The impact of home business network attributes on Chinese outward foreign direct investment

Researchers who take a network perspective argue that insidership in foreign market networks is a necessary condition for internationalization. In this study, we argue that insidership in home market networks also matters. The effect of home network insidership on outward foreign direct investment (OFDI) depends on both individual and joint effects of structural and relational network attributes. Our study based on a survey of 194 Chinese firms shows that firms in a central network position are more likely to engage in OFDI than those in a brokerage position. Furthermore, we find the interaction between firms’ centrality and their connections to foreign-invested enterprises to be significantly and positively associated with OFDI, whereas a significantly negative effect is evidenced when a firm is connected more to domestic firms.     

The effect of foreign partner network embeddedness on international joint venture failure: Evidence from European firms’ investments in emerging economies

Access to trusted information about potential local partners is a critical factor for international joint venture (IJV) stability and success in emerging economies. We build on social network theory and examine how foreign investors can benefit from their alliance networks in accessing reliable information on the availability, resources, and behavior of potential local IJV partners. More specifically, we examine positional embeddedness in networks and network density and how these factors help foreign firms mitigate behavioral uncertainty in IJVs and thus reduce the likelihood of failure. We use data on 349 IJVs formed by 132 European firms in emerging economies during the 1995–1997 period and event history analysis to test our hypotheses. Our findings indicate that having an alliance network is a necessary but insufficient condition to mitigate behavioral uncertainty of local partners. We find that only densely tied networks offer benefits of reliable information on potential local partners that ensure the longevity of IJVs and that a central position in an alliance network translates into lower IJV failure.     

Foreign institutional investors and dividend policy: Evidence from China

This study examines whether foreign institutional investment influences firms’ dividend policies. Using data from all domestically listed nonfinancial firms in China during the period of 2003–2013, we find that foreign shareholding influences dividend decisions and vice versa.Furthermore, changes in dividend payments over time positively affect subsequent changes in foreign shareholding, but the opposite is not true. Our study indicates that foreign institutional investors do not change firms’ future dividend payments once they have made their investment choices in China. Moreover, they self-select into Chinese firms that pay high dividends. Our evidence suggests that in an institutional setting where foreign investors have tightly restricted access to local securities markets and a relatively high risk of expropriation by controlling shareholders exists, firms can use dividends to signal good investment opportunities to foreign investors.     

Why do over-deviated firms from target leverage undertake foreign acquisitions?

This paper examines how deviation from firms’ target leverage influences their decisions on undertaking foreign acquisitions. Using a sample of 5746 completed bids by UK acquirers from 1987 to 2012, we observe that over-deviated firms are more likely to acquire foreign targets. Consistent with co-insurance theory, we find that over-deviated firms engage in foreign acquisition deals to relieve their financial constraints and to mitigate their financial distress risk. We also note that foreign acquisitions enhance over-deviated firms’ value and performance, measured by Tobin’s q and return on assets (ROA) respectively. These findings support the view that over-deviated firms pursue the most value-enhancing acquisitions. Overall, this paper suggests that co-insurance effects, value creation and performance improvements are the main incentives for over-deviated firms’ involvement in foreign acquisitions.     

Top management team’s formal network and international expansion of Chinese firms: The moderating role of state ownership and political ties

This article explores the role of the formal network centrality of top management teams (TMT) for foreign expansion, looking at the case of Chinese firms. The former is defined by the degree to which top managers are connected with TMTs of other firms in formal ways, through service as independent board members. We explore boundary conditions, comparing state ownership with political ties. The analysis of a panel data of 489 firms expanding to 72 developed and developing host markets in the period 2000–2012 confirms that network centrality facilitates internationalization. We found that TMT network centrality had a stronger effect on internationalization in developed than emerging markets. Conversely, state ownership had a positive moderating effect in the latter and political ties a negative effect in developed ones. The literature on comparative institutional analysis suggests that formal ties are more important in developed economies, and informal ties in emerging ones. However, formal political ties and/or links to the Chinese state may be more of value in internationalizing into other emerging markets, where the balance of diplomatic power may be more skewed in China’s favor.     

