Firm heterogeneity and location choice of Taiwanese multinationals

This paper examines the extent to which production location decisions of Taiwanese multinationals reflect underlying patterns of firm productivity. In our theoretical model, heterogeneous firms in a middle-income country decide on the optimal production locations for serving three geographically separate markets: domestic, foreign high-income and foreign low-income. The model shows that the equilibrium decision of a firm depends on the fixed investment costs of establishing foreign subsidiaries, production costs, transportation costs, market size and its own productivity level.Using firm-level data in 2000, Taiwanese electronics firms are divided into four different categories: non-FDI, investors in China only, investors in the U.S. only, investors in both China and the U.S. We use a multinomial logit model to link firms' location choices with their productivity, controlling for country, industry and other firm characteristics. Our empirical results are consistent with the predictions of the theoretical model. We show that more productive firms engage in outward FDI, with the most productive ones investing in both China and the U.S. We also provide evidence indicating that Taiwanese multinationals investing only in the U.S. are more productive than those investing exclusively in China due to smaller fixed investment costs in China relative to the U.S.     

Firm heterogeneity and location choice of Taiwanese multinationals

This paper examines the extent to which production location decisions of Taiwanese multinationals reflect underlying patterns of firm productivity. In our theoretical model, heterogeneous firms in a middle-income country decide on the optimal production locations for serving three geographically separate markets: domestic, foreign high-income and foreign low-income. The model shows that the equilibrium decision of a firm depends on the fixed investment costs of establishing foreign subsidiaries, production costs, transportation costs, market size and its own productivity level.

Using firm-level data in 2000, Taiwanese electronics firms are divided into four different categories: non-FDI, investors in China only, investors in the U.S. only, investors in both China and the U.S. We use a multinomial logit model to link firms' location choices with their productivity, controlling for country, industry and other firm characteristics. Our empirical results are consistent with the predictions of the theoretical model. We show that more productive firms engage in outward FDI, with the most productive ones investing in both China and the U.S. We also provide evidence indicating that Taiwanese multinationals investing only in the U.S. are more productive than those investing exclusively in China due to smaller fixed investment costs in China relative to the U.S.     

Firm heterogeneity and location choice of Taiwanese multinationals

This paper examines the extent to which production location decisions of Taiwanese multinationals reflect underlying patterns of firm productivity. In our theoretical model, heterogeneous firms in a middle-income country decide on the optimal production locations for serving three geographically separate markets: domestic, foreign high-income and foreign low-income. The model shows that the equilibrium decision of a firm depends on the fixed investment costs of establishing foreign subsidiaries, production costs, transportation costs, market size and its own productivity level.Using firm-level data in 2000, Taiwanese electronics firms are divided into four different categories: non-FDI, investors in China only, investors in the U.S. only, investors in both China and the U.S. We use a multinomial logit model to link firms' location choices with their productivity, controlling for country, industry and other firm characteristics. Our empirical results are consistent with the predictions of the theoretical model. We show that more productive firms engage in outward FDI, with the most productive ones investing in both China and the U.S. We also provide evidence indicating that Taiwanese multinationals investing only in the U.S. are more productive than those investing exclusively in China due to smaller fixed investment costs in China relative to the U.S.     

Market-Entry Strategies in Poland -

This paper reports findings of a study undertaken on market-entry strategies of UK firms in Poland. It presents a cross sectional profile of UK firms investing in Poland, their motives for entering the Polish market, and their entry strategies and assesses their performance in terms of their entry strategies and experiences with regard to financial, technological, marketing and strategic aspects. The paper compares the findings with international market-entry theory and concludes by examining managerial implications of the study.     

The Location Choices of Multinational Firms: The Role of Internationalisation Experience and Group Affiliation

This paper investigates whether location choices of multinational firms depend on their past export, import or Foreign Direct Investment (FDI) experience on foreign markets or the experience of other affiliated firms. Regardless of locations' characteristics, we find that exporting in a given country, and to a smaller extent importing from it, significantly increases the probability of investing in that particular country the following year. This preliminary exporting phase appears more important for firsttime investors. Moreover, location choices not only depend on the investor's own international experience, but also on the international experience of other affiliated firms: firms tend to invest in countries where the group already exports or owns a local affiliate. These last findings suggest the existence of coordinated strategies and/or information sharing between affiliated firms.     

