Business model innovation: How the international retailers rebuild their core business logic in a new host country

Although research into the business model has received increasing attention, few studies have so far been conducted on business model innovation in an international context. The purpose of the study is to identify different patterns of business model innovation which enables international retailers to rebuild their core business logic in new host countries. On the basis of comparing and contrasting the business model changes of 15 international retailers from various home countries to one single host country (China), our study provides an in-depth understanding of business model innovation in the context of international business. By looking at the firms’ capabilities in rebuilding their core logic in the setting of a host country, we reveal six routes of retail business model innovation. Utilizing the lens of organizational learning theory and internationalization, we identify three patterns of resource deployment by international companies in the process of developing business model innovations. Our study, therefore, provides insights and guidance for multinational companies in general, international retailers in particular, as for how to successfully adapt their business model from home country to host country.     

The Role of Religiosity in Business and Consumer Ethics: A Review of the Literature

This study investigates antecedents of corporate social responsibility (CSR) in multinational corporations’ (MNCs’) subsidiaries. Using stakeholder theory and institutional theory that identify internal and external pressures for legitimacy in MNCs’ subsidiaries, we integrate international business and CSR literatures to create a model depicting CSR practices in MNCs’ subsidiaries. We propose that MNCs’ subsidiaries will be likely to adapt to local practices to legitimize themselves if they operate in host countries with different institutional environments and demanding stakeholders. We also predict that MNCs’ subsidiaries will be likely to adapt to local practices to avoid spillover effects if their parent companies suffer major legitimacy problems at home or abroad. However, we speculate that MNCs’ subsidiaries will be less likely to adapt to local practices if they are strongly annexed to their parent companies and the benefit to gain internal legitimacy outweighs external legitimacy. This article contributes to the discourse on CSR across borders by exploring the antecedents of CSR practices in MNCs’ subsidiaries at social and organizational levels, and integrating institutional and stakeholder views. We provide a number of propositions for future studies and explore implications for practitioners.     

Mapping the impact of home‐ and host‐country institutions on human resource management in emerging market multinational companies: A conceptual framework

While there is a growing literature concerned with multinational companies from emerging markets (EMNCs), it does not contain a robust conception of how institutions shape human resource (HR) practices in such firms. We contribute to filling this gap through developing a framework of how institutions create a range of constraints and opportunities for EMNCs. Specifically, our framework contains three key elements of how MNCs from emerging markets interact with institutions: EMNCs develop approaches that to some extent reflect the perceived strengths and weaknesses of the institutions in the home country (institutional conditioning); the strategies of actors in EMNCs can overcome the weaknesses of the home country by drawing on institutions in other countries (institutional arbitrage); and the actions of EMNCs can reinforce, or create pressures for change in, the institutional context in the countries in which they operate (institutional change/consolidation). By mapping this set of strategies of EMNCs, we contribute to a fuller understanding of the relationship between institutions and HR practices, and we outline how the rise of EMNCs reshapes the global landscape by adding new kinds of firm behavior to capitalist diversity.     

Home country institutions,social value orientation,and the internationalization of ventures

We examined how home country formal institutions and the venture’s value orientation influenced the venture’s likelihood of internationalization based on a data set that was adapted from the Global Entrepreneurship Monitor (GEM) data in the year 2009, covering 7668 individual ventures in 25 countries. Better-developed home country formal institutions are found to have a supportive impact on the venture’s likelihood of internationalization. The supportive impact is also found to be weaker for socially oriented ventures than for profit-oriented ventures. The venture’s social value orientation negatively moderates the home country formal institutions–likelihood of internationalization relationship. The negative moderating effects can be explained as follows: Socially oriented ventures in the better-developed home country institutional environment are less likely to develop coping skills against uncertain and risky institutional environments, which are common in their host countries. Besides the theoretical contributions, this paper also highlights the implications for both business researchers and policy makers.     

Host country risk and foreign ownership strategy: Meta-analysis and theory on the moderating role of home country institutions

Empirical evidence for the relationship between host country risk and a firm’s ownership level in its foreign entry strategy is inconclusive. We revisit this relationship by integrating the internalisation logic with an institution-based view to examine the moderating effects of formal and informal institutions in the home country. By meta-analysing 64 empirical studies involving 52,229 ownership decisions on foreign market entry, this study gives support to theoretical arguments that the focal relationship is positively moderated by institutional constraints on policymakers and risk-taking tendencies in the home country but is negatively moderated by the joint effect of these two institutional factors. These findings shed new light on the literature of host country risk and foreign ownership strategy. Besides describing the implications of the findings for theory and practice, we discuss the agenda for future theory development in international business.     