Network architecture and firm performance: A resources-based view

Previous studies have investigated alliance networks primarily from two alternative views, a relational view that focuses on the “strength of strong/weak ties,” or a structural view that refers to a firm’s position and structural embeddedness. We posit a firm’s network architecture, i.e., the portfolio of strong/weak ties, influences its conduct and performance. From a resource-based view, the network architecture itself could be a source of sustained competitive advantage. We argue that both network architecture and duration of a firm can enhance its performance. However, their effects and the interaction are contingent on different performance outputs. Using strategic alliance networks data from a survey of the manufacturing industry in China, we examine the performance implications of network architecture. Results suggest that benefits from networks may evolve with network duration, hence firms should search for optimal network configurations. By integrating an alliance portfolio, firms with dual network architectures can enjoy both the strengths of strong ties and weak ties and avoid the risks inherent in a pure strong/weak-tie network.     

An examination of the investments in U.S. biotechnology firms by foreign and domestic corporate partners

This study examines the characteristics that make start-up biotechnology firms attractive alliance partners. We distinguish between firm specific and location-specific characteristics as well as between foreign and domestic corporate partners. We present and test a longitudinal model of alliance development based on data from 64 public biotechnology firms. The results provide evidence that foreign and domestic alliance capital inflows are driven by different factors. Firm-specific factors explain minimal variance in capital inflows from foreign alliance partners; rather, location-specific factors seem to matter more. The reverse is true for domestic alliance partners. Further, our results suggest that firm size moderates the relationship between location-specific factors and capital inflows from foreign alliance partners such that larger firms benefit more when located in technologically munificent environments.     

The impact of early imprinting on the evolution of new venture networks

Given the argued importance of networks to new ventures, this paper is intended to fill a noted gap in the literature pertaining to the factors that influence the evolution of new ventures' alliance networks. Drawing on the imprinting literature, we propose that one has to look beyond the first partner per se, and instead focus on the extant relationships the initial partner has with other firms. More specifically, we argue and find that the network size and centrality of a new venture's initial alliance partner influence the subsequent size of the new venture's network.     

Liability of Foreignness and the Constitutive Legitimation of Foreign Firms in a Host Country

We examine population density effects on foreign firms’ likelihood to exit from a host country. The lack of constitutive legitimacy is an important aspect of the liability of foreignness experienced by foreign firms. Both foreign firms from a focal firm’s home country and foreign firms from other countries can provide constitutive legitimation for the focal firm. These intrapopulation and interpopulation legitimation effects strengthen with a greater psychic distance between the home and host countries; they also interact with and strengthen each other. Results based on a dataset containing 68,723 firm-year observations on 29,843 foreign firms in China support our predictions.     

Does partnering with the World Bank shield investors from political risks in less developed countries?

This study explores whether partnering with the World Bank’s International Finance Corporation (IFC) protects foreign investors from aggressive actions by host countries’ governments. Building on the obsolescing bargaining model, we theorize that host states fear that hostile actions towards IFC-supported investments will damage their relationships with the World Bank. Within this context IFC support deters host government aggression towards investments. We assess our argument using country-level panel data as well as interviews with a sample of high-level managers. Findings suggest that IFC-support helps to reduce host state aggression against investing firms.     

