Foreign entry and survival: Effects of strategic choices on performance in international markets

This paper investigates effective strategies that can reduce the risk of failure in international expansion by examining the entry and survival of foreign subsidiaries in the U.S. computer and pharmaceutical industries over the 1974-89 period. Using a hazard rate model, we examine the effects of (1) diversification strategies, (2) entry strategies, and (3) organizational learning and experience on the survival probabilities of foreign subsidiaries. The results show a higher exit rate for foreign acquisitions and joint ventures than for subsidiaries established through greenfield investments. The results also indicate a higher exit rate for subsidiaries that diversify than for those that stay in the parent firm's main product areas. Finally, the results show that firms benefit from learning and experience in foreign operations, which improves the chances of success for subsequent foreign investments. These findings shed light on the dynamic process of international expansion and the evolution of the multinational corporation.     

全球化战略决策中高管团队的国际化角色：国外市场进入模式

海外扩张的模式是决策制定者协商的结果,高管团队（TMT）在此类型的决策过程中起到了重要的作用。通过整合市场准入模式理论与高层梯队理论,并结合组织国际化相关的因素后发现,TMT跨国经验和TMT国籍多样性在组织国际化战略决策中充当着不同的,甚至是相反的角色。在分析了100多个公司近7年的数据后,得出TMT跨国经验与全面控制型市场进入模式正相关、TMT国籍多样性与合作控制式市场进入模式正相关两个重要结果。因此,跨国经验能够通过出国实践获得,但这种经验在某种程度上受到自身国籍影响。人力资源管理实践旨在通过外派出国来获得国际经验的方式,还要认识到拥有这种经历的人不能替代高管团队中所有的外国国籍的人。     

Foreign Expansion by Italian Manufacturing Firms in the Nineties: an Ordered Probit Analysis

This paper develops an index of internationalizationcommitment or foreign expansion index(FEI) of the firm. The FEI integrates variousdimensions of commitment tointernationalization that, although interrelated,have usually been analyzed independently, i.e.exports, foreign penetration operations (suchas foreign commercial agreements, sales outletsabroad and so on) and FDI. Because of itsprominent inter-firm relationships andNorth-South discrepancies, this study focuseson Italy, constructing FEIs for each of some4,000 firms for three periods characterized bydifferent exchange rate regimes. Thedeterminants of FEI in each period are studiedat both the macro and micro levels, the latterthrough the use of an ordered probit model. Thefindings suggest that: (a) firm size,inter-firm relations, innovation capabilities,location and technology are all highly significantdeterminants of FEI, but their relative impacton the foreign expansion is influenced by theexchange rate regime; and (b) although still lowand especially so in the South, Italy's FEIshave risen somewhat during the 1990s.     

行业异质性、适度知识产权保护与出口技术进步

本文将受知识产权保护制度约束的模仿效应参数及模仿成本引入Hausman的技术水平模型,通过建立1994—2009年SITC Rev.3的三位编码产品与中国国民经济中35个工业行业的对应关系,构建了行业出口技术水平测算指标,运用固定效应模型与系统GMM估计方法,实证分析了知识产权保护对行业出口技术进步的影响及在不同行业间的差异性体现。研究结果表明:中国知识产权保护制度的完善对出口技术提升起到了加速器的作用,但并未对出口规模扩张做出显著直接贡献,而是通过影响出口技术间接作用于出口规模;不同行业的知识属性差异使知识产权保护的出口技术进步效应在研发强度大、技术水平高、外资渗透率高的行业中更显著。     

Pace,rhythm, and scope: process dependence in building a profitable multinational corporation

Many potential benefits of foreign expansion have been identified in the literature, yet empirical support that multinational firms perform better than domestic firms is mixed. This paper takes a longitudinal perspective and argues that how much a firm benefits from having foreign subsidiaries depends on its process of internationalization. We argue that a firm's capacity to absorb expansion is subject to constraints: some expansion patterns increase profitability less than others, owing to diseconomies of time compression. We hypothesize that the speed of internationalization, the spread of the geographical and product markets entered, and the irregularity of the expansion pattern negatively moderate a firm's increase in profitability resulting from international expansion. Model estimations based on panel data raised strong support for these predictions. Copyright © 2002 John Wiley & Sons, Ltd.     

