Subsidiary Capacity Building in Emerging Markets: How Japanese MNEs Sequence Market Entry and Development Strategies in India

This paper asks the pragmatic question of how and to what extent firms build subsidiary competitiveness over time. By merging international business and international marketing theory, we integrate the unconnected discourses on market entry, development, product sequencing, and diffusion. The context of our research questions is marketing and entry strategies of four Japanese firms in India. All have had to learn the sequencing of both entry and product diversification. While strategies vary between the firms, the cases exhibit that entry and product diversification decisions are interlinked. Market entry configurations are central for developing market‐led solutions in large emerging markets. This study offers insights into how Japanese MNEs build subsidiary competitiveness when faced with the early stages of the Indian consumer market take‐off. Second, through the integration of international business and international marketing theory, we find that new product performance and international diversification interact in specific ways, and this contributes to future theoretical developments. © 2015 Wiley Periodicals, Inc.     

The effect of product diversification strategies on the relationship between international diversification and firm performance

Previous studies have provided mixed evidence on the interaction effect of product and international diversification on firm performance. This study extends this stream of research by investigating the differential impacts of product diversification strategies on the relationship between international diversification and firm performance. We find that while related product diversification positively influences the performance of multinational firms, unrelated product diversification negatively moderates the international diversification–performance relationship. The evidence is robust for different models of international diversification and firm performance, and holds for firms in both the service and manufacturing industries. Our findings highlight the importance of distinguishing different product diversification strategies, and provide a potential explanation for prior mixed evidence.     

How Institutional Change Reconfigures Successful Value Chains: The Case of Western Pharma Corporations in China

Management researchers have traditionally emphasized two main factors in the definition of corporate strategies: internal capabilities and industry competition. However, in less stable, transition economies it is particularly the changing institutional environment that influences strategy definition and performance of multinational corporations (MNCs) as shown by numerous international business (IB) scholars. Yet, how institutions matter remains a largely unresolved question. This article examines how institutions have affected the value chain configuration of Western pharmaceutical firms in China. Our research framework identifies four major strategic shifts along the value chain of Western firms in the pharmaceutical industry: upgrading along the value chain, outsourcing to contract service providers, expansion of geographical scope and diversification of product portfolio. The findings allow concrete managerial implications to be derived for decision makers of Western pharmaceutical firms operating in China. © 2013 Wiley Periodicals, Inc.     

International Equity Joint Ventures in Ghana and Cote D'Ivoire

Abstract

This paper examines international equity joint ventures (IJVs) in West Africa, presenting data from 45 British and French alliances with local partners in Ghana and Cote D'Ivoire. A comparison with prior studies finds remarkable consistency in the characteristics of IJVs between firms from DCs and LDCs in the following dimensions: motives, instability, asymmetry in equity distribution, frequency of government association, source of CEO, autonomy in management. Differences in IJVs between developed and less developed countries appear cursory rather than fundamental and focus on MNEs' dissatisfaction with IJV performance, the control relationship, and level of equity.     

Performance implications of store format diversification for international retailers

Abstract

International retailers face formidable tasks in trying to replicate, or improve upon, their home country success abroad. Their market-seeking efforts sometimes require strategic diversifications of their store format portfolios capable of serving customers in different host countries. In this study, we examine whether the degree of store format diversification helps improve the performance of international retailers. We also assess the possible moderating effects of three factors—internationalization speed, political distance, and cultural distance—on this relationship. Utilizing 2001–2015 panel data for 19 retailers originating from several home countries and operating in multiple host countries, we employ a fixed effects model to examine the hypothesized relationships. Our results show that the performance of international retailers is influenced negatively by store format diversification. This relationship is moderated by internationalization speed and political distance, but not by cultural distance.     

How do institutional transitions impact the efficacy of related and unrelated diversification strategies used by business groups?

Drawing from institutional theory and organizational theory, this paper reports findings from a longitudinal study of Indian business groups as they were responding to pro-market institutional reforms. It explores their diversification choices at the group level, and the group performance consequences of these choices during a period of institutional change (1988–2012). Results show that although overall group diversification had a positive impact on performance, as institutions developed and market reforms took root, unrelated diversification resulted in poorer performance. However, related diversification strategies resulted in positive group performance outcomes after pro-market reforms had taken root. This suggests that the performance consequences of alternative diversification strategies adopted by business groups change as institutional development occurs, an important facet of business group evolution that has received limited attention in the extant literature.     