Do Firms Spend More on Suppliers That Have Environmental Expertise? An Empirical Study of U.S. Manufacturers’ Procurement Spend

Stakeholders expect focal firms to improve their environmental performance. While firms may be able to accumulate the environmental expertise needed to achieve this goal internally, doing so may require significant time and resource commitments. Alternatively, buyer firms can leverage their suppliers’ existing environmental expertise and gain access to such expertise when they purchase products and services from these suppliers. The purpose of this study was to develop and test theory regarding under what conditions suppliers’ environmental expertise influences a buying firms’ procurement spend with these suppliers. We ground our study in transaction cost economics and agency theories and empirically test our hypotheses using a unique buyer–supplier dyadic data set. We find that buyer firms are willing to increase their overall business spend with suppliers that have strong environmental expertise, particularly when the buyer firms are more profitable and have higher levels of absorptive capacity. However, we find the opposite effect when the buyer firm’s executive compensation is linked to the firm’s environmental, social, and governance (ESG) performance. Likewise, we also find that the buyer firm’s environmental concern ratings negatively moderate the relationship between the supplier’s environmental expertise and the buyer’s procurement spend with the supplier.     

Foreign direct investment,black economic empowerment and labour productivity in South Africa

The impact of foreign direct investment (FDI) on domestically owned firms in developing countries has been widely debated in the literature. It has been argued that FDI provides access to advanced technologies and other intangible assets, which may spill over to the host country and allow domestic firms to improve their performance. While there is a substantial literature on this issue, for obvious reasons, little is known about the effect of FDI on domestic firms in the African context. Noting this gap, this paper uses two-period (2003 and 2007) firm level panel data from South Africa to examine the impact of FDI on the labour productivity of domestic firms. A key policy change during this time period was the passage of the broad-based black economic empowerment act (BB-BEE) and we also examine the effect of the interaction between foreign firm ownership and BEE on labour productivity. Regardless of the empirical specification, we find no spillover effects and no evidence that a greater degree of BEE compliance by foreign firms influences labour productivity.     

基于博弈理论的大宗商品定价权联盟构建

目前,我国已经成为国际上许多大宗商品的最大买家。但全球大宗商品的定价权并未因我国成为最大买家而移至我国。在商品与服务的价格方面,我国还没有与自身地位相匹配的话语权。这是因为,我国铁矿石行业间缺乏有效的联盟,存在行业集中度低、竞争无序等问题,结果导致定价权与国内企业离得越来越远。大宗商品联盟缺失是导致我国定价权缺失的重要原因。基于博弈理论构建大宗商品的定价权联盟,是打破目前状况的一条根本途径。我国企业应借鉴国外企业的经验和路径,积极构建产业链联盟、企业联盟、金融联盟、采购联盟和营销联盟,以谋求我国企业在大宗商品上的国际定价权。     

制度学习、网络中心性和市场进入——跨国风险资本在华投资的实证研究

在我国风险投资市场不断繁荣而且跨国风险投资大量涌进的背景下,本文主要运用清科数据库2001年1月1日到201 0年1 2月31日的数据进行分析,研究发现跨国风险投资机构的网络中心性对"制度学习一市场进入"的关系具有中介作用。跨国风险投资机构不同的联合投资网络中心性对制度学习正向影响市场进入的影响作用不同,其中中介中心性的影响作用最大,表明跨国风险资本充当其他风险投资机构网络联结的中介具有重要的作用。在此基础上,本研究对跨国风险投资机构和本土风险投资机构的实践及联合投资网络的运作提出相应的建议,以期推动我国风险投资产业的有序发展。     

Spillovers from foreign direct investment and firm growth: technological,financial and market structure effects

This article examines spillover effects from inward investment on domestic firm growth in the case of a developed host country. The emphasis is placed on the role of the technological gap between domestic and foreign firms in identifying the importance of technology diffusion from the presence of multinationals. An augmented production function is employed to account for technological, financial and market structure effects. Based on a sample of 2589 manufacturing firms operating in Greece between 1992 and 1997, the analysis provides evidence that the significance of spillovers varies with the relative technological position of domestic firms and is higher in the middle and upper quantiles of the growth distribution. It was estimated that a unit increase in the foreign presence in Greek industry raises output growth by 7% on average, in a five‐year period, after controlling for technological differences among firms. This result is consistent with the ‘absorptive capacity’ hypothesis that the technological capability of the host country relates positively to FDI spillover benefits.     

