the event study indicate that earnout offers create significantly higher wealth gains compared to the cash offers only and not the stock offers.     

Industry characteristics and internationalization processes in small firms

The purpose of this study of small firms is to compare the process of internationalization in traditional manufacturing companies with corresponding processes in companies oriented toward innovation. Case studies were conducted in six small Nordic companies: three conventional and three innovative. The underlying concept of the conventional companies is strictly production oriented. Investment in engineering workshops and an effective organization for production constitute their most important strategy. In the innovative companies the production equipment is relatively easy to move, and over the years these companies have changed the location of production plants a number of times. The basic meaning of technology also differs in the two categories of industries. The conventional companies are based on an established technology that can be purchased through well-known market channels. In the innovative companies the process of developing new products or serving as intermediary between research organizations and end users demands close contact with people and organizations close to the technological core of the industry.The conventional companies are incorporated into a multidimensional industrial system of suppliers, competitors, and other companies, and the individual companies within these industries are constrained by the rules dictated by these networks. The innovative companies all have a concentrated product scope, which implies that it is relatively easy to achieve efficiency in various functions such as R&D, production, and marketing activities. This clear distinction between functions has been advantageous to the process of internationalization.The conventional companies have characteristics typical of family-controlled companies, i.e., the management team consists of a handful of people often closely associated with the owner family. The observation on the industry level that the game is governed by some very rigid rules is also evident on the management level, where the significant people are always kept within narrow limits. The individuals in the innovative companies have a very high level of education; they work in teams together with partners from other companies and/or organizations and they adhere to high professional demands.The results from these six case studies indicate that the internationalization process must be understood in the context of the industry, company, and people involved. International trade and cooperation will most certainly increase. Therefore it is important to observe that the conditions for industries and single companies are different. Conventional companies have a natural local concentration that ultimately implies different strategies from the innovative companies who have a global focus.     

Capital Structure Across Industries

The purpose of this article is to examine the capital structure across different industries for companies quoted on a stock exchange and headquartered in the United States. The paper demonstrates significant difference in the capital structure depending on the industry where the company operates. The debt ratio sensitivities to the explanatory variables differ significantly between the five industries studied. Almost every significant coefficient obtained in our regressions is in accordance with capital structure theory and other studies. Debt ratio is negatively related to profitability, growth, and age, while asset structure and company size are positively related. However, the debt ratio of the 50 largest companies in the sample is negatively related to company size, which gives support to a currency hedging hypothesis.     

Formal international contracts in the presence of cultural distance: An empirical analysis of biopharmaceutical alliances

Formal contracts are designed to manage the moral hazard issues and inherent risks that come with relationships between organizations. These contracts play an important role in nonequity international alliances, where greater cultural distance between the partners gives rise to more uncertainty in the relationship. At the same time, the contract is the outcome of a negotiation process, and this process is affected by the cultural distance between the partners. This article addresses whether cultural distance affects contract design and content. Rather than test an established model, we use an inductive approach to conduct a detailed empirical analysis of 135 two‐party international research‐and‐development contracts for clinical development in the biopharmaceutical industry. The results show that cultural distance wields complex effects on the contract and its content. They also indicate that a contract will be less detailed—with fewer monitoring clauses and a narrower definition of the collaborative scope—when the partnering firms operate in highly distant national cultures.     

Cross-sector Alliances for Corporate Social Responsibility Partner Heterogeneity Moderates Environmental Strategy Outcomes

This article provides a new mechanism in understanding how partner heterogeneity moderates an alliance??s ability to advance corporate social responsibility goals. I identified the antecedents for firms to select a more diverse set of partners and explored whether more diverse alliances (especially cross-sector alliances) may facilitate partners to achieve more proactive environmental outcomes. I employ 146 environmental alliances formed in the U.S. between 1990 and 2009 to test the assertions. Results suggest that firms with innovative orientation and alliance experiences tend to choose a more diverse set of partners (especially cross-sector partners); and such partner heterogeneity in turn moderates an alliance??s environmental outcomes??compared to inter-firm alliances, cross-sector alliances are more likely to facilitate partners to pursue more proactive environmental strategies.     

International Market Entry Strategies of Emerging Market MNEs: A Case Study of Qatar Telecom

ABSTRACT

Drawing on existing theoretical perspectives and previous research, this study essentially investigated the strategic motives, location choice, and international entry mode strategies of emerging market multinational enterprises based on a case study of a telecom company, Qatar Telecom (Qtel) from the Gulf Cooperation Council. Using empirical findings from the semi-structured interviews, this study has clearly indicated that the main strategic motivation behind Qtel's internationalization was essentially opportunity seeking in terms of enabling market development and generating higher return on investment. Although Qtel used different entry strategies depending on the characteristics of host country markets, the company is more in favor of mergers and acquisitions than greenfield investments.     

Learning from own and others’ previous experience: the contribution of the venture capital firm to the likelihood of a portfolio company’s trade sale

The objective of this paper is to examine to what extent different venture capital firms contribute to the likelihood that the portfolio company in which they invested will realize a trade sale. We use arguments from learning theory to hypothesize the relationship between vicarious, experiential and congenital learning of the venture capital (VC) firm and the trade sale hazard of its portfolio companies. Based on our analysis of 206 VC-backed UK start-ups, we find that both trade sale experience of the VC and learning from syndicate partners with trade sale experience significantly increase the trade sale hazard. The routines and procedures learned from experienced syndicate partners complement experience accumulated through trial and error. Congenital trade sale experience of the investment managers on the contrary has no significant influence on the acquisition hazard.