Institutional determinants of ownership stake in cross-border acquisitions in Africa: The moderating role of geographic distance

We look at how emerging markets' institutional features affect ownership stake in cross-border acquisitions (CBAs) within Africa. Particularly, we show that the presence of shared colonial history between the home and host country and the extent of fractionalization distance and formal institutional distance influence the acquiring firm's decision regarding its ownership stake in the target. Moreover, we show that geographic distance between the home and host country, by augmenting uncertainty faced by acquiring firms, moderates the relationship between these institutional features and ownership stake. We test our hypotheses in a sample of 341 intra-Africa CBAs from 2001 to 2016. Generally, we find that greater ex ante uncertainty and ex post costs increase ownership stake. Specifically, greater geographic distance strengthens the positive relationship between shared colonial history and ownership stake and reverses the negative relationship between formal institutional distance and ownership stake. As for fractionalization distance, the relationship is more nuanced and needs to be further studied. We contribute to advance research on south–south CBAs in general, particularly within Africa, as well as to extend hostage theory in foreign market entry strategies in and from emerging markets.     

International diversification of the emerging-market enterprises: A multi-level examination

This study develops a cross-level research model based on insights from the capabilities view and institutional theory. We examine the drivers of international diversification for firms from emerging economies, specifically how top managers’ prior experiences and a favorable institutional environment for human capital affects the international diversification of emerging-market enterprises (EMEs). This research demonstrates that firm- and country-level factors collectively influence the international diversification of EMEs. We find that an EME whose top managers have global managerial and technological experiences is more likely to venture into international markets when a favorable institutional environment provides globally competitive, highly skilled human capital. This study demonstrates that for a multidimensional phenomenon such as EMEs’ international diversification, a more complete picture emerges given a theoretical framework that builds on diverse perspectives which are empirically tested across levels.     

International diversity of authorship in advertising research

Although advertising is a global discipline, several of the world's regions remain under-represented in the leading advertising journals, with North American dominance of review boards and authorship in these journals. Introducing this special issue of the International Conference on Research in Advertising (ICORIA), this paper assesses the international diversity of authorship in advertising research by looking at the nationalities of author teams of articles published in the leading advertising journals over the last 10 years. Among advertising journals, international diversity of authorship is clearly greatest in the International Journal of Advertising (IJA), and the even greater international diversity of this ICORIA special issue highlights the Journal's international orientation. The fact that diversity of authorship also relates to article citations and therefore to research performance further emphasizes the need for more international diversity of authorship in advertising research.     

Service multinational enterprises and linkages development in Pakistan

The development of various types of linkages is key to understanding the impact of multinational enterprises (MNEs) on the economic development of host markets. Using a qualitative research approach, we investigate the linkages created by IT MNEs in Pakistan. The findings suggest that these MNEs have created management, technological, diversification, and financial linkages, among others. Their creation is contingent and co‐determined by the MNEs' investment motives, their mandates, and embeddedness in the host market as well as the local technical capability. We highlight the contributions and implications of these linkages. Copyright © 2017 ASAC. Published by John Wiley & Sons, Ltd.     

National distances,international experience,and venture capital investment performance

This study examines how the performance of cross-border venture capital investments is affected by national institutional and cultural distances between the environments of venture capitalists (VCs) and investee ventures. We propose that institutional and cultural distances will decrease VCs' effectiveness in conducting venture capital activities and negatively affect investment performance in terms of exit success, and obtain supportive evidence while controlling for geographic distance. We further analyze how VCs can use their international experience to mitigate the negative consequences of national distances. We find that while broad international experience in diverse countries attenuates the deleterious effects of institutional distance in a significant way, it does not have a similar impact in attenuating the negative effects of cultural distance.     

The impact of institutional distance on the international diversity–performance relationship

We investigated the impact of institutional distance on the international diversity–performance relationship. We first discussed the international diversity–performance relationship for large multinational firms and later showed the moderation effect of regulative and normative institutional distance. Based on a sample of Fortune 500 firms, we found an inverted U-shaped curve. Regulative institutional distance has a negative moderating effect on the international diversity–performance relationship, while normative institutional distance shows a positive effect.     

Institutional difference,organizational experience,and foreign affiliate performance: Evidence from Polish firms

We draw from the institutional economics and organizational learning theories to clarify two international business debates. The first debate involves how institutional distance affects foreign affiliate performance: some propose a negative and others a positive direct effect. We clarify this debate by differentiating between negative and positive institutional difference. The second debate involves how experience modifies this relationship: some propose a negative and others a positive moderating effect. We clarify this debate by differentiating between similar and dissimilar experience, creating four moderating effects: Advantage of Challenge Anticipation, Advantage of Opportunity Anticipation, Disadvantage of Polymath Downgrading, and Disadvantage of Specialist Upgrading.     

The impact of formal and informal institutional distances on MNE corporate social performance

Can host country selection affect the corporate social performance (CSP) of multinational enterprises (MNEs)? Using institutional distance as our theoretical lens, we propose and empirically examine the notion that greater institutional diversity can have disparate influences on the social performance of different types of MNEs. We conceptualize each MNE as a unique portfolio of locations and use that “footprint” to examine the impact of formal and informal institutional distances on CSP. We hypothesize and find (1) a moderating influence of greater formal institutional distance in the MNE portfolio that slows the rate of increased benefits associated with greater international scope; and (2) a direct influence of greater informal institutional distance that lowers the overall levels of CSP independent of the international scope of the MNE. Managerial implications for international location selection are discussed.     

