MNE liability of foreignness versus local firm-specific advantages: The case of the Chinese management software industry

The theory of the multinational enterprise (MNE) suggests that the subsidiaries of MNEs possess firm-specific advantages (FSAs) that can overcome their liability of foreignness (LOF). It also suggests that subsidiaries can gradually decrease their LOF over time as they learn more about the host country environment and develop better connections to local business networks. Accordingly, subsidiaries should outperform local firms not only at point of entry but also (and increasingly so) in the long run as LOF decreases. This paper challenges this received wisdom by using case-study methodology to argue that LOF may not decrease over time and, meanwhile, the FSA gap between local firms and subsidiaries may narrow. We focus on two types of FSAs (asset and transaction ownership) and three sources of LOF (complexity, uncertainty, and discrimination) to develop a theoretical framework for analysing the dynamic relationships between LOF and FSAs and show how local firms can outperform foreign subsidiaries over time. We use the case of the Chinese management software industry to illustrate the framework. Our findings have important implications for MNEs competing abroad as well as helping to explain the emergence of strong competition from local firms.     

Chinese enterprises in Germany: Establishment modes and strategies to mitigate the liability of foreignness

Although China shows an impressive increase of outward foreign direct investment, research on internationalization strategies of Chinese companies is still in its infancies. It remains unclear, for example, how Chinese MNEs cope with the specific institutional hurdles of a developed country such as Germany and to reduce their liability of foreignness (LOF). Given a remarkable lack of in-depth empirical studies, we present insights from 31 semi-structured face-to-face interviews with employees belonging to seven Chinese MNEs and stakeholders. Our findings suggest that Chinese MNEs have gained international experience, whereas strategies to reduce their LOF depend on the establishment mode chosen.     

Mitigating the dual liability of newness and foreignness in capital markets: The role of returnee independent directors

Foreign firms undergoing an initial public offering in developed economies face a dual liability of newness and foreignness that can negatively impact the firm’s ability to access capital. In this study, we examine the ability of returnee independent directors to overcome such a liability among 232 foreign listings in the U.S. We find that returnee independent directors positively impact the price premium of the foreign IPO. We also find that this relationship is contingent on the level of ownership retained by non-independent directors, the level of ownership retained by venture capitalists, and investor protection in the firm’s country of origin.     

Turning a liability into an asset of foreignness: Managing informal networks in Korea

Although foreignness can bring both benefits and costs to a business, much of the literature has focused on the liability of foreignness (LOF), while relatively little attention has been paid to the positive side. Despite the presence of LOFs, foreign companies may accrue some unique advantages from their foreign status, which are referred to as assets of foreignness (AOFs). Drawing upon social-capital theory and institutional theory, this article examines the issue of LOFs versus AOFs in the context of the informal networks in Korea and explores how foreign companies can manage their weaknesses in host-country-specific informal networks to create value from their foreignness. We discuss two practical strategies, reactive and proactive strategies, that can be used by foreign companies. While these two strategies can be pursued in parallel, this article suggests that foreign companies should prioritize pursuing proactive strategies. This article contributes to a more nuanced understanding of the role of foreignness in the international business context and provides practical insights into how foreign companies can leverage their foreign status in developing their own informal networks in Korea.     

Escapism FDI from developed economies: The role of regulatory context and corporate taxation

In this paper, we extend the conceptualisation of escapism Foreign Direct Investment (FDI) holding for emerging economies to developed economies that face specific institutional failures, such as weak or incomplete regulations, along with high taxation. We combine this literature with the recent development of Dunning’s eclectic paradigm, which includes institutional aspects regarding location factors. We argue that in developed economies with problematic regulations and high taxation, sound institutions and lower tax rates abroad are extremely significant for domestic firms’ internationalisation. A central result regards the moderating effect of host regulatory quality on taxation, which highlights the crucial role of institutions for firms originating in developed economies that lack sound institutions. Additionally, the results challenge the available theorising and evidence on the moderating role of institutions in the prior experience of a firm at a location. We instead provide evidence that once firms establish a subsidiary abroad, they acquire substantial knowledge about the host institutional environment, which translates into an Ot advantage, providing an additional motive for further expansion. This work uses a unique database of the total population of Greek MNEs – released for the first time – for an extended time period, 2001–2010. The results could be generalised to similar developed economies facing analogous regulatory failures and high taxation, such as the southern European Union countries, as well as even for northern European Union countries, such as Germany, according to Bundesbank’s report.     

