Morphing: The Linkage of Inward Private Equity and Outward Ventures

Private equity is impacting the global economy and competitive landscape of multinational enterprises (MNEs) worldwide. In this pioneering study, we find an important new pattern for global interfirm connections: an inward private equity investment is inductive for emerging MNEs to conduct an outward venture. This inward‐outward linkage implies that emerging MNEs are more likely to undergo a series of organizational changes after receiving private equity investments. These changes include restructuring their boards of directors, rebuilding their top management teams, reconfiguring their corporate resources, reframing the industry structure, and altering competitive dynamics. These organizational changes induce emerging MNEs to modify their strategies such as speeding up the internationalization process, locating additional outward ventures in advanced economies, and choosing more complex entry modes, particularly cross‐border mergers and acquisitions (M&As). We describe this type of evolving internationalization of emerging MNEs as a “morphing” process with in‐depth case studies on emerging Chinese MNEs including Lenovo, Zoomlion, Geely, Alibaba.com, Huawei, NVC Lighting, and BYD. © 2014 Wiley Periodicals, Inc.     

Internationalization of China's private‐sector MNEs: An analysis of the motivations for foreign affiliate formation

China's private‐sector multinational enterprises (MNEs) are often owned and controlled via offshore holding companies in tax havens. As such, their foreign affiliates are often difficult to identify, and their activities are also not captured in official Chinese outward foreign direct investment data. To date, therefore, there has been comparatively little systematic analysis of these affiliates as they internationalize. Here we address this gap by developing a method that allows us to identify 104 privately owned Chinese MNEs owned via offshore holding companies, as well as their 227 foreign affiliates. We analyze and discuss the motivations for the formation of their foreign affiliates in light of current theory. © 2012 Wiley Periodicals, Inc.     

Multinational Enterprises’ Entry Mode Strategies in Syria and Jordan: The Impact of Ownership Advantages

This study addresses the issue of ownership advantages affecting multinational enterprises’ (MNEs) entry mode strategies in developing countries. Although a few studies have focused on such effects, very little attention has been devoted to the ownership advantages generated from the institutional environment of MNEs’ home countries. To bridge this gap, this study concentrates on three types of ownership advantages: intangible asset advantages (IAA), advantages of common governance (ACG), and home‐country‐specific advantages (HCSA). Using a sample of 303 foreign affiliates, this study empirically examines the choice of MNEs between a wholly owned subsidiary (WOS) and a joint venture (JV). The data were collected from senior executives of MNEs’ subsidiaries operating in Syria and Jordan. The findings of this study reveal that MNEs’ choice of entry mode strategies is significantly influenced by intangible asset advantages, advantages of common governance, and home‐country‐specific advantages. Hence, senior executives perceiving an increased importance of these assets will opt for a WOS rather than a JV when entering a new market in the Middle East. © 2015 Wiley Periodicals, Inc.     

Environmental risks,localization and the overseas subsidiary performance of MNEs from an emerging economy

Despite the fact that multinational enterprises (MNEs) from emerging economies invest actively in host countries with substantial risks, we have limited understanding of how they manage environmental risks to achieve desirable performance in their overseas subsidiaries. Drawing on resource dependence theory, we argue that different localization strategies serve as a mediating mechanism linking environmental risks and overseas subsidiary performance. Our findings based on a sample of Chinese MNEs show that industry risks significantly reduce the levels of input localization and marketing localization of Chinese MNEs’ subsidiaries, and thus negatively affect subsidiary performance. Political risks have an insignificant impact on input localization and marketing localization, but a positive direct impact on Chinese MNEs’ overseas subsidiary performance. We also find that state-owned MNEs’ localization strategies are more sensitive to industry risks compared with privately owned MNEs.     

The WTO and entry modes in China

For years, multinational enterprises (MNEs) vying for the Chinese market used joint ventures (JVs) as an entry mode. However, there has been a growing frustration with the JV mode. It is reported that MNEs are increasingly opting for wholly owned subsidiaries for better control. This article examines the recent development of the business environment in China. It concludes that there are now real entry options for MNEs, including exporting, JVs, wholly owned subsidiaries, and acquisitions. China's accession into the World Trade Organization (WTO) will accelerate the change process and make non‐JV options even more viable. A few decision rules for choosing an entry mode in China are discussed. © 2004 Wiley Periodicals, Inc.     

