Foreign direct investment motivations and knowledge acquisition from MNEs in overseas subsidiaries

Despite studies exploring factors affecting knowledge acquisition from multinational enterprises in subsidiaries, what accounts for a successful acquisition is unresolved. We argue that such disparity may stem from inattention to investment motivations of multinational enterprises (MNEs) in foreign markets and to the fact that learning patterns of subsidiaries can be influenced by foreign firms' market‐seeking or efficiency‐seeking behaviors. We find that absorptive capacity in learning organizations and daily interactions with knowledge possessors are essential to learning from parent firms. In addition, active support from parent firms is particularly crucial for subsidiaries seeking to improve operational efficiency of MNEs. We also suggest that potential absorptive capacity plays a catalyst role in initiating knowledge acquisition, particularly in cases where MNEs have market‐seeking motivations. Copyright © 2014 ASAC. Published by John Wiley & Sons, Ltd.     

The role of top management networks for market knowledge creation and sharing in China

Despite the paramount influence of top managers within a firm, extant literature has under-researched the specific role of top management in market knowledge development. Drawing on social networks theory, the authors conceptualize a linkage between top management networks (TMNs) and market knowledge management. Based on a sample of Chinese firms, the results show that networking embeddedness of TMNs promotes new knowledge creation, but too much networking embeddedness leads to diminished returns. In addition, networking disparity of TMNs has a negative influence on existing knowledge sharing, and technological turbulence seems to weaken this negative impact. The findings have some important implications for marketing research and for managers on how to obtain superior learning in Chinese Economy.     

Global sourcing of complex production processes

We develop a theory of a firm in an incomplete contracts environment which decides on the complexity, the organization, and the global scale of its production process. Specifically, the firm decides i) how many intermediate inputs are simultaneously combined to a final product, ii) if the supplier of each input is an external contractor or an integrated affiliate, and iii) if that input is offshored to a foreign country. Our model leads to a rich set of predictions on the internal structure of multinational firms. In particular, it provides an explanation why many firms choose hybrid sourcing and have both outsourced and integrated suppliers.     

The Role of Social Mechanisms in Demand and Supply Integration: An Individual Network Perspective

In many industries, including retail, increased complexity of marketing strategies needs to be met with increased efficiency in product delivery, requiring integration across demand and supply facing functions of the firm. For frontline logistics employees (FLEs) of manufacturing firms who are delivering and marketing products in retail stores daily, the ability to understand both the marketing and supply implications of their actions is essential. Despite the importance of cross‐functional integration at the retail frontline, little logistics research has explored how logistics frontline employees interact with managers and each other to integrate knowledge and information. The purpose of this research is to examine the antecedents to cross‐functional integration across demand and supply functions in multiple social networks of the FLE. Mixed methods, including social network analysis, structural equation modeling, and analysis of variance, are applied to test social capital theory hypotheses regarding the impact of relational embeddedness and social mechanisms, socialization and shared interpretation, on individual demand and supply integration across friendship, key enabler, and ideation networks of the frontline employee.     

Factors in the effective transfer of knowledge from multinational enterprises to their foreign subsidiaries: a Mozambican case study

The purpose of this article is to better understand the role of internal stakeholders in subsidiaries of multinational companies (MNCs) in order to offer potential insights into the cross‐border transfer of knowledge from those companies’ headquarters to their subsidiaries. The focus is upon subsidiaries in developing countries, here Mozambique. More specifically, the article is concerned with identifying factors that influence the learning of internal stakeholders and noting practices which seem associated with a high level of absorptive capacity and performance of subsidiaries. The starting point is evidence of ineffective transfer of knowledge by MNCs to their subsidiaries in developing countries, with consequent sub‐standard performance. The research reported involves four case studies of Portuguese companies operating in Mozambique and draws on data from interviews with senior and middle managers in the firms’ Mozambican subsidiaries. The results obtained suggest that successful knowledge transfer to overseas subsidiaries is found under the following conditions. First, the parent company knows the local context and provides a flow of relevant information. Second, application of knowledge locally is done flexibly to suit local circumstances. Next, a participatory approach is used so that local staff can see why the knowledge conveyed is necessary. Fourth, explanation and demonstration are key techniques, with major roles for on‐the‐job training, continuous improvement and training at headquarters. Finally, issues arising from local culture may need to be addressed.     