Minimizing effects of ‘liability of foreignness’: Response strategies of foreign firms in the United States

While anecdotal and research evidence exists supporting the difficulties faced by foreign firms in host nation environments due to liability of foreignness, it is clear that many foreign firms have been successfully operating in the U.S. over the years. This study seeks to understand the strategies foreign firms use to cope with liabilities of foreignness in an alien environment and compete successfully with domestic firms, specifically through boundary spanning. Using a sample of 3861 firms in the U.S., we find that foreign firms on the average underperform compared to domestic firms. We also find these firms take a differing strategic posture to cope with the disadvantages of being a foreign firm compared to domestic rivals. Multiple mediation models indicate that once this strategic posture of foreign firms is controlled for, performance differentials do not exist between foreign and domestic firms.     

Toward a model of governance and legality in transforming economies: Empirical evidence from China

This article develops and empirically examines a model of governance and legality of organizations in countries under significant system transformation. While previous research has focused on issues of governance structures, this study suggests that organizational legality is equally important. An analysis of survey data from 127 Chinese managers demonstrates that governance and legality are distinct dimensions. We suggest that an application of this empirically corroborated model to other transformational economies may reveal different configurations of the organizational field, mirror contrasting reform strategies, and indicate the possibility for alternative routes of organizational transformation. © 2005 Wiley Periodicals, Inc.     

Causal mechanisms of COVID-19 disruptive effects on liability of foreignness and the emergence of new firm-specific advantages

There is the need for comprehensive research on the disruptive effects of COVID-19 on international business (IB) in preparation for future disruption. However, we know little about the causal mechanisms of the phenomenon which impacted IB. Based on a case study of a Japanese automotive firm in Russia, we investigate how firms tackle institutional entrepreneurship with firm-specific advantages to overcome the disruptive effects. Consequently, the pandemic increased institutional costs due to greater uncertainty in Russian regulatory institutions. To manage this, the firm developed new firm-specific advantages to deal with the increasing uncertainty of regulative institutions. The firm united with other firms to motivate public officials to advocate for semi-official debates. Our study contributes to extending intersecting studies on the liability of foreignness and firm-specific advantages through the lens of institutional entrepreneurship. We propose a holistic conceptual process model of the causal mechanisms and a novel construct for new firm-specific advantages.     

The Impact of Leadership on Absorptive Capacity: New insights from the UAE

This paper investigates the impact of transformational and transactional leadership on the absorptive capacity of firms within an emerging market setting. Unlike some findings from the Western world, the results indicate that both transformational and transactional leadership styles positively influence the learning processes of absorptive capacity. More specifically, the results indicate that transactional leadership style positively influences the exploratory and transformative learning processes, while the transformational leadership style positively affects the exploitative learning process. Given the unique context under investigation and the fluid institutional arrangements associated with it, the results reflect the need for leadership guidance. Implications for theory and practice are discussed.     

The risk concept for entrepreneurs reconsidered: New challenges to the conventional wisdom

This paper explores the entrepreneurial risk construct, focusing on how the decision to launch a new venture may entail risks different from what is found in established firms. Opportunities often emerge from the creation of specialized knowledge: in start-ups this knowledge is characterized by concerns for rent appropriation and information asymmetry. We suggest that traditional measures of risk do not properly account for these concerns; hence an illusion of greater risk-taking attaches itself to entrepreneurs, especially if the specialized-knowledge is difficult to observe. We suggest alternative measures that better capture these concerns, including the dilution of control when issuing equity, cash burn rates, etc.     

Liabilities and benefits: Examining the two sides of the foreignness coin from entrepreneurial perspective

This paper provides an in-depth examination of foreignness at the individual level by studying it in the context of entrepreneurs. Based on data collected from 470 domestic and foreign entrepreneurs operating in the U.S., it was concluded that foreignness has a curvilinear relationship with entrepreneurial performance. There was also evidence of moderating effects of entrepreneurial orientation on the relationship between foreignness and performance. Implications of the findings are discussed.     

Financial liberalization and stock markets efficiency: New evidence from emerging economies

This paper aims to assess the impact of financial liberalization on the degree of informational efficiency in emerging stock markets while considering three types of financial crises, i.e. banking, currency and twin crises. To this end, a treatment effects model with time-varying parameters is estimated for 13 emerging economies from January 1986 to December 2008. Empirical results show that there is a greater efficiency in recent years and that financial liberalization not only improves the degree of efficiency but also reduces the probability of financial crises. They also suggest that improving efficiency depends upon several internal characteristics.     

