Efficiency and Ownership Structure: The Case of Poland

We examine the effects of foreign entry on productive efficiency during the Polish investment liberalisation. The performance of foreign acquisitions is compared to foreign firms entering the market through greenfield entry, as well as domestic acquisitions of privatised firms, domestic greenfields and remaining state‐owned (non‐privatised) firms during the period 1995–2000. We find that foreign privatised firms have realised larger productivity gains than all types of domestic firms and that this is not due to higher price‐cost margins, which is consistent with the idea that foreign firms bring in firm‐specific knowledge. Foreign greenfields have the highest average labour productivity, while foreign privatisations show the largest productivity increase.     

Welfare gains from Foreign Direct Investment through technology transfer to local suppliers

We hypothesize that multinational firms operating in emerging markets transfer technology to local suppliers to increase their productivity and to lower input prices. To avoid hold-up by any single supplier, the foreign firm must make the technology widely available. This technology diffusion induces entry and more competition which lowers prices in the supply market. As a result, not just the foreign-owned firm, but all firms downstream of that supply market obtain lower prices. We test this hypothesis using a panel dataset of Indonesian manufacturing establishments. We find strong evidence of productivity gains, greater competition, and lower prices among local firms in markets that supply foreign entrants. The technology transfer is Pareto improving — output and profits increase for firms in both the supplier and buyer sectors. Further, the technology transfer generates an externality that benefits buyers in other sectors downstream from the supply sector as well. This externality may provide a justification for policy intervention to encourage foreign investment.     

Managerial Firms,Entry, and Switching Costs

Empirical evidence shows that switching costs are important in many industries. We analyze the welfare effects of entry into markets with switching costs when firms can be run by managers and the entrant may be partially foreign-owned. We find that with profit-maximizing firms, the welfare effect of entry depends crucially on the ownership of the entrant firm. We also show that entry is less likely with managerial firms than it is with profit-maximizing firms. In the latter case, entry always reduces welfare if the share of the entrant firm owned by foreign investors is high. However, with managerial firms, entry always increases welfare.     

In Search of Environmental Spillovers

There is an extensive literature that examines the relationship between foreign direct investment (FDI) and the productivity and competitiveness of domestic firms. Using estimation techniques from the productivity spillover literature, this paper tests for the presence of environmental spillovers from foreign firms. On the basis that foreign‐owned firms may encourage firms in their extended supply chain to improve their environment‐related management practices, evidence for the existence of environmental spillovers should be easier to find than productivity spillovers where firms naturally attempt to minimise intra‐industry knowledge leakage. In this paper we show that, first, foreign‐owned firms are more likely to implement environmental management systems (EMS) and, second, that the presence of foreign‐owned firms in those sectors that a firm supplies can encourage good environmental practice. This is especially true if a firm is foreign, has high absorptive capacity, and operates in the presence of formal and informal networks.     

Determinants of Entry in Turkish Manufacturing Industries

The entry of new firms into markets plays an important role in efficient resource allocation and evolution for long term economic growth. Employing dynamic panel data techniques, this paper investigates entry behavior in 66 four-digit Turkish manufacturing industries for the 1993–1999 period. The results of this paper suggest that potential entrants observe the market before the entry takes place; entry is, in general, a follow-up process; and incumbent firms seem to collude to prevent entry in Turkish manufacturing industries. In addition, the real interest rate appears to be a very important determinant of entry decision.     

Competing with multinational enterprises’ entry: Search strategy,environmental complexity,and survival of local firms

This study examines the competitive dynamics between foreign and local firms. We posit that multinational enterprises (MNEs)’s entry in foreign markets significantly reduces the survival rate of local firms in the short term, but that this effect gradually diminishes over time. The proposed conceptual framework is operationalized through the combination of the widely used agent-based model and the economic model of competition. The agent-based model allows us to study the behavior of firms under the context of different markets and the environmental complexity while the competition model determines the competition between firms as well as the entry and exit of firms. Our results obtained from the simulation study reveal that the negative effect of foreign entry is heightened as environmental complexity increases. However, local firms with a broader knowledge search are better able to confront the negative impact of foreign entry over time. We also find that the negative effect of foreign entry on the survival of local firms is weaker for local firms with a strong retrieval capacity.     

Turbulence in growing and declining industries

Turbulence over the industry life cycle is examined for the case of Portugal using the lowest possible level of industry aggregation, thus allowing for the use of panel data to study the evolution of product markets. Replacement of exiting firms by subsequent entrants plays a primary role in generating turbulence in high growth markets, while displacement of incumbents by recent entrants is the main selection force in declining markets. As the industry life cycle progresses, trial-and-error entry and entry mistakes decrease, and turbulence subsides.     