Digital transformation,sustainability, and purpose in the multinational enterprise

We discuss how environmental and pandemic crises in combination with digitization are presenting the multinational enterprise (MNE) with increasing geopolitical, organizational, and market tensions. Institutional pluralism is creating a more complex global environment. The organization of productive work is shifting, which challenges how MNEs structure and coordinate their activities. Changing consumer and investor expectations are broadening the understanding of value creation with implications for business models. We contend that the tensions invite MNEs to reconsider how they frame, formalize, and realize corporate purpose. We close with a research agenda that recognizes the need for MNEs to become purpose-driven actors.     

Regulating the entry of multinational enterprises: Models and practices

This paper examines the policies adopted by host governments to regulate the entry of multinational enterprises (MNEs). The conflict between host governments and MNEs over the choice of entry strategies is demonstrated. The theoretical underpinnings of host governments’ regulations on MNEs’ entry are provided and the restrictive policies adopted by host governments are assessed. In general, prohibiting an MNE to sign a licensing agreement with its own partially owned subsidiary generates a higher level of national welfare. If the size of the host market is large enough to support several efficient plants, encouraging MNEs to license their technologies to several local firms will also increase national welfare.     

Reflections on the Evolving Terrorist Threat to Luxury Hotels: A Case Study on Marriott International

The advent of global terrorist networks represents a challenge to international business (IB) theory. Traditionally conceptualized as a type of political risk experienced by multinational enterprises (MNEs) operating in conflictive areas, terrorism has evolved in recent years. The global terrorist networks that dominate the international scene today have different motivations, strategies, tactics, and organizational structures than their secular and ethnic‐separatist predecessors and these differences matter for IB theory and practice. Moreover, these groups have shown themselves adaptive, resilient, and capable of striking targets of strategic and symbolic importance in global business and financial centers. This paper examines the changing nature of the terrorist threat to MNEs and the implications for a sector that has been a target of recent attacks: the luxury hotel industry. Structured as a case study of Marriott International, a leading global hospitality provider, the paper analyzes ways the firm is adapting to the evolving threat and the measures it has introduced to safeguard guests, staff, property, and brand. Implications for IB theory and practice are drawn. © 2012 Wiley Periodicals, Inc.     

A closer look at the productivity advantage of foreign affiliates

In analyzing firm productivity in Belgium, this article shows empirically that both scale and efficiency contribute positively to the typical productivity advantage of foreign affiliates. Stochastic production frontier estimation using the translog functional form indicates that foreign subsidiaries exploit economies of scale more fully and benefit from better (transferred) technological capabilities than Belgian national firms (i.e., Belgian owned firms without subsidiaries abroad). Belgian multinational enterprises (MNEs), i.e., Belgian owned firms with at least one subsidiary abroad, resemble foreign‐based MNEs in possessing specific technological advantages. While the increasing globalization has facilitated the realization of scale effects across borders, this article shows that the development of technological capabilities/advantages is still a prerequisite for MNEs to compete successfully abroad.     

WTO与中国民营旅游企业的发展

“入世”以后，境外资本和跨国旅游企业的进入，必将对中国旅游业产生巨大冲击。目前，国有经济形式在我国旅游业中仍居主导地位，但其运营效益并不理想。放宽政策，支持民营旅游企业的发展，是我国旅游业应对“入世”挑战的有效途径之一。     

International Training and Management Development Policies and Practices of South Korean MNEs in China

International training and management development has to date received little research attention. This study aims to contribute to the international human resource management literature by empirically exploring international training and management development policies and practices for both expatriates and host‐country nationals (HCNs) of South Korean multinational enterprises (MNEs) operating in China. The data for this study were collected through in‐depth interviews with both HCN managers and expatriate managers of 10 Korean MNEs. The results show that in our sample, South Korean MNEs provide expatriates with inadequate and low‐rigor predeparture cross‐cultural training and leadership training. However, the sample MNEs provide extensive predeparture and postarrival language training and regular postarrival technical and professional training. On‐the‐job training is provided mainly to HCN production workers in order to improve productivity and work safety. Selected high‐performance HCN middle managers and employees are sent back to headquarters for training. This, however, is not regarded for career development but for rewarding good performance. The sample South Korean MNEs pay little attention to management development for both expatriates and HCNs. Consequently, this has a negative effect on employees’ organizational commitment and retention. © 2015 Wiley Periodicals, Inc.     