Integrating Foreign Languages and Cultures into U.S. International Business Programs: Best Practices and Future Considerations

This paper describes the importance of foreign languages and cultures and their integration into U.S. international business programs. The author juxtaposes globalization strategies of European and American business schools and highlights pre-university foreign language study in Europe and the U.S. The paper goes on to describe model U.S. undergraduate and graduate international business programs and their use of strategies that lead to professional proficiency. The author concludes with a discussion of strategies to be considered by U.S. business schools.     

Public policy influences on the formation of international joint ventures

The literature on international joint ventures (IJVs) devotes little attention to the influence of public policy on the formation of such alliances. This paper examines the influence on the recent growth in IJVs of U.S. and foreign governments’ antitrust, trade, and technology policies. Little evidence supports the claim that U.S. antitrust policy is a critical influence on the decisions of U.S. firms to collaborate with foreign enterprises. IJVs are rarely substitutes for the collaboration among U.S. firms that might develop in the absence of antitrust restrictions. The recent interest by governments in “strategic technology policy” and the growing importance of “managed trade” in some high-technology industries both have created new incentives for the formation of IJVs. There are some important parallels between recent international joint ventures and the international cartel agreements of the interwar period, but modern IJVs do not yet appear to have reproduced the cartelization associated with the international patent-sharing agreements of the interwar period. Nevertheless, the influence of these market-distorting government interventions on the incentives to form IJVs means that the effects of these alliances on economic welfare may be mixed and should be monitored carefully.     

Impediments to International Franchising in the Business Format Sector

Franchising in the business format area by U.S. firms is a dynamic industry with excellent growth potential in view of the crumbling down the barriers in the world economy. The authors have identified eight major impediments to the growth of international business format franchising as a result of a survey conducted among a sample of U.S. franchise marketing executives. The study has come up with some major recommendations for the U.S. franchisors to improve the effectiveness of U.S. franchisors to market and support franchisees in foreign coutries. The sample size being quite small, the study should be considered as an exploratory study, and several areas for future study have been recommended in this paper.     

Minimizing effects of ‘liability of foreignness’: Response strategies of foreign firms in the United States

While anecdotal and research evidence exists supporting the difficulties faced by foreign firms in host nation environments due to liability of foreignness, it is clear that many foreign firms have been successfully operating in the U.S. over the years. This study seeks to understand the strategies foreign firms use to cope with liabilities of foreignness in an alien environment and compete successfully with domestic firms, specifically through boundary spanning. Using a sample of 3861 firms in the U.S., we find that foreign firms on the average underperform compared to domestic firms. We also find these firms take a differing strategic posture to cope with the disadvantages of being a foreign firm compared to domestic rivals. Multiple mediation models indicate that once this strategic posture of foreign firms is controlled for, performance differentials do not exist between foreign and domestic firms.     

The 1939 New York World's Fair

Decades before the literature on marketing for non-profit organization emerged in Journal of Marketing, the New York World's Fair 1939 Corporation undertook the challenge to make the 1939 fair in New York City a truly “world's” fair. That nonprofit organization recognized, from its inception in October 1934, that only a customer-oriented marketing effort could transform a then ash-dump in Queens into a site where 60 nations and international organizations would ultimately construct memorable exhibits alongside showcases prepared by U.S. firms. While such a degree of foreign participation in a U.S. fair was unprecedented, success came largely because the nonprofit sponsors devised and executed a six-part international marketing strategy. This paper is a case study of how that nonprofit managed objectives, strategies, and tactics within an international marketing concept, with lessons still applicable for those managing such events in the 1990s.     