Shareholder valuation of foreign investment and expansion

This study analyzes when different foreign investment location choices are value creating for firms at different stages of international expansion. I argue that because direct investment in developing countries is riskier than in advanced countries, shareholders may not value a firm's investment in developing countries until that firm has experience from previous international investments and capabilities to better manage and hedge the higher levels of risk and uncertainty. Using a panel of 191 U.S. manufacturing firms and their foreign investments over a 20‐year period (1981–2000), the empirical results show that firm investments in advanced and developing countries are valued differently by shareholders, depending on the firm's prior international expansion, the firm's capabilities and experiences, and the knowledge intensity of the firm's industry. These results highlight the importance of considering firm location decisions, prior experiences, and resources when analyzing. Copyright © 2006 John Wiley & Sons, Ltd.     

Media coverage and location choice

Emphasizing the importance of informed location choice, prior strategy research has examined how private information about locations affects foreign direct investment. Publicly available media information has received little attention, however, perhaps because its impact on location choice is expected to be trivial. This study examines the relationship between the extent of a location's media coverage and the number of entering foreign firms in Russia, using a novel instrumental variable for media coverage, a major anniversary of a city's establishment date. The results suggest that extensive foreign media coverage of a city increases the number of foreign entrants. This effect is stronger for firms with less private information about Russian cities; i.e., more socially and geographically distant firms and foreign entrepreneurs. Copyright © 2013 John Wiley & Sons, Ltd.     

Letter to the Editor: A Disputation Between the Authors and the Reviewing Editor

One of the major risks encountered in economic evaluation of foreign direct investment is the changes in future exchange rates that may affect the accuracy of the estimated economic worm of the investment. The objective of this article is to present a model for reducing the uncertainty associated with changes in foreign exchange rates when conducting economic evaluations of foreign direct investments. The model uses the Purchasing Power Parity Theorem and weighted averages for creating a procedural approach in which future changes in exchange rates are considered and included in the calculation of an overall profitability measure.     

Does international research and development increase patent output? An analysis of Japanese pharmaceutical firms

Internationalizing research and development is often advocated as a strategy for fostering the development of technological capabilities. Although firms conduct international R&D to tap into knowledge bases that reside in foreign countries, we argue that in order to benefit from international R&D investments firms must already possess research capabilities in underlying or complementary technologies. We examine the international R&D expansion activities, research capabilities, and patent output of 65 Japanese pharmaceutical firms from 1980 to 1991. We find that firms benefit from international R&D only when they possess existing research capabilities in the underlying technologies. In addition to refining our understanding of when international R&D enhances firm innovation, our results integrate asset‐seeking and asset‐based theories of foreign direct investment. Internationalizing R&D to tap into foreign knowledge bases is consistent with asset‐seeking theories of foreign direct investment, while the contingent nature by which firms benefit from international R&D is consistent with asset‐based theories of foreign direct investment and the notion of absorptive capacity. Copyright © 2004 John Wiley & Sons, Ltd.     

基于零售专业技能转移视角的外资零售企业在华战略比较研究

以沃尔玛、家乐福、麦德龙、TESCO乐购、欧尚和卜蜂莲花这六家外资零售企业为例,从零售专业技能转移的视角分析了外资零售企业在华的物流运作模式、区位布局战略、赢利模式、进入模式、店铺营销模式和业态模式,揭示了外资零售企业在华战略的一般规律,这对于外资零售企业在华发展,对于中国本土零售企业未来的国际化发展与当前国内市场的跨区域扩张都有着借鉴的价值。     

基于投入产出法的对外贸易比较优势变化研究——兼论对外贸易顺差形成

本文从经典的HOV模型入手,运用投入产出法,分析我国1997以来的对外贸易。通过对1997～2007年(投入产出表最新数据)的对外贸易的资本劳动消耗进行计算。实证结果表明:我国的对外贸易比较优势处于资本比较优势正在形成的时期,对外贸易顺差扩大是结构升级中的暂时现象。并提出应抓住资本优势加大产业结构调整的力度,促进产业结构升级的建议。     