基于知识结构的跨国公司子公司成长战略研究

基于知识结构的子公司成长实质上是子公司内外部知识积累互动、优化知识结构的过程。知识基及其构成是子公司成长的内在基本条件;母合知识结构及其外部知识结构的互动是子公司成长的真正机理;子公司知识结构的变化为其成长提供了可能。基于知识结构的子公司成长战略有利于我国企业与跨国公司人力资源和知识网络的有效嫁接,能够促进我国企业的持续快速成长。     

The role of experiential and non-experiential knowledge in cross-border acquisitions: The case of Indian multinational enterprises

This paper investigates the antecedents of the internationalization of emerging economy multinational enterprises (EMNEs) through cross-border acquisitions. Using a panel data set of 1138 cross-border acquisitions made by 515 Indian multinational enterprises (MNEs) during 2000–2013, it examines interactions of in-house resources with experiential and non-experiential knowledge to explore how EMNEs manage and exploit their knowledge base when internationalizing. The results show that Indian multinational enterprises have ‘interface competence’. They combine in-house resources with experiential market and externally sourced technological knowledge for undertaking cross-border acquisitions. The Uppsala model provides insights in analyzing the role of market knowledge and the Global Factory model helps in analyzing the role of technology in cross-border acquisitions by EMNEs.     

Interfirm collaboration and exchange relationships: An agenda for future research

Interfirm collaboration and exchange relationships are fundamental to how value is created, managed, and exchanged between firms. In this paper we first identify three major research themes (nature, governance, and outcomes) that existing research has focused on and then propose three structural shifts (technology, platforms, and globalization) that might influence nature, governance, and outcomes associated with interfirm collaboration. We also synthesize a research agenda for the future and develop multiple research propositions that might become the foundation to integrate the structural shifts into research on interfirm collaboration. We provide guidance on how existing theories can help scholars address new research questions arising due to the structural shifts. Finally, we provide insights to managers on the type of data that they need to access to make more effective decisions related to interfirm collaboration in a dynamic business environment.     

Knowledge Management in Central and Eastern Europe Through Network Development and Boundary Spanners

ABSTRACT

Central and Eastern European (CEE) countries have become a popular research venue due to their transitioning into market based economies. For international business scholars this represents a unique opportunity, as one of the key driving forces is the privatization of state-owned enterprises. Due to the market's great potential, many multinational enterprises are entering CEE countries and realizing that a transfer of market knowledge (i.e., customer tastes, distribution methods/channels, etc.) from the host country to the multinational, as well as from the multinational to the host country (i.e. technology, management/marketing capabilities, etc.), is essential.

The lack of host country skills have made knowledge transfer difficult. Also, the tacit nature of some of the most important knowledge embedded within the host country's organization and the multinational makes knowledge diffusion a daunting task to manage. However, successful knowledge management will assist in positive performance measures so researchers are examining knowledge management and its constructs (acquisition, transfer, conversion, and application).

Our research explores the linkage between knowledge management and performance in host country firms in a CEE country, Croatia. We also explored antecedents of successful knowledge management that of networks and human resources (boundary spanners). Finally we explored whether cultural distance moderates these relationships in the knowledge management process.     

Asia Pacific as a research context for organizational learning: background and future directions

The dominant research agenda in the field of organizational learning continues to be driven by Western universalist assumptions. However, Asia provides a fertile setting for challenging such narrow orthodoxy in the field through studies that investigate the influence of local contexts. In this collection, four studies by Asia-based scholars address various facets of organizational learning among indigenous Asian firms. Drawing on diverse theoretical lenses and research methodologies to examine various organizational forms, their insights about the unique patterns and processes of learning among both small and emerging multinational companies from the Asia Pacific serve to rekindle debates about universalism/convergence versus contingency/divergence, and about emic (context-rich, inside-out) versus etic (context-free, outside-in) perspectives.     

What changes the rules of the game in wholly owned subsidiaries? Determinants of knowledge acquisition from parent firms

We examine key factors affecting the extent of knowledge acquisition from multinational enterprises (MNEs) in their wholly owned subsidiaries (WOSs). As the volume of foreign direct investment (FDI) by MNEs is rapidly growing, empirical studies dealing with knowledge acquisition from parent firms in subsidiaries are in the limelight. However, as far as we know, none has attempted to identify primary mechanisms influencing subsidiary learning by dividing WOSs based on ‘investment mode’ and ‘investment direction’. We believe WOSs are characterized by these two issues and thus this research contributes to current literature by providing a detailed picture of learning mechanisms in subsidiaries. We advance a series of propositions to achieve the research objective by using a sample of WOSs established by MNEs in Korea. By doing this, we reveal that subsidiary learning depends significantly on absorptive capacity in learning organizations, relational capital and parent firms’ behavior. Also, we confirm that factors facilitating knowledge acquisition are influenced by investment mode and investment direction. Based on the results, this study provides some useful implications for MNEs and policy makers in local markets.     