Who Survives in Japan? An Empirical Analysis of European and U.S. Multinational Firms in Japanese Manufacturing Industries

This paper provides new evidence on exit patterns of European and U.S. firms in Japanese manufacturing industries. Specifically, the paper tests two sets of hypotheses: (1) Japans distinctive business institutions and practices work against foreign firms and constitute a barrier to operate in Japan; and (2) the international configuration of business activities of foreign firms determines their post-entry performance in Japan. Using a new sample of 366 subsidiaries established during the 1973–1994 period in Japan, the paper finds, most importantly, that the exit pattern of foreign firms in Japan is influenced significantly by the industry-specific factors that determine infant mortalities and the subsidiary-specific factors that determine the subsidiarys international activities. On the contrary, this paper finds that Japans distinctive business practices are less likely to affect the exit pattern.     

Innovation capacity,international experience and export performance of SMEs in Brazil

Innovation capacity and international experience are factors often related to the internationalisation process of firms, with export activities as the first stage of the process. However, firms from emerging countries seem to show advantages and follow patterns of international expansion that may differ from firms based in developed countries, where the internationalisation models were created. Specifically, exporting firms from emerging countries tend to have limited resources, especially small firms (e.g., for investing in R&D). Despite these facts, the literature on export performance seems biased towards recommending firms to enhance, above all, their innovation capacity in order to achieve better export performance, while little attention is paid to international experience as a factor that is as important as innovation. In this context, the objective of this study is to investigate the impact of innovation capacity and international experience on the export performance of small and medium-sized enterprises (SMEs) located in an emerging country and to identify which factor is more significant. The Resource-Based View and Dynamic Capabilities approach were used as theoretical frameworks. A research model was developed and tested on a significant sample of Brazilian industrial SMEs. The data were analysed through partial least squares structural equation modelling. The results indicate that international experience has a greater impact on export performance than innovation capacity, showing that there is possibility of overemphasising the role of innovation in the export performance of SMEs, at least, in the Brazilian context.     

Standardization,Customization and Revenue from Foreign Markets

Abstract

This study develops theory and empirically tests the influence of heterogeneity (the degree of standardization or customization) of firm outputs on the globalization entry mode decisions, and receipt of revenues from foreign markets. To insure sufficient variance in the sample while also controlling for extraneous sectoral and national variables, this study obtained and analyzed cross-sectional data from 190 U.S. based firms in the environmental control industry. The findings indicate that the outputs of global firms are significantly less heterogeneous than the outputs of domestic firms, but that heterogeneity is not significantly related to the receipt of foreign revenues, or to the use of a higher control entry mode. These findings suggest that firms with more standardized outputs are more likely to globalize, but that standardization fails to help firms create any additional value in international markets compared to firms with more heterogeneous outputs.     

Service Firms Heterogeneity,International Collaborations and Export Participation

The paper investigates the relationship between service firms’ international collaboration strategies and export decision. It proposes an extension of the recent class of models of firm heterogeneity, intermediation and international trade according to which service firms can engage in a collaboration agreement with a foreign partner in order to favour their market access and distribution activities overseas. The paper analyses the empirical relevance of this model by means of a new survey dataset providing information on the internationalization activities of 814 Norwegian firms in the service sectors for the period 2004–2006. The econometric results point out that international collaboration, both on existing and on innovative services, is indeed an important factor to foster service firms’ decision to enter the export market.     

The Foreign Corrupt Practices Act's Consquences for U.S. Trade: The Nigerian Example

A by-product of the Watergate investigations into illegal political contributions and money-laundering was the revelation that American corporations had been making questionable payments to foreign officials to gain business advantages. That discovery was the driving force behind passage of the FCPA in 1977. Many since have complained that the law put American firms at a disadvantage in international trade. This paper assesses the credibility of that claim, as well as exploring the socioeconomic implications of corruption in a world of intensifying international competition. Based on the literature review, examination of international trade data and intensive interviews with foreign firms doing business in Nigeria, the paper reaches the following conclusions:1. Enforcement of FCPA has waxed and waned, but there is no evidence that its enforcement has impeded the growth of U.S. trade. In fact, trade with countries previously considered "bribe prone" has out-paced the growth of trade with non-bribe-prone countries, despite FCPA.2. Those American corporations which, in the past, were guilty of international bribery did so as a short-cut when adherence to time-honored ethics could have accomplished the same or better results.3. The "Storehouse of Knowledge" maintained by successful firms has been far more influential in promoting exports than any questionable payments they might be tempted to make.4. In most of the questionable payments investigated, American corporations had indulged in bribery to gain a competitive edge over other U.S. firms rather than foreign ones.5. Whatever the result, international bribery is inherently wrong for the same reason that domestic bribery is wrong.Despite criticism of it, FCPA has benefitted honest U.S. firms by reducing unfair competition among other American firms which comprise about 80 percent of the world's true multinationals. For multinationals to function in anything other than a transparent manner would be to impede the spread of democratic governments and market economies worldwide.     