Internationalization of Chinese and Korean firms

This article compares and contrasts the growth of Chinese and Korean multinational enterprises (MNEs). The article identifies the similarities and differences between Chinese and Korean MNEs in terms of motivations for internationalization, expansion strategies, and paths. The goal of this article is to contribute to the literature by shifting focus on host‐country conditions to home‐country conditions in explaining the drivers for firms' internationalization. We conclude that firms are motivated to expand abroad when faced with domestic competitive disadvantages resulting from absence or deficiency of one or more of Porter's Diamond attributes in their domestic market. Implications for further studies are also explored. © 2009 Wiley Periodicals, Inc.     

Local integration and co‐evolution of internationalizing Chinese firms

This study investigates the integration of internationalizing Chinese firms into local host markets. We explore the market‐driven investment of a new wave of Chinese private and local state‐owned firms in Australia since 2012, which has replaced the initial large‐scale investment in resources by central state‐owned enterprises. Using an in‐depth analysis of nine Chinese firms operating in various sectors of the Australian market, we argue that market integration, adaptation, and bilateral institution‐building through co‐evolution and empowerment of local subsidiaries of Chinese multinational enterprises results in entrepreneurial autonomy and characterizes a new generation of Chinese investors. We propose that Chinese multinational subsidiaries have transferred domestic practices to the Australian market and have reconfigured domestic and host market resources to gain a competitive advantage in their original investment industry and new industries. Our study advances middle‐range theory building and provides a practical understanding of the strengths and weaknesses of Chinese investors, their potential to disrupt local markets, and their responsiveness to market‐oriented institutional guidance. The results of this study suggest that the bilateral institution‐building and resource reconfiguration capabilities of Chinese enterprises can be transferred to other developed and developing markets, including Belt and Road Initiative countries.     

Intra-Industry Affiliate Trade of Foreign-Owned Companies in Transition Economies: The Importance of Organization of Production

Using a database containing trade and industry variables of foreign-owned companies in the Polish manufacturing industry for the years 1993–2002, we investigate the relationship between the organizational structure of multinational enterprises (MNE) in Poland and the intra-industry trade of their affiliates (IIAT). We find labour intensity; scale economies and absorptive capacity of affiliates are the main explanatory variables for IIAT. Given the overall rise in export and import intensities of foreign affiliates over the period of investigation, our findings suggest that export-platform FDI has become a more important mode of organization for multinational enterprises as Poland has evolved into a relatively stable economic environment where MNEs feel comfortable basing their regional operations.     

Strategic investment flexibility for MNE success in Russia: Evolving beyond entry modes

Many American multinational enterprises (MNEs) are currently active in Russia despite the turbulence encountered in that transitional economy. Most seem to have entered as an extension of their global strategies with a long-term horizon. While some entered with considerable involvement and substantial investment, others followed a more cautious or incremental path. This article focuses on how MNE strategies have evolved after entry and describes six strategic approaches. Strategic investment flexibility is found to depend upon a company 's original entry strategy and tolerance for risk, as well as its assessment of the legal and political environment, industry conditions, market readiness for its products or services, competition, and the investment required to establish a sustainable competitive position. Keys to successful strategy development are drawn from the experiences of US MNEs which have established growing businesses in the vast Russian market. The strategies of such successful MNEs, however initiated upon entry, usually evolved to a relatively heavy investment position.     

Clustering,MNEs, and Innovation: Who Benefits and How?

Abstract

This paper explores three under-researched questions in the literature on multinational enterprises (MNEs), clustering, and innovation. First, to what extent does multinationality lead to higher rates of innovation activity and performance? Second, what, if any, is the link between MNE cluster location and innovation inputs and outputs? Third, are there any significant differences between enterprises belonging to domestic and overseas MNEs in these regards? Evidence is based primarily on 11,775 firms derived from the UK Community Innovation Survey 2007. Diversity in the regional economy exerts the most consistent positive influence, followed by the scale of employment in the enterprise’s own industry. Enterprises belonging to domestic MNEs appear to exert higher levels of innovation effort. However, evidence regarding their superiority in innovation outputs was weaker. Contrary to Michael Porter’s work, it appears that enterprises belonging to overseas firms benefit more than domestic firms.     