The emergence of multi-sided platform MNEs: Internalization theory and networks

The rise of the digital economy provides firms across the globe with unique business opportunities. Companies such as Facebook, Alibaba, and Uber are competing in a new multi-sided platform world; the primary focus of these firms, from their inception, is to provide digital infrastructure, information and technology—intangible assets that enable direct interaction or value creation across platforms by linking different user group and complementors, often at the international level. Building on data drawn from multinational multisided Platform corporations (MMPCs) operating in China, we combine insights from internalization theory and network effects in understanding the value creation of such firms. We explore the boundaries of these new “breed” of MNEs in exploiting firm-specific advantages (FSAs) and in creating new knowledge between headquarters and subsidiaries. The findings suggest that internalization theory needs to shift its focus from the ‘boundaries of the firm’ to the ‘boundaries of the local network’. By integrating their internal and external networks of knowledge in adapting their business models in host markets, this new breed of MNEs is more likely than the traditional one to gain a sustainable competitive advantage in the new information age.     

The dual role of local sites in assisting firms with developing technological capabilities: Evidence from China

As strong local knowledge bases emerge in some developing countries and regions, more research efforts are devoted to examine the role of local sites in technological-capability development of firms from developing countries. However, most of these studies illuminate the direct input (e.g., knowledge, human capital) and the role of motivating multinational companies (MNCs) to upgrade their local operations in developing countries so as to perform more innovation activities. Few articles are presented that examine the role of local sites in the learning and technological-capability building processes that take place during technology import activities. This study investigates how local sites in developing countries help their firms benefit from the spillovers of international technology diffusion, by empirically scrutinizing Chinese licensee firms. The empirical results support the hypothesis that Chinese local sites assist with their firms’ technological-capacity building, driven by international technology licensing-in activities, in three indirect ways. That is, the enrollments of sufficient R&D personnel from local sites, the collaborations with local universities and research institutes, and the collaborations with local industrial community firms positively influence the relationship between firms’ international inward technology licensing and technological capabilities.     

Internationalization of Chinese Firms: What Role Does Guanxi Play for Overcoming Their Liability of Outsidership in Developed Markets?

This article explains how managers of Chinese firms can use guanxi when entering and expanding in developed markets. The empirical basis for the investigation is formed by interviews with 29 managers at 17 Chinese business‐to‐business firms internationalizing to Europe. The results generated are twofold. On the one hand, existing guanxi was largely irrelevant for initially entering the European market. On the other hand, Chinese firms managed to successfully overcome the liability of outsidership by building new guanxi‐like relationships with their Western business network partners after a certain period of time. Six propositions give insights on the process for Chinese firms to become insiders in the business networks of developed countries. The propositions were combined into two comprehensive models that give implications for future research and for management practice. © 2016 Wiley Periodicals, Inc.     

The Effects of Learning on Relationship Value in a Business Network Context

ABSTRACT

In today's intense global competition, a firm's ability to learn from its networks of business relationships is an important source of sustainable competitive advantage. Learning in a network of relationships involves a constellation of resource linkages among business partners tied together by interconnected resources. This has the potential of increasing the relationship value of a firm in terms of knowledge created through interactions among firms in the business network. Prior research has not yet examined the effects of learning in and through relationships in a business network context. Interdependence of firms in business networks gives rise to learning effects of adaptation and coordination that can have implications for relationship value. An empirical study of 215 business relationships from a network of nine high-technology companies in the United Kingdom shows that learning in and through relationships as a result of interactions and resource interdependencies in networks of relationships has a positive effect on a firm's relationship value. Furthermore, an understanding of the network context through interactions among firms facilitates learning and development of the firm's learning capabilities that enhance relationship value.     