SME Networks and International Performance: Unveiling the Significance of Foreign Market Entry Mode

This study investigates the relevance of interorganizational networks for the international performance of small and medium‐sized enterprises (SMEs) in relation to the foreign market entry mode (FMEM) selected. We distinguish two groups of internationalized SMEs: exporting firms and micromultinational enterprises (mMNEs). Drawing on insights from the network theory, our study accounts for the role of intermediate outcomes (innovative behavior and foreign market knowledge). Structural equation modeling is conducted in a sample of U.K.‐based internationalized SMEs. Our findings suggest that interorganizational networks have an indirect influence on international performance but differences are found among the two groups of internationalized SMEs.     

Trade Policy and Global Corporate Strategy

This article is an investigation of the linkages between the international trade and investment strategies of firms faced with global competition and the structure of protectionism. The first section briefly reviews the problems faced by businesses competing in a global environment characterized by triad power. It also provides a new framework which describes the various strategic alternatives available to firms when dealing with government trade policy. In the second and third sections, this theoretical framework is applied to explain a new global trading phenomenon: the recent escalation os U.S. "administered" protection. It is demonstrated how such protection can severely affect the environment for corporations when used as a strategic weapon by U.S. firms against foreign rivals. The fourth section assesses the response of Canadian firms faced with the issue of U.S. administered protection. It demonstrates how they have been able to influence government policy in order to diminish the impact of U.S. protectionism. This section also addresses the question of why certain Canadian firms oppose trade liberalization between the United States and Canada, in spite of administered protection, and how they have been able to influence the Canadian government in order to maintain "artificial" competitive advantages.     

Marketspace and the Internationalisation Process of the Small Firm

This empirical study explores the potential impact of the marketspace—the virtual world of digitised information—on the process of internationalisation within small technology-based firms (STBFs). Research findings demonstrate several effects relating to the firm's increased use of the marketspace for international business activities. In relation to internal resource-related effects, increased marketspace use is associated with: a stronger internal resource-base for international operations; and higher levels of internal international business information. Moreover, in relation to external resource-related effects, increased marketspace use is associated with: an increase in the firm's international orientation; an increase in the range and diversity of international business contacts; and an increase in unsolicited orders from foreign markets. This study confirms that the entrepreneur's prior Internet experience is a critical factor influencing use of the marketspace to support the firm's international operations. Similarly, organisational use of the marketspace (influenced by the previous experience of the entrepreneur) impacts upon certain aspects of the firm's internationalisation behaviour. Despite the significance of these findings, the marketspace is neither a replacement for traditional marketplace-based activities, nor is it a panacea that ensures effective small firm internationalisation. Complementary exploitation of both the marketspace and the traditional marketplace is likely to provide the optimal internationalisation route for small firms.     

The Growth,Decline and Survival of Small Businesses: An Exploratory Study of Life Cycles*

Using U.S. Census Bureau special tabulations, we follow a cohort of small (single‐establishment) firms formed in 1992 and a cohort of fast growers to 2002 to track their employment changes. Explorative findings showed growing firms as generally a constant share of the economy with a minor business cycle effect, growing firms outnumbering decliners, new firms not growing much, and fast growers in a given year tending to revert to the mean in the following year. The findings are presented as an opening statement, but are far from final salvo into the discussion of small‐firm growth.