Accelerated internationalization by emerging markets’ multinationals: The case of the white goods sector

The emergence of a “second wave” of developing country multinational enterprises (MNEs) in a variety of industries is one of the characterizing features of globalization. This paper documents how emerging markets’ MNEs (EM-MNEs) may follow quite different patterns to reach, or at least approach, global competitiveness. In particular, it investigates how three EM-MNEs pursued global growth through accelerated internationalization combined with strategic and organizational innovation. Haier (China), Mabe (Mexico) and Arçelik (Turkey) emerged as multinationals in the large home appliances (so-called “white goods”) industry. The recipe for the success of these firms seems to lie in their ability to treat global competition as an opportunity to build capabilities, move into more profitable industry segments, and adopt strategies that turn latecomer status into a source of competitive advantage. At the same time, their experiences show that there are many strategies and trajectories for going global, consistent with a pluralistic conceptualization of globalization.     

Exploring the role of internationalization knowledge in fostering strategic renewal: A dynamic capabilities perspective

Internationalization knowledge (IK) is important to successfully enter and develop competitive strategies abroad. Yet, how IK is advanced and improved across the multinational enterprise (MNE), and how this contributes to the MNE’s strategic renewal is less understood. This analysis is based on an in-depth case study of Microsoft International to explore how IK is advanced, improved, and integrated across the enterprise. Our findings suggest that IK plays a critical role in fostering strategic renewal of an MNE. More specifically, sensing, seizing, and transforming capabilities jointly provide the necessary basis that enable IK to facilitate strategic renewal. We contribute to the literature by (1) explicating three categories of IK and their hierarchical relationship; (2) reveal how three distinct capabilities required by MNEs capture and integrate the three categories of IK across the enterprise; and, (3) offering that strategic renewal is triggered by routines based on the development and integration of IK.     

HRM in Chinese privately owned enterprises

Using an in‐depth case study approach, this study investigates human resource management (HRM) practices in Chinese privately owned enterprises (POEs). While HRM practices in POEs are marketoriented, there is a lack of HR planning, commitment to training and development, and employee involvement and participation. The pragmatic HRM practices in POEs contribute to greater efficiency and rapid expansion of the private enterprise economy, but at the same time are associated with low employee job satisfaction, employees' organizational commitment, and their experience of disadvantages. These are issues that are all likely to cause labor disputes to occur. The findings of this study have significant implications for practitioners and further research. © 2008 Wiley Periodicals, Inc.     

Acquisitions Entry Strategies in Africa: The Role of Institutions,Target‐Specific Experience,and Host‐Country Capabilities—The Case Acquisitions of Finnish Multinationals in Africa

Acquisition is an important entry strategy for multinational enterprises (MNEs) seeking to gain faster entry into new and emerging markets and remain competitive in the global marketplace. MNEs utilize partial‐, staged‐, and full‐acquisition strategies when entering into foreign markets. This research analyzes how and why firms opt for these acquisition strategies in the context of Africa. The study applies institutional theory and explores constructs derived from the Uppsala internationalization process model. Using a case study of five Finnish acquisitions in Africa (Egypt, Morocco, Kenya, and South Africa), it was found that Finnish MNEs opt for partial acquisition rather than staged and full acquisition in the context of acquisitions made prior to late 1990s without earnout arrangements. Finnish MNEs opt for the choice of staged acquisition rather than partial and full acquisition in the contexts of mild regulatory framework in host countries and when the acquired firm business requires extensive improvements and the target host market structure is fragmented. Finnish MNEs opt for the choice of full acquisition rather than partial and staged acquisition in three contexts specifically: (1) when the acquiring Finnish MNE possesses host‐country capability, target‐specific experience, and ensures the retention of top management personnel of the acquired target; (2) when the size of the acquired target is relatively very small compared to the acquiring MNE; and (3) when the nature of the acquired firm business is well developed and the target host‐market structure is consolidating. © 2016 Wiley Periodicals, Inc.