Export Premia and Subcontracting Discount: Passive Strategies and Performance in Domestic and Foreign Markets

This paper contributes to the literature on firms’ productivity and exporting decisions by analysing the role played by organisational choice aspects. Rather than setting up a vertically integrated structure, manufacturers may act as subcontractors in both domestic and foreign markets, and produce to satisfy the requirements of other firms. The predictions that the most productive firms self‐select into exporting, whereas the least productive ones work as subcontractors serving the domestic market only, are tested on a sample of Italian firms observed during the 1998–2003 period. The results of our estimates highlight a ranking of firms consistent with a priori expectations, and provide a clear indication that passive exporters (i.e. those using subcontracting in foreign markets) display lower total factor productivity (TFP) values when compared with direct exporters. Moreover, only the latter category exhibits higher pre‐entry productivity levels and growth rates as well as higher post‐entry TFP growth rates. Such findings are consistent with both the self‐selection hypothesis and the learning‐by‐exporting explanation.     

State‐owned Enterprises,Exporting and Productivity in China: A Stochastic Dominance Approach

A popular explanation for China's rapid economic growth in recent years has been the dramatic increase in the number of private domestic‐ and foreign‐owned firms and a decline in the state‐owned sector. However, recent evidence suggests that China's state‐owned enterprises (SOEs) are in fact stronger than ever. In this paper, we examine over 78,000 manufacturing firms between 2002 and 2006 to investigate the relationship between ownership structure and the degree of firm‐level exposure to export markets and firm‐level productivity. Using a conditional stochastic dominance approach, we reveal that although our results largely adhere to prior expectations, the performance of SOEs differs markedly between those that export and those that supply the domestic market only. It appears that China's internationally focused SOEs have become formidable global competitors.     

Antecedents of international and domestic learning effort

We examine the antecedents of international and domestic learning effort in independent firms. We combine learning theory and the “attention-based” view to examine how firms' degree of internationalization, the age at international entry, and entrepreneurial orientation are associated with the extent to which they engage in foreign and domestic learning activities. In particular, our study shows that early entry in foreign markets and an entrepreneurial orientation are positively related to a culture that promotes learning effort in international and domestic markets. On the other hand, whereas a firm's degree of internationalization does not have a significant association with international learning effort, the degree of internationalization is negatively related to domestic learning effort. We discuss the implications of our study for theory, practice, and future research.     

The order and size of entry into international markets

When entering markets, managers must decide when to enter as well as how many resources to commit to the entry. The study finds that larger initial resource commitments do not result in higher market share and market survival in international markets. Instead, to improve performance in international markets, managers should strive to be first entrants. Further, first entrants typically commit fewer resources, suggesting that this strategy can be pursued by firms with limited resources.     

The DNA of the domestic value added (DVA) in exports: Firm‐level analysis of DVA in exports

This paper sheds light on the relationship between domestic value added in exports (DVA) and the different ways firms participate in GVCs by exploiting a detailed firm‐level data set for the whole population of Slovenian exporting firms for the period 2002–14. The paper draws attention to those firm characteristics that allow a greater share of DVA to be captured. Although reliance on industry‐level data from input–output tables is the most common way of doing this in the literature, this paper develops a method for estimating DVA in exports using firm‐level data by adapting the approach taken by Kee and Tang (2016). The paper finds that in terms of DVA, domestic‐owned exporting firms outperform more productive foreign‐owned firms and that firms not affiliated with permanent suppliers from abroad capture higher DVA in exports. Positive outcomes of DVA in exports can be observed, all else being equal, for firms with a larger share of intangible capital per worker and firms with a smaller share of exports based on imports of the same products. The results also show that when exporting more to less demanding markets, like the countries of former Yugoslavia, firms benefit more in terms of greater DVA gains in exports.     

Internationalization of Western Venture Capitalists into Emerging Markets: Risk Assessment and Information in India

This paper provides the first analysis of the internationalization of venture capital firms through an examination of risk assessment and information usage by firms in India. Personal interviews were conducted with executives in 31 (84%) of the active venture capital firms. The paper extends previous research by comparing perceptions of the behavior of domestic venture capital firms in India, foreign (primarily U.S.) venture capital firms in India and U.S. venture capital firms in their domestic markets. Foreign firms in India place significantly greater emphasis on product market factors and accountants' reports than domestic firms in India. They place significantly less emphasis on financial contributions of management in assessing risk and own due diligence and information from entrepreneurs than do U.S. firms in their domestic market. They make more use of information from trade publications and relating to production capacity and technology and information from accountants' reports than do domestic venture capital firms in India. The evidence is consistent with venture capital firms adapting to local market conditions rather than implementing "recipes" from their domestic markets.     

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.     

对外直接投资与企业生产率——基于中国上市公司的实证分析

文章先利用K-S检验研究中国制造类上市公司的全要素生产率分布,结果与HMY模型的预期一致,对外直接投资企业的全要素生产率分布显著优于出口企业和仅在国内生产销售的企业。进一步探讨对外直接投资与生产率的关系,结果表明,企业在进行对外直接投资时不存在显著的自我选择效应,但是,对外直接投资能够促进企业生产率的提高,具有学习效应。     

Do Domestic Firms Benefit from Foreign Presence and Import Competition in Irish Services Sectors?

