Not all family firms are equal: The moderating effect of family involvement on the political risk exposure of the foreign direct investment portfolio. Preliminary evidence from Spanish multinational enterprises

We investigate the effect of political risk (PR) exposure and family control on the internationalization strategy of multinational enterprises (MNEs) using social capital theory. Our results from a negative binomial cross‐sectional analysis in 2007 of Spanish MNEs show family ownership or the limited presence of family members on the board has no effect on internationalization. However, when the conceptualization of family firms (FFs) includes majority ownership and board presence, we find a direct negative effect on their internationalization scope but a positive moderating effect on the relationship between the exposure to PR and internationalization scope. FFs have some specific advantages suitable to be employed in their corporate political activity allowing them to develop long‐lasting relationships with relevant political actors. By disentangling the effects of family control on internationalization and PR, this article explains how FFs can be simultaneously risk‐willing and risk‐averse.     

Comparing approval procedures for new drugs

We analyse how drug approval procedures influence the incentives of pharmaceutical firms to commercialise new drugs in the presence of international reference pricing. Since 1995, the European Medicines Agency (EMA) coordinates a centralised approval procedure for specific new drugs in the EU. With such a centralised procedure, the EMA grants simultaneous drug approvals for all EU countries. Alongside, non‐centralised procedures coexist for approvals of other new drugs and approvals can be sequential. We focus on the effects of the exogenous timing of drug approvals, either simultaneous or sequential, and we compare the effects of centralised versus non‐centralised procedures on the firms’ incentives to commercialise new drugs in different markets. In a context of international reference pricing, we show that a centralised procedure limits the number of countries where the firm commercialises new drugs, compared to a non‐centralised procedure. We also show in a simplified framework that countries are better off with non‐centralised procedures, while pharmaceutical firms in theory prefer the drug to be approved everywhere as soon as possible, as in an early centralised procedure. This is in line with the stated objective of the EMA to generate savings for the pharmaceutical firms.     

The institutional context as a source of heterogeneity in family firm internationalization strategies: A comparison between U.S. and emerging market family firms

Existing research has underexplored the role of context as a source of heterogeneity in family firms’ (FFs) internationalization strategies. Drawing upon institutional theory, we develop and test a mid-range theory positing that differences in the quality of the institutional context can moderate the strength of the relationship between individual- and board-level attributes and FF internationalization. Our comparison of U.S. FFs with FFs from Brazil and Mexico reveals that in emerging market FFs, individual-level attributes such as CEO international experience, CEO educational attainment, and CEO international education exhibit a stronger relationship with internationalization. Similarly, we find that board-level attributes such as board size and board independence are also more strongly related to internationalization in emerging market contexts. We contribute to the literature by identifying a source of variation in FF internationalization strategies based on context and by examining the relationship between a wide range of FF attributes and internationalization.     

Geographic export diversification: Determinants and their link with export performance

This study examines company‐specific factors that may help explain the choice of an export‐market strategy and explores how the selected export strategy contributes to explaining company's export performance (XP). Concentrating on a specific area within a broad spectrum of export behavior analysis has enabled us to examine these factors in greater depth. The results of our research, which was carried out using a sample comprising Spanish exporting companies, show a firm's size, a firm's age, and a firm's greater foreign ownership in its share capital are all determining factors for adopting a strategy geared to export‐market diversification. A greater level of investment in R&D and greater international commitment are also important in this regard. We suggest reinforcing these two factors because there is evidence of a better XP among firms that have a wider range of foreign markets.     

Chinese customers' loyalty to international consulting firms

International consulting firms enjoy higher customer loyalty than domestic firms in China. This paper investigates an influence model of customer loyalty on international consulting firms that goes beyond traditional research. Using a sample of 231 companies receiving service from international consulting firms in China, structural model testing validated the idea that choice based on service quality and belief caused by halo effect together lead to the customer loyalty on international consulting firms. International consulting companies have some born advantage doing business in emerging markets such as China due to Chinese customers' belief caused by halo effect.     

Internationalization performance of Chinese multinational companies in the developed markets

This study investigates the relationship between prior cooperation experience with partners from the developed markets and internationalization performance of emerging multinational companies. Based on the knowledge-based view, this study sheds light on the crucial role of knowledge base, organizational learning in the home country, and acquisition possibility of knowledge in the host country. Employing a sample of Chinese international firms, this study demonstrates that international experience accumulated by learning through linkage with partners from the developed markets improves the performance of companies from the emerging market. Organizational learning in the home country and acquisition possibility of knowledge in the host country moderate the effect of international experience. The implications of these findings for theoretical development and future research are discussed.     