Wage bargaining and multinational firms

We set up a general equilibrium model with heterogeneous firms to study the interaction between wage bargaining and foreign direct investment. Thereby, we highlight the incentives of firms to invest abroad in order to improve their bargaining position vis-á-vis local unions and we show how changes in the bargaining power of unions affect the share of multinational firms in an open economy. In addition, taking into account this relationship between wage bargaining and foreign direct investment, our analysis provides novel insights on how labor income and the unemployment rate adjust to economic integration and how changes in the bargaining power of unions affect these two labor market variables.     

Customer Satisfaction with Consumption Systems

ABSTRACT

Purpose: This research examines how satisfaction toward a product and its associated services offered together by a single provider jointly affects behavioral intentions toward the provider.

Design/methodology/approach: In this study, empirical tests were conducted using longitudinal data spanning 5 years from a multinational company that offers both products and associated services as part of a consumption system to their customers.

Findings: Results show a joint congruent effect of product and services satisfaction on behavioral intentions is linear and positive. It appears that offering great service cannot compensate for less-than-adequate satisfaction toward the product. The results further highlight decreasing customer sensitivity to improvements in both sources of satisfaction and imply that focusing on too high levels of one type of satisfaction for their customers can actually be counterproductive for firms.

Research Limitations: Our model was tested using the data obtained from a single firm. Future research could test this model with data from multiple firms in various different industries and establish broader generalizability to the findings.

Practical Implications: Findings provide managers with insights on how to allocate resources across product and service spaces and to manage product and services revenues over time. Results also indicate that customer behavioral intention ratings are more weighted on product quality over the service received by them. However, mere improvements in the product cannot provide the highest desired results and therefore quality improvements in the product need to be complemented by improvements in service quality.

Originality/Value: There is a rapid emergence of the phenomenon of manufacturers providing both products and services as an integrated consumption system to their customers. While the provision of both product and service subsystems by the same firm leads to certain synergies, there are obvious costs to the development of new service capabilities and coordination with existing product capabilities. Our research intends to address this issue.     

Cross-border private equity syndication: Institutional context and learning

Private equity (PE) has become an increasingly international phenomenon but there is a lack of research that looks at the process by which PE firms invest across borders. We aim to fill this gap in the literature by examining the role of institutional context and organizational learning as determinants of cross-border PE syndication. We examine these issues by studying the international expansion by later-stage UK PE investors into continental Europe over the period 1990 to 2006. Our results indicate that institutional context (in terms of the number of PE firms in the local environment and the presence of investment bankers in the local market) and organizational learning (in terms of the PE firm's experience in the host country; the PE firm's multinational experience; and the number of investment managers per portfolio company; but not the presence of local offices) are significantly related to the use of cross-border syndicates. Implications for theory and practice are suggested.     

The performance implications of outsourcing customer support to service providers in emerging versus established economies

Recent discussions in the business press query the contribution of customer-support outsourcing to firm performance. Despite the controversy surrounding its performance implications, customer-support outsourcing is still on the rise, especially to emerging markets. Against this backdrop, we study under which conditions customer-support outsourcing to providers from emerging versus established economies is more versus less successful. Our performance measure is the stock-market reaction around the outsourcing announcement date. While the stock market reacts, on average, more favorably when customer-support is outsourced to providers located in emerging markets as opposed to established economies, approximately 50% of the outsourcing firms in our sample experience negative abnormal returns. We find that the shareholder-value implications of customer-support outsourcing to emerging versus established economies are contingent on the nature of the customer support that is being outsourced and on the nature of the outsourcing firm. Customer-support outsourcing to emerging markets is less beneficial for services that are characterized by personal customer contact and high knowledge embeddedness than for customer-support services that involve impersonal customer contact and are low on knowledge embeddedness. Firms higher in marketing resource intensity and larger firms benefit more from outsourcing customer-support services to emerging markets than firms lower in marketing resource intensity and smaller firms.     

How do firms evolve? The patterns of technological evolution of semiconductor subsidiaries

This study draws on concepts from international strategy and evolutionary economics to investigate the development of innovative ability within multinational subsidiaries. The paper develops hypotheses regarding the evolution of subsidiary innovative abilities, and the changes across time of their knowledge sourcing and sharing patterns with other parts of the multinational enterprise and host country firms.The paper analyzes patent data pertaining to foreign subsidiaries of US semiconductor firms and finds support for subsidiary technological development—there are positive changes in the scale and scope of innovative activity across time. The results also suggest that subsidiaries are increasingly embedded in host country knowledge networks—as they mature, subsidiaries increasingly learn and share knowledge locally. Evidence of increasing integration with other firms within the multinational enterprise is weaker.