International management of R&D: The Swedish Experience

This paper summarizes the results of in-depth case studies of international R&D management in four Swedish multinational corporations. The results suggest that foreign volumes and shares of R&D expenditures are rapidly increasing. Through a rapidly increasing number of foreign acquisitions, foreign R&D laboratories have been added. As part of international rationalization of production, foreign units have been given global product mandates with responsibility both for manufacturing and R&D. In maturing foreign subsidiaries, routine technical activities have often evolved into proper R&D. Tight labour market conditions for engineers in Sweden have made it increasingly necessary to exploit existing technical capacity, regardless of location.
Concurrently, companies face new pressures for international coordination and control of R&D. Coordination is required to reduce product differentiation, to facilitate technology transfer and to ensure the technical and market compatibility of products and components developed at different locations but sold as part of total systems. Drawing on the experience in the four investigated companies, the paper discusses how systems and procedures can be developed to meet the need for coordinated international R&D management.     

MNC foreign investment and industrial disasters: The moderating role of technological,safety management,and philanthropic capabilities

Research Summary: We investigate how industrial disasters can discourage FDI and how MNCs' technological, safety management, and philanthropic capabilities can moderate these effects. Using two unique panel data sets of entry and expansion of U.S. wholly‐owned manufacturing subsidiaries overseas, we found that industrial disasters are associated with reduced foreign entry of wholly‐owned subsidiaries in the disaster industry, but not for all firms in the host country experiencing the disaster. We also found that MNCs' technological, safety management, and philanthropic capabilities can, in some cases, positively moderate the negative relationships between industrial disasters and the foreign entry and expansion of wholly‐owned subsidiaries. Additionally, three‐way interactions with government stability suggest that technological and safety management capabilities substitute government stability in managing industrial disasters, while philanthropic capability complements government stability. Managerial Summary: How can MNCs' technological, safety management, and philanthropic capabilities overcome the effects of industrial disasters such as chemical spills and explosions in host countries? Our results show that industrial disasters are associated with reduced foreign entry of wholly‐owned subsidiaries in the industry in which the industrial disaster occurs, but not for other firms operating in the country experiencing the disaster. However, an MNC's technological capability can, in general, lower the negative consequences of industrial disasters in both the entry and expansion of its wholly‐owned subsidiaries. Regarding the institutional quality of a host country, the results imply that MNCs should develop philanthropic capability when the government stability of the host country is strong, and develop technological and safety management capabilities when the government stability is weak.     

Absolute and relative resources as determinants of international acquisitions

Although it is established that firms sometimes expand abroad to augment their capabilities, previous studies have generally focused on technological determinants of foreign expansion. We analyze capability‐seeking aspects of foreign direct investment by examining the relationship between upstream (technological) and downstream (marketing) capabilities and the choice between acquisition and greenfield modes of international entry. In analyzing 2175 entries by British, German, and Japanese investors into the United States, we find that for downstream capabilities, which tend not to be geographically fungible, the absolute level of capabilities in the entered industry explains the mode choice. However, for upstream capabilities, which tend to be geographically fungible, the acquisition motive stems from a relative capability differential between host and home country firms. These results have implications for the concept of fungibility in the resource‐based view of the firm as well as for the literature on sourcing of resident assets by foreign firms, which has thus far ignored issues of entry mode and downstream assets. Copyright © 2002 John Wiley & Sons, Ltd.     

Asymmetric interactions between foreign and domestic banks: effects on market entry

An inverted U‐shaped relationship is thought to exist between the number of firms entrenched in a market and the rate of new entrants. This study examined early and late entry by foreign and U.S. banks into the California market following a deregulation in the banking industry in the early 1980s. The study was designed to elucidate the competitive interactions between foreign and domestic banks. Specifically, what response did the entry of foreign banks elicit from domestic banks and what influence did the entry of domestic banks exert on the evolution of the foreign banks in the market. Data covering the period from 1979 to 1988 demonstrate that the density of foreign banks operating in the market had a U‐shaped relationship with the rate of entry of U.S. banks, supporting the argument that foreign investment can encourage the expansion of domestic banks. Although foreign banks were not an obstacle to domestic bank entries, the presence of domestic banks deterred the entry of foreign banks. Copyright © 2008 John Wiley & Sons, Ltd.     