Change in international market strategy as a reaction to performance decline

While a great deal of research has explored how international marketing strategy influences performance, researchers have paid scant attention to understanding changes to international marketing strategy resulting from firm reaction to past performance. In this study, organizational learning theory addresses when and how international marketing strategy will change. Employing data from over 500 exporters, the results, which are consistent with theoretical predictions, indicate that (1) firms are generally not prone to inertia and do, in fact, change their international marketing strategy when facing declines in performance, and (2) that the direction of change depends on the level of competition in the specific foreign market, with firms adapting their international marketing strategy in low competitive markets and standardizing their international marketing strategy in highly competitive markets. The paper includes implications for academics and practitioners.     

Competitive Marketing Strategies: A Survey of Japanese Manufacturing Firms' Competitive Performance in the British Market

The role of Japanese corporations in world markets has become so crucial that an understanding of the rules of competition employed by the Japanese is essential for all those involved in international business. The aim of this survey was to gain an insight into the role marketing plays in affecting the competitive position of Japanese firms in the British market. In particular the researcher focused on the overall approach of Japanese companies to the marketplace and the process by which they identify and bring products to the market.

The broad findings emerging from this study present few surprises, Japanese companies do not seem to suffer from a “sales orientation”, a “production orientation” or “finance orientation” as opposed to a “marketing orientation”. The in‐roads being made into the British market are based by and large on a strategy aimed at satisfying customer needs and wants. Japanese companies saw their strengths in placing emphasis on research and engineering and bringing the right product to the market quickly and decisively.     

Practical Skills in International Business: Training Needs for Workforce Competence by Minnesota Companies

Companies doing business internationally face the competitive challenges of a constantly changing operational environment. Employees need to update their international knowledge, skills, and abilities (KSA) frequently by attending training programs. A survey of Minnesota firms indicate that almost all companies are willing to cover the time and cost of employees attending such programs, apparently believing that workforce development benefits both day‐to‐day operations and improves employee morale. The current specialization in educational (K) and training (SA) programs by academic and nonacademic providers largely meets the needs of students and of corporate workforce development, but company competitiveness overseas could be enhanced if international K and SA providers cooperated more closely in complementary programming.     

The role of female directors in promoting CSR practices: An international comparison between family and non‐family businesses

This article analyzes a panel of 550 international firms, for the period 2004 to 2010, to compare the role of female directors in family and non‐family firms in promoting responsible practices. Many studies have associated the presence of women on the board with a higher degree of socially responsible commitment. However, we found that this is much less so in family firms than in non‐family firms. In family firms, corporate social responsibility (CSR) commitment does not vary significantly with the presence of female directors, as the latter tend to behave in accordance with the family orientation toward CSR. This orientation depends on the stakeholders being addressed, with greater social responsibility shown toward external stakeholders than internal ones.     

Family Firms and Labor Productivity: The Role of Enterprise‐Level Bargaining in the Italian Economy

We investigate the role of Italian firms in labor productivity performance. We find that family‐owned firms have lower labor productivity than their non‐family counterparts. In a second step, we estimate the role of firm‐level bargaining (FLB) to determine whether family‐controlled firms that adopt this type of bargaining may partially close the gap in terms of labor productivity with their non‐family competitors. Our results, obtained through IV estimation to control for endogeneity bias, suggest that enterprises under family governance achieve significant labor productivity gains—greater than those achieved by their non‐family counterparts—when they adopt firm‐level bargaining.     

Competitive by design

This paper is concerned with the role of design in the competitiveness of manufacturing companies and reports on design management in commercially successful firms. The findings are based on a survey of design policies and practices in over one hundred British and foreign companies from several industries, ranging from furniture to electronics. The paper shows that while in theory design plays a key role in competition, influencing both “price” and “non‐price” factors, in practice many managers do not give design high priority in company strategy and product development. The commercially most successful firms were those that not only invested resources in design and managed it effectively, but had other strengths, for example in marketing and manufacturing.     

Direction of outward FDI of EMNEs: Evidence from the Indian pharmaceutical sector

This article seeks to add to the small but growing literature of emerging‐market multinational enterprises (EMNEs). Using two linked large firm‐level databases, it seeks to explore the determinants of outward investment of Indian pharmaceutical companies, distinguishing between developed‐ versus developing‐country destinations. It specifically examines the impact of two firm‐level characteristics that embody “non‐OLI” [ownership, location, and internalization] firm‐specific capabilities of EMNEs. The finding of this study is that family firms are keen on investing in other developing countries but much less so in developed countries. However, international linkages in the form of foreign investors offset this. © 2011 Wiley Periodicals, Inc.     