Managing the foreign investment portfolio: How industry and governance diversity influence firm performance

Foreign investment has been seen as an important strategy for learning about new technologies and markets. However, the link between the characteristic of a foreign investment portfolio and firm performance has not been examined in detail. Using panel data from 199 Taiwanese firms, this study examines how the foreign investment portfolio in terms of industry and governance diversity influences firm performance. This study finds that governance diversity has an inverse U-shaped relationship to firm performance, whereas industry diversity does not. In addition, this study also finds that their relationships are affected by R&D capability and industry profitability. The empirical findings of our study are useful for firms that invest in emerging economies.     

Competing for large-scale infrastructure projects in the emerging Asian markets: Factors of success

This paper aims to provide some general guidance and factors of success for those interested in the burgeoning Asian infrastructure sector. What separates successful foreign contractors from those that flounder? This investigation is based on interviews with managers, directors and other executives from American construction and engineering firms that have had an established and successful presence in the region for at least 10 years. Also interviewed were representatives from government and local firms. The two groups typically play a vital role in the prosperity of the foreign contractor. Three general success themes emerged from our investigation: the growing competitive role of knowledge transfer, the use of local firm networks for managing government entities and the importance of adapting firm risk orientation to the host country's legal and cultural environment. The authors provide an overview of the challenges facing these emerging economies as well as the challenges to firms wishing to gain entry. The concept of a “triple alliance” between foreign firms, government constituencies and local entities is used as a framework for analysis.     

Subsidiary roles,vertical linkages and economic development: Lessons from transition economies

Vertical supply chain linkages between foreign subsidiaries and domestic firms are important mechanisms for knowledge spillovers, contributing to the economic development of host economies. This paper argues that subsidiary roles and technological competences affect the extent of vertical linkages as such as well as their potential for technological spillovers. Using survey evidence from 424 foreign subsidiaries based in transition economies, we tested for the effect of subsidiaries’ autonomy, initiative, technological capability, internal and external technological embeddedness on the extent and intensity of forward and backward vertical linkages. The evidence supports our main argument that the potential of technology diffusion via vertical linkages depends on the nature of subsidiary roles. We discuss the implications for transition as well as other developing countries.     

Do Foreign Firms in China Incur a Liability of Foreignness? The Local Chinese Firms’ Perspective

Liability of foreignness (LOF) has been one of the building blocks of multinational enterprise theory development, but we have limited knowledge about the liability of foreignness in the context of multinationals operating in developing countries. This study suggests that in a developing country like China, foreignness may still exist, but its negative impact on foreign firms’ performance may have become insignificant. Local Chinese firms were found to enjoy significant location‐based advantages over their foreign counterparts, contributing to liability of foreignness. However, the adverse effects of liability of foreignness on foreign firms appear to be offset by the foreign firms’ superior firm‐specific and multinationality advantages over local Chinese firms. Further, the location‐based advantages that foreign firms have built up over time further serve to strengthen their overall competitive position in China. © 2014 Wiley Periodicals, Inc.     

The role of market orientation,relational capital,and internationalization speed in foreign market exit and re-entry decisions under turbulent conditions

Firms’ internationalization strategies can vary with changing environments. Occasionally, a firm may choose to re-enter a foreign market it had abandoned in the past if environmental conditions have improved. The present study provides insight into the foreign market exit and subsequent re-entry processes. Specifically, we utilize the strategic flexibility perspective to investigate the impact of market orientation, relational capital, and internationalization speed on market exit and re-entry decisions under turbulence in a host market. Using a sample of 156 Turkish firms that operated during the Arab Spring in the Egyptian market between 2010 and 2015, we find that the market-oriented firms are more flexible in their market exit decisions than less market-oriented organizations. In addition, relational capital specific to the host country has a negative impact on market exit decisions under conditions of political conflict. The results also suggest that strong ties with partners in the host country increase the propensity to re-enter the market.