The interplay between home and host country institutions in an emerging market context: Private equity in Latin America

This study examines how the interplay between home and host country regulatory institutions affects the investment strategy of private equity (PE) firms in an emerging market context. To answer this question, we consider three different mechanisms: (1) the institutional hazard avoidance effect, (2) the institutional escapism effect, and (3) the dysfunctional institutions effect. Contrary to conventional wisdom, we argue that regulatory institutional differences between home and host countries can sometimes have a positive rather than a negative effect on investment likelihood. Our findings show that when a host emerging market has a strong regulatory institutional system relative to other emerging markets, it is more likely that this country will attract PE investments from firms based in home countries with very strong and very weak institutional systems. The empirical analyses, based on a polynomial specification and a dataset covering more than 300 PE firms that made close to 1500 investment transactions in Latin America during 1996–2011, are consistent with our main theoretical arguments.     

Multinational Oil Companies and the Adoption of Sustainable Development: A Resource-Based and Institutional Theory Interpretation of Adoption Heterogeneity

Sustainable development is often framed as a social issue to which corporations should pay attention because it offers both opportunities and challenges. Through the use of institutional theory and the resource-based view of the firm, we shed some light on why, more than 20 years after sustainable development was first introduced, we see neither the adoption of this business model as dominant nor its converse, that is the total abandonment of the model as unworkable and unprofitable. We focus on multinational corporations (MNCs) because they were among the organizations first called to take action. In order to illustrate the institutional pressures MNCs face and their strategic response to these pressures, we analysed four major oil and gas multinationals subject to similar sustainable development pressures – climate change, biodiversity, renewable energy development and social investment. We argue that normative and coercive isomorphism does not occur at the global level because sustainable development is largely a stakeholder-driven rather than a broad social pressure. That is, host country interpretation of sustainable development pressures varies across an MNC’s subsidiary network. Based on the analysis of the four major MNCs’ annual reports from 2000 to 2005, we argue that mimetic isomorphism may occur, but since it implies the use of complex and intangible resources, mimetic processes are slow, rare and discretionary.     

Environmental sustainability practices and offshoring activities of multinational corporations across emerging and developed markets

Using panel data of 1080 multinational corporations (MNCs) from the United States, we examine the effects of environmental sustainability practices on the degree of firms’ offshoring activities. In addition, we disaggregate offshoring activities into their core components depending on whether or not the firm buys (inputs) or sells (outputs) and/or owns assets in a given country and examine the extent to which sustainability practices influence the different components of offshoring decisions. The results indicate that sustainability practices significantly affect offshoring activities of MNCs. In particular, we found that sustainable business practices matter when the firm sells goods or owns assets in the given host nation. Additionally, the results show that the sustainability–degree of the internationalization relationship is crucial for MNCs that have offshoring activities in advanced economies relative to those firms that have activities in emerging markets. Our results are robust to alternative explanations.     

Institutional duality and political strategies of foreign-invested firms in an emerging economy

This study investigates how the complex institutional environment surrounding foreign-invested firms (FIEs) affects their corporate political strategies (CPS) in China. Analyses of data on 442 FIEs operating in China show that the relative potency of dual institutional pressure from FIEs’ home and host countries shapes their strategic choices. Institutional factors at the country, region, and firm levels not only affect firms’ adoption of multiple firm-based tactics but also shape their collective-oriented associational activities. Moreover, participation in both foreign and domestic business associations enhances an FIE's adoption of firm-based political tactics, but joining domestic business associations has a stronger effect.     

Liabilities of origin and its influence on firm's corporate social performance? A study of emerging market multinational corporations

This study draws upon the institutional-based view to examine how home country institutional voids affect the corporate social performance (CSP) of emerging market multinational corporations (EMNCs). We propose that home country institutional voids of EMNCs are positively related to CSP. We also argue that EMNCs' internationalization and visibility will further augment the above relationships. We tested our hypotheses using a sample of 89 EMNCs from 10 countries from 2009 to 2018 and found support for our arguments. Our findings show that EMNCs use CSP to overcome the liabilities of origin due to their home-country institutional voids. Internationalization and visibility increase the challenges of origin liabilities and EMNCs respond by enhancing their CSP. Our research adds to the existing knowledge base on institutional voids within the realm of international business.     