This paper examines whether domestic firms benefit from the pro‐competitive effects of imports from abroad and from the presence of foreign‐owned firms in the host country in three Irish market‐services sectors between 2001 and 2007. Grouping the three sectors together masks opposing effects in individual sectors. Where significant, the effect of foreign presence on domestic firms tends to be negative, this is mainly the case in wholesale and retail trade. Despite it being of lesser importance than foreign presence in these sectors, import competition from abroad is negatively associated with domestic firms' productivity in wholesale and retail trade, but positively in transport, storage and communication. There is no significant effect of foreign presence or import competition in real estate, rental and business activities. Using capital‐labour ratios as an input‐based indicator related to productivity suggests that domestic firms adapt to increased foreign competition by adjusting their inputs.     

Local integration and co‐evolution of internationalizing Chinese firms

This study investigates the integration of internationalizing Chinese firms into local host markets. We explore the market‐driven investment of a new wave of Chinese private and local state‐owned firms in Australia since 2012, which has replaced the initial large‐scale investment in resources by central state‐owned enterprises. Using an in‐depth analysis of nine Chinese firms operating in various sectors of the Australian market, we argue that market integration, adaptation, and bilateral institution‐building through co‐evolution and empowerment of local subsidiaries of Chinese multinational enterprises results in entrepreneurial autonomy and characterizes a new generation of Chinese investors. We propose that Chinese multinational subsidiaries have transferred domestic practices to the Australian market and have reconfigured domestic and host market resources to gain a competitive advantage in their original investment industry and new industries. Our study advances middle‐range theory building and provides a practical understanding of the strengths and weaknesses of Chinese investors, their potential to disrupt local markets, and their responsiveness to market‐oriented institutional guidance. The results of this study suggest that the bilateral institution‐building and resource reconfiguration capabilities of Chinese enterprises can be transferred to other developed and developing markets, including Belt and Road Initiative countries.     

Does Exporter Turnover Contribute to Aggregate Productivity Growth? Evidence from Malaysian Manufacturing

Malaysia’s economic success is to a significant extent underpinned by its export‐oriented manufacturing sector. The sector has a large foreign presence, with MNCs attracted by the open trade and investment regime, and FDI‐friendly policies. Using unpublished manufacturing census data for 2000 and 2005, we apply the methodology by Foster et al. (1998) to decompose productivity growth. The analysis shows that exporters were more productive than domestic‐oriented establishments, and were distinctly more competitive. The empirical evidence also shows that establishment turnover is important in boosting productivity growth. In particular, we find that turnover of exporters made a larger contribution to aggregate productivity growth compared with domestic‐oriented establishments during the period from 2000 to 2005. Surviving establishments (those that operated in both years), on the other hand, made a negative contribution. It is noteworthy that entrants to export markets were more productive than surviving non‐exporters and even surviving exporters. Exiters from export markets or ‘export failures’, on the other hand, were less productive than continuing exporters. Given the importance of turnover to productivity growth, the government should ensure unrestricted entry to the export sectors for both foreign and domestic investors. Continuing with pro‐FDI policies is also important, given the keener global competition.     

Factors enhancing the choice of higher resource commitment entry modes in international new ventures

The choice of entry mode in foreign markets is an important strategic decision with major consequences for the success of international new ventures (INVs). It is generally accepted that these firms choose relatively low-resource commitment entry modes to operate in foreign markets. Nevertheless, some researchers have suggested that higher resource commitment entry modes in foreign markets also seem to be competitive strategies for INVs. In this study, from a marketing/international entrepreneurship interface perspective and focusing on organizational issues, we center our attention on international market orientation as a neglected yet important factor in INVs’ choice of higher resource commitment entry modes in foreign markets. We suggest that an entrepreneurial orientation and the timing of international entry are important correlates to an international market orientation. We also suggest that the international learning effort of INVs through their international market orientation has a direct, positive impact on the resources these companies commit to their foreign markets through the use of higher resource commitment entry modes. Accordingly, the model proposes a positive effect of entrepreneurial orientation and early international entry on international market orientation which, in turn, is positively related to higher resource commitment entry modes. The hypotheses were tested on country-level data from Spain, using a structural equation model to analyze relationships between the latent variables.This study extends previous international entrepreneurship research, including insights on antecedents of international new ventures’ choice of resource commitment entry modes in foreign markets. The paper also goes further than previous international entrepreneurship research, by addressing the strategic consequences of rapid entry into foreign markets. Additionally, the results of this work encourage international entrepreneurs to look beyond the explicit value of experiential market knowledge to realize the potential value of international market orientation as an antecedent to higher resource commitment entry modes.     

An analysis of U.S. small and medium‐sized manufacturers' international business relationships

Notwithstanding the dominant role of the United States in world trade, little is known about the relationships between smaller indigenous manufacturers and their foreign customers and how these differ from domestic market relationships. Using data from a recent study among 201 U.S. small and medium‐sized enterprises (SMEs), the article reveals that (a) these firms tend to put much more emphasis on the domestic side of their business, while the foreign market receives secondary treatment; (b) the atmosphere governing their relational exchanges differs in the two types of markets, being relatively healthier in domestic business; and (c) their domestic business performance levels, although moderate, are significantly higher than those found in foreign markets. © 2004 Wiley Periodicals, Inc.