Corporate social responsibility in emerging economies: Investigating firm behavior in the Indian context

Scholars have questioned the appropriateness of using a western‐centric framework to investigate corporate social responsibility (CSR) in emerging economies. This study assesses the appropriateness of using such a framework in one emerging economy—India. More specifically, the drivers of CSR and their impact on firm‐level CSR activity in the Indian context are investigated and compared with those in developed economies. Content analysis of 369 CSR policy statements of publicly traded Indian firms revealed the factors that drive CSR activities of Indian firms are similar to those found in developed economies. However, the ways firms respond to the drivers of CSR are surprisingly different in the Indian context, and these differences can be traced to attributes of the Indian socio‐cultural context. Implications and recommendations for future research conducted in India, and in other emerging economies, are offered.     

The impact of foreignness on the compliance with cybersecurity controls

This study examines whether and how foreignness affects internal auditors’ compliance with the International Standards for the Professional Practice of Internal Auditing (the Standards) from social and culture perspective. It demonstrates that foreignness, such as language and relational social capital, has a significant impact on auditors’ compliance with the Standards, especially with respect to cybersecurity, independence and objectivity, individual objectivity, and governance of the Standards. The Partial Least Squares Structural Equation Modelling (PLS-SEM) is used to analyze the survey data. This study highlights that external factors such as social capital affect the internal auditors’ compliance with the Standards.     

Leadership in a global context: New directions in research and theory development

The goal of this special issue is to present a set of articles that, collectively, explores the interrelationships between national culture, leadership, and organizational behavior. Our hope is that these articles will summarize where the field currently stands, as well as suggest new directions for future research and theory development on this important topic. To achieve this, we include 14 articles from authors representing 13 countries. The methodologies used here include meta-analyses, case studies, and interview studies, although the majority represents conceptual model building based on critical analyses of existing theories and research. Management implications are discussed.     

诌议侵权责任法中公平责任之地位

本文对侵权责任法中公平责任之地位进行了论述.     

Competition in the banking sector: New evidence from a panel of emerging market economies and the financial crisis

This paper assesses competition across the banking systems in emerging market economies. The analysis employs the Panzar and Rosse (1987) methodology, spanning the period 2000–2012. The analysis emphasises the impact of the recent financial crisis on the extent of competition in these banking systems. The empirical findings are robust and consistent with those of previous studies, providing sufficient evidence in favour of monopolistic competition across all countries under investigation. The level of competition in these banking sectors seems to have undergone a significant decline after the recent financial crisis. This finding receives robust support from an alternative methodological approach.     

Banking market power and its determinants: New insights from MENA countries

This paper evaluates the degree and determinants of banks' market power in 13 MENA countries for the years 2000 to 2018, with a special focus on customers' switching costs and banks' cost efficiency. We find that MENA banks enjoy a substantial degree of market power on the loan market, while their customers have to face remarkable costs in case of switching to other banks. Banking market power increases with the level of switching costs and is higher when credit institutions are more cost efficient, focus on the traditional intermediation activity, are smaller in size, and operate in countries where stock markets are less developed, banking markets are more concentrated, the inflation rate is lower, and GDP growth is poor. Our results are robust to alternative specifications and estimation techniques.     

The moderating effect of institutional context on the relationship between associational activity and new business activity in emerging economies

Varying institutional environments provide the foundation for a great deal of international business (IB) research yet relatively little empirical work has examined the association between institutional factors and new business development in emerging economies, although the importance of new business development for economic transition and growth is widely acknowledged. Drawing from social network and institutional theories, we address this gap by examining the effect of associational activity on the level of new business activity in emerging economies, and testing the thesis that associational activity becomes more instrumental for new business creation when aspiring entrepreneurs confront higher institutional burdens (i.e., obstacles derived from underdeveloped or absent institutions). On the basis of data from two cross-national research projects—the Global Entrepreneurship Monitor and the World Values Survey—we find a positive relationship between a country's associational activity and new business activity; this relationship is stronger for higher regulatory and normative institutional burdens and lower cognitive institutional burdens. This study is among the first to examine empirically the possible substitution effect between social ties and institutions to predict new business activity; it paints a nuanced picture of how social networks might be more instrumental in contexts characterized by weak institutions. We discuss the implications of these findings for IB theory and practice and offer directions for further research in the area.     

A tale of passion: New insights into entrepreneurship from a parenthood metaphor

While most organizational theories avoid emotion, many entrepreneurs act with emotion. Entrepreneurs often describe their businesses as their “babies,” expressing personal connection and even identification with their businesses. We therefore suggest that through exploring associated relational metaphors, we can gain additional insight into entrepreneurship. Specifically, we propose that parenting, with its nurturance, passion, or even neglect or abuse, offers a particularly fruitful metaphor for examining entrepreneurship that may better resonate with entrepreneurs themselves than does current theory. We examine various aspects of the progression of children and ventures, including nascent forms of entrepreneurship (gestation of babies), emergence, and postemergence activities, and highlight the ideas of passion, identification, attachment, and entrepreneurial context.