Managing MNC-Government Negotiations in Saudi Arabia: The Key Role of Elites

This article explores the relationships between multinational corporations (MNCs) and a host country, in this case Saudi Arabia (the Kingdom). The interests of Saudi businesses and the political elite, along with the evolution of their relationship are surveyed. Furthermore, the validity of traditional and two-tier models of bargaining between MNCs and developing countries are assessed in the context of the Kingdom. It is argued that while both models may be useful, the two fail to capture the nature of MNCs-Saudi Arabia bargaining process. These two models are revised and enriched to adequately reflect the Kingdom's specific advantage, the nature of its national firms, and the unique relations it has with MNCs and their home countries. The study concludes that under current global political and economic conditions, the elite and MNCs interests appear to converge around business objectives.     

Transfer of corporate governance practices into weak emerging market environments by foreign institutional investors

We advance the practice transfer theorising of corporate governance (CG) by developing a framework that uncovers how foreign institutional investors (FIIs) improve on CG practices of firms in weak institutional environments. Using hand-collected data for 85 listed Nigerian firms covering the 2011–2016 period, we show that FIIs bypass the weak regulatory environment in emerging markets by transferring good CG standards to host countries. Furthermore, FIIs’ ability to enhance the CG quality of firms in such environments is moderated by their home country’s legal system, with FIIs from countries with strong legal enforcement having an enhanced ability to improve CG practices of firms in weak institutional environments. However, cultural differences between the FIIs’ home and host countries negatively moderate this relationship. Our results are robust to the choice of estimation technique and various sources of endogeneity.     

Managerial Values in the Institutional Context

A comparative study of business related values among business students was conducted over the last 10 years in two neighbouring countries. Although Estonia and Finland are culturally related, according to an empirical study of managerial values, including the ethical values of business students, the two countries display significant differences. During the last decade, Estonia has changed from being a country characterised by an authoritarian, centralized, totalitarian state socialism, to a democratic country with a free market economy and different attitudes and values. At the same time Finland has experienced almost a century of capitalism and democracy. It is argued that the differences in values exhibited by these two countries could be explained by using the institutional and historical context. The authors propose a model of value hierarchies in relation to institutionalism.     

How “space” and “place” influence subsidiary host country political embeddedness

As a part of multinational corporations (MNCs), subsidiaries operate in distinct host countries and have to deal with their external context. Host country political embeddedness, in particular, helps subsidiaries to obtain knowledge and understanding of the regulatory and political context, and to get access to local networks. Moreover, they get some guidance and support from their headquarters. Distance between MNC home and host countries, however, alienates subsidiaries from the MNC and influences the extent of subsidiary host country political embeddedness. We suggest that the host country political and regulatory context moderates the effect of distance on subsidiary host country political embeddedness by reducing the need and/or value of headquarters support. Using a sample of 124 European manufacturing subsidiaries, we find that distance (space) and context (place) matter jointly: the impact of distance is stronger for subsidiaries that operate in host countries with low governance quality and low political stability in place.     

The Effects of Institutional Distance and Headquarters’ Financial Performance on the Generation of Environmental Standards in Multinational Companies

This article combines institutional and resources’ arguments to show that the institutional distance between the home and the host country, and the headquarters’ financial performance have a relevant impact on the environmental standardization decision in multinational companies. Using a sample of 135 multinational companies in three different industries with headquarters and subsidiaries based in the USA, Canada, Mexico, France, and Spain, we find that a high environmental institutional distance between headquarters’ and subsidiaries’ countries deters the standardization of environmental practices. On the other hand, high-profit headquarters are willing to standardize their environmental practices, rather than taking advantage of countries with lax environmental protection to undertake more pollution-intensive activities. Finally, we show that headquarters’ financial performance also imposes a moderating effect on the relationship between environmental institutional distance between countries and environmental standardization within the multinational company.     