Firm and target country characteristics as factors explaining wealth creation from international expansion moves of mobile network operators

Although mobile network operators (MNOs) carried out numerous international expansion moves over the past 25 years industry-specific empirical research on shareholder reactions to such moves and on factors explaining differences of the wealth effects of international expansion moves is scarce. Using event study methodology, the present investigation empirically captured the impacts of 148 major expansion steps into foreign mobile communication services markets announced by 29 large MNOs during the period from December 1989 to December 2004 on “abnormal” market value changes of the expanding MNO. Further, it sought to explain differences in cumulative abnormal shareholder returns related to an announcement by four characteristics of the expanding firm (e.g., foreign experience) and nine characteristics of the country targeted by an internationalization step (e.g., cultural distance; intensity of MNO regulation).     

The effect of own-firm and other-firm experience on foreign direct investment survival in the United States, 1987–92

We argue that foreign firms operating in a host country generate information spillovers that have potential value for later foreign direct investment. We test two predictions. First, we expect foreign direct investments by firms with experience in a host country to be more likely to survive than investments made by first-time entrants. Second, foreign direct investments will be more likely to survive the greater the foreign presence in the target industry at the time of investment, subject to two contingencies. The first contingency is that the relationship will be weak or nonexistent among firms with no experience in the host country, because these firms have difficulty evaluating and taking advantage of the information spillovers. The second contingency is that the presence of other foreign firms will not affect investment survival among firms that already have a presence in the target industry and undertake expansion. These firms already possess general information about the target industries and are unlikely to gain additional benefit from information spillovers. We find supportive evidence based on the survival to 1992 among 354 U.S. investments undertaken by foreign firms in manufacturing industries during 1987. © 1997 John Wiley & Sons, Ltd.     

论中国外贸增长方式的转变

中国现行的主要依靠低生产要素成本和引进国外先进技术以形成国际竞争力,以数量扩张、劳动密集和低价格取胜,低效益、难持续的外贸增长方式,现在面临外贸条件恶化、外贸顺差过大、外贸依存度太高、人民币升值压力较大、生产要素价格上涨、高新技术引进困难、资源消耗过多、环境压力加剧的难题,必须采取多种有效措施,转变成为一种进出口商品结构优化、市场多元化、主要依靠自主创新和自主品牌、科技兴贸、以质取胜、产业结构合理、加工度高、附加值大、高效益、可持续的新的方式。     

Motivations and barriers of foreign R&D activities in China

The continued growth of the Chinese economy accompanied with the expansion of international investment in China has led to an increase in foreign research and development (R&D) activities in the country. Aside from the rising importance of R&D internationalization, research on foreign R&D in China has been neglected in the past due to its emerging status. In this article we examine drivers and barriers for conducting R&D in China. The focus of our research is on transnational companies typically characterized by decentralized R&D activities. Our research is mainly based on qualitative interviews with senior R&D managers. The success of foreign R&D activities in China strongly depends on the realistic estimation of its advantages and the proper identification and handling of barriers.     

A framework for offshoring marketing processes in business-to-business marketing relationships

Outsourcing has been a prominent aspect of business strategies in the last three decades. Outsourcing of manufacturing processes is now complemented with outsourcing of various marketing process as well. More importantly, outsourcing to foreign locations — offshoring — has increased for marketing processes in recent years. In this context, the present paper develops a model that identifies the types of marketing interactions and processes that can be offshored in business-to-business markets. We suggest that the decision to offshore marketing processes and interactions depend upon the interaction process that is preferred and the importance of interaction process itself. Marketing interactions that are not critically important and/or those that can be performed through technology can be easily offshored. However, other marketing processes need to be examined in depth before being offshored. Implications for research and practice in the area of offshoring, as well as in the broader area of outsourcing, are also highlighted.