Attitudes towards corporate social responsibility and perceived importance of social responsibility information characteristics in a decision context

This study addressed the questions of perceived importance of social responsibility information (SRI) characteristics in a decision context, as well as the attitudes of institutional investors toward social responsibility involvement. The results showed that SRI presently disclosed in company annual reports did not have any significant impact on institutional investors' decisions. However, if SRI were presented in quantified, financial form, and were focused on product improvement and fair business practices, such information would be perceived as more important for investment decisions. Attitudes toward corporate social responsibility also suggested that institutional investors were not totally opposed to company involvement in social activities. Hai Yap Teoh is associate professor in the Department of Accountancy, The University of Wollongong, New South Wales, Australia. He has published extensively in local and international journals including Accounting, Organizations and Society and The International Journal of Accounting Education and Research. His major areas of research interest include corporate social responsibility and reporting.Godwin Shiu is teaching fellow in the Department of Accountancy, The University of Wollongong, New South Wales, Australia. He is also doing a master's degree in accountancy.     

Does the sequencing of related and unrelated export diversification matter? Evidence from Colombian exporters

How does related or unrelated geographic diversification affect future related or unrelated product diversification of exporting firms, and vice-versa? This question addresses an unresolved debate, and it is important for firms in developing countries that seek to expand their product and geographical markets. Our study contributes to a current debate by highlighting the relevance of the temporal sequence and the relatedness of international diversification. Expanding the classic transaction costs and the resource-based explanations, we argue that organizational learning as well as organizational and sales (in-)efficiencies (notably through resource and product cannibalization, negative transfer and coordination costs) affect the interrelationships between product and geographic diversification. Using a panel dataset of over 14,000 firm-year observations from exporters based in Colombia, we find that (1) related geographic diversification tends to increase future product diversification; (2) related product diversification tends to decrease future geographic diversification; and (3) unrelated product diversification tends to increase future geographic diversification.     

Emerging-market firms’ dynamic capabilities and international performance: The moderating role of institutional development and distance

While extant research has examined the separate influences of dynamic capabilities and institutions on international performance, their interactive role has received limited attention. Therefore, we examine the role of host-country institutional conditions in the relationships between emerging-market firms’ (EMFs) innovation-related dynamic capabilities and their international performance. We use multi-source secondary data and primary data from multiple informants from 254 Turkish international firms to test our framework. The study finds that the linkages between three innovation-related dynamic capabilities (innovativeness, supply-chain agility, and adaptability) and international performance are positively and negatively moderated by institutional development and institutional distance, but that their influences are opposite. These influences demonstrate that host-country institutional conditions shape the link between dynamic capabilities and EMFs’ international performance in a multifaceted and paradoxical fashion.     

The Roles of Cultural Elements in International Retailing of Cultural Products: An Application to the Motion Picture Industry

We investigate factors influencing the international retailing of cultural products by concentrating on two cultural elements: (1) consumer-perceived cultural content embedded in the product and (2) the general cultural environment of the foreign market. To test cross-culture predictability in international retailing, we develop a novel text mining procedure to elicit the specific cultural content of the product using consumers’ online product reviews. In addition, to measure the general cultural environment of the market, we apply Hofstede's cultural distance measure. To explain foreign markets’ acceptance of culturally specific elements, we theorize that the relationship between inter-country cultural distance and product sales is U shaped because of both cultural discount and cultural premium. In our empirical analysis using American movies in international retailing, we find that the two specified types of cultural factors determine a movie's success, along with the movie's characteristics and the market's economic environment. From a managerial perspective, international retailers that understand the delicate implications of the match/mismatch of their general national culture and the imported product's specific cultural content can better predict the international success of imported cultural products.     

Does consumer‐firm affiliation matter? The impact of social distance on consumers’ moral judgments

When the leader of a firm commits a professional transgression, how would customers’ judgments of the transgressor's professional performance and immorality differ from those of noncustomers’? This research answers this question by investigating factors that explain the discrepancy in moral judgments between noncustomers and customers affiliated with the firm of a transgressing leader. Drawing on construal level theory, our two experimental studies consistently demonstrate that relative to high social distance (i.e., noncustomers), low social distance (i.e., customers) leads to more positive judgments of the transgressor's professional performance, but differences in the social distance do not directly lead to disparities in judgments of immorality. Social distance, however, affects both performance and immorality judgments when mediating mechanisms (conscious and nonconscious moral reasoning) are accounted for, such that low social distance indirectly influences customers to be more lenient in not only their performance judgments but also their immorality judgments. This research contributes to the topic of morality that permeates the current discourse on ethical business transgressions and, in particular, to an understanding of specific mechanisms that guide consumers’ moral judgments.