The “Young” Consumer Perception of Functional Foods in Italy

We analysed the role of acceptance of functional foods (FFs) focusing on the preferences expressed by three distinct groups of young Italian consumers. FFs represent an innovation both in terms of technology and marketing for Italian food companies, and the segment of young consumers would appear especially interested in them. Our results showed that a different cultural education, hence the degree of knowledge cumulated by young consumers, is a key element in the preference for, and perception of FFs. This implies the need to identify differentiated marketing strategies for firms seeking to reach this segment of FF demand in Italy.     

Firm resources,cultural distance and simultaneous international expansion in the retail sector

Despite the fact that many firms simultaneously expand into multiple new markets, we know very little about why firms choose this type of international expansion instead of sequentially entering new markets. Drawing on the resource-based view (RBV) we argue that in order to engage in simultaneous international expansion firms have to be able to draw on intangible assets, be financially strong, and have international experience that will enable them to reduce and/or shoulder the strains on managerial resources, time compression diseconomies and costs of simultaneously entering multiple new overseas markets. We further expect the strength of these associations to be moderated by the cultural distance between a firm’s home country and newly entered countries. Our analysis of the international expansion of the sales operations of 102 retailers over the period 2003–2012, during which these retailers sequentially or simultaneously entered into a total 836 overseas markets, largely supports our hypotheses. Our study underlines the usefulness of the RBV for understanding simultaneous international expansion as an important phenomenon that has received only scant scholarly attention to date.     

Unraveling the IJV Rationale in Emerging Markets: The Case of Multinational Enterprises in the Russian Construction Industry

ABSTRACT

This article investigates the role of international joint venture strategy of five multinational enterprises in the Russian construction market. Joint ventures play a crucial and specific role for these firms’ strategy in Russia: They serve both as an entry mode and a postentry strategy; facilitate business and guide foreign investors; increase efficiency for further strategy; and help international construction firms overcome the environmental deficiencies. Findings of the article bolster the theory by stressing the facilitating effect of joint venture upon challenges and problems that Western firms meet in emerging market in contrast with more developed economies.     

The strategies of small and large international specialists

Falling trade barriers and corporate restructuring are resulting in the creation of international specialists, firms that focus on one line of business but with an international scope. International specialists compose the growing middle ground between diversified multinational companies and local firms. This study of 41 firms identifies two types—large and small international specialists—that differ substantially in their governance structures, resources, functional strategy, and approach to international markets.Large international specialists have abundant resources and high growth expectations, make a concerted push to dominate worldwide markets, and increase their reach over multiple stages of their industry. Small international specialists do not have strong growth motivations. They are upstream players that outsource extensively, serve intermediate users, and enter international markets selectively in ways that conserve their limited resources.Managers should consider the strategic option of becoming an international specialist in addition to the known strategic alternatives of being a domestic or a diversified multinational firm. To become international specialists, strategists need to implement several, consistent actions across functions that reinforce one another.     

Small Firms and the Strategy of the First Mover

Timing of entry and the decision to be a leader or follower in products or markets is a complex decision and empirical evidence suggests that first movers do not always 'capture' all the potential benefits from being first. Small firms in particular are faced with problems when deciding on whether to be a first or later mover. Their strategies were examined using a sample of 264 firms in chosen industry sectors and specific external and internal factors were found to explain much of the variation in timing of entry strategies by these firms. In particular a composite measure of the technological turbulence that firms faced in their supply chain was seen as a crucial determinant of early entry whilst uncertainty as to general business conditions explained much of the late and non pioneering strategies. Even within this group of small firms, size also played an important role with the smallest companies tending to be the most pioneering     

Internationalisation,Innovation and Productivity: How Do Firms Differ in Italy?

This paper addresses the issue of intra‐industry heterogeneity and internationalisation. We show that, after controlling for sector, location, firm age and size, Italian manufacturing companies exhibit different economic and innovative performance according to their involvement in foreign activities. In particular, exporters show intermediate innovative performance between non‐internationalised firms and those carrying out foreign production. Multinationals with a lower commitment to foreign markets, i.e. with non‐manufacturing activities abroad only, exhibit a higher productivity than exporters but they do not appear to innovate more than the latter. Heterogeneity in productivity is robust to controlling for innovation inputs and outputs, suggesting that the difference in economic performance cannot be entirely attributed to different innovative activities, and that the involvement in international operations can be a distinct channel of knowledge accumulation.     

FDI versus Exports: Multiple Host Countries and Empirical Evidence

There are two main options for companies to serve foreign markets: exports and foreign direct investment (FDI). Based on the Helpman et al. (2004) model for multiple host countries, this paper derives a clear theoretical prediction for the decision between both strategies. A bivariate probit model is estimated using a large data set of European companies to analyse the probability of using one or the other strategy. The empirical evidence indicates that more productive firms less (more) probably use the export (FDI) strategy to serve foreign markets. Moreover, a considerable number of companies use a combination of both the strategies to serve foreign markets, which is in line with a multiple‐country model.