MNEs and policy networks: Institutional embeddedness and strategic choice

Political strategies are a crucial matter for MNEs in the context of globalization. We argue that MNEs’ influence on political decision-making depends on their insertion into policy networks, which define the institutional framework and the interaction patterns of business/government relations in different issue-areas. Then, we propose a stylized taxonomy regarding the differentiation of MNEs’ political leverage in various domains, at a home country level. Finally, we explore the influence of political power at home on MNEs’ strategic approaches to the host countries, taking into account the bargaining power of local actors in the concerned issue-areas.     

Pro-market institutions and outward FDI of emerging market firms: An institutional arbitrage logic

We offer new theory and evidence regarding the effects of pro-market institutions on outward foreign direct investment (FDI) of emerging market firms (EMFs). Drawing on the logic of institutional arbitrage, we integrate the escapism and exploitation mechanisms of EMF internationalization into a unified theoretical context. We propose an inverted U-shaped relationship between host market-supporting institutions (MSI) and the investment scale of an EMF’s FDI project in the country, showing an escape-driven upward slope for low-to-medium MSI levels and an exploitation-driven downward slope for medium-to-high MSI levels. We supplement this main argument with two boundary conditions: the alleviating effect of home market liberalization (HML) and the strengthening effect of home government subsidies (HGS), demonstrating the coexistence and variation of pro- and anti- market institutions in an emerging market. Using information on 1,450 FDI projects conducted by 288 Chinese listed firms in 116 host countries, we obtain supportive evidence for the predicted relationships between the three institutional forces. This study enriches the literatures on institutional arbitrage and pro-market institutions with evidence from EMFs.     

Corporate Social Responsibility in Transnational Spaces: Exploring Influences of Varieties of Capitalism on Expressions of Corporate Codes of Conduct in Nigeria

Drawing from the varieties of capitalism theoretical framework, the study explores the home country influences of multinational corporations (MNCs) on their corporate social responsibility (CSR) practices when they operate outside their national/regional institutional contexts. The study focusses on a particular CSR practice (i.e. corporate expressions of code of conducts) of seven MNCs from three varieties of capitalism – coordinated (2), mixed (2) and liberal (3) market economies – operating in the oil and gas sector of the Nigerian economy. The study concludes that the corporate codes of conduct of these MNCs operating in Nigeria, to a large extent, reflect the characteristics of their home countries’ model of capitalism, respectively, albeit with certain degree of modifications. The home countries’ model of capitalism is also found to have implications for the degree of adaptability of these MNCs’ CSR practices to the Nigerian institutional context – with the mixed market economy model of capitalism adapting more flexibly than the liberal and coordinated market economies, respectively. The findings of this study will contribute to the emerging literature on the institutional embeddedness of CSR practices in transnational social spaces, understanding of varieties of capitalism, and CSR in developing economies.     

Business under adverse home country institutions: The case of international sanctions against Myanmar

We expand the institutional perspective of international business by exploring the range of institutions outside the host country that influence international business. We use a critical case, Myanmar, to explore the dynamics of institutional constraints and the reaction of business to such constraints. Our in-depth case analysis focuses on four industries for the period 1996–2011. On this basis, we develop the concept of ‘low profile strategy’ and propose a conceptual framework of home country pressures influencing multinational enterprises’ international operation, and the variation of their impact across industries and firms. This framework provides a foundation for future work on the extra-territorial effects of institutions in international business.     

How have Japanese multinational companies changed? Competitiveness,management and subsidiaries

Evidence on the strategies and capabilities of Japanese multinational companies (MNCs) and their subsidiaries points to aspects of established management practices (typically home-grown) that complicate or inhibit adaptation to the demands of global competition since the 1990s. Japanese MNCs have had to respond, amongst other trends, to the switch from production to buyer-driven global value chains, cross-border vertical specialization, global factory strategies and strategic alliances and cooperative relationships. Amongst the factors that might affect the ability of Japanese MNCs to make competitive and organizational transitions are: parental MNC intent and capability in the cross-border transfer of management practices; the impact of host country risk on investment, ownership and entry strategies; measures of institutional difference and the gap in economic development between home and host nations; parent firm–subsidiary and subsidiary–subsidiary power relations and knowledge boundaries; and the evolution of insider networks that might overcome institutional and cultural distances within an MNC.