Inward investment and industrial competitiveness

Inward investment—foreign direct investment in subsidiaries and joint ventures—has played an important part in Europe's post-war development as multinational firms, particularly American multinationals, became a major feature of many European economies. Latterly, we have seen an increasing presence also from Japan and other South-East Asian countries, as well as a resurgence of intra-European investment. What has been the effect of this on the competitiveness of European industry?     

The role of subsidiaries from emerging economies—A survey involving the largest Brazilian multinationals

Several research projects have been devoted to the study of the internationalization of Brazilian firms; however there is a lack of research related to the strategy and management of subsidiaries of Brazilian multinational corporations in other countries. This article seeks to contribute to filling this gap. An academic research study was conducted involving 30 Brazilian multinational corporations. Of the 93 subsidiaries involved, 66 foreign subsidiaries answered the questionnaires. The main results concern the identification of three factors and the proposition of a typology of Brazilian subsidiaries of multinational corporations: implementing subsidiaries; market‐exploiting subsidiaries, and aspirants to strategically relevant subsidiaries. © 2012 Wiley Periodicals, Inc.     

Business responses to climate change: strategies for reducing greenhouse gas emissions in Vietnam

This study identifies the climate change strategies adopted by firms in developing countries to reduce their greenhouse gas (GHG) emissions. First, a framework is developed to classify and assess the GHG emission strategies of companies; second, it is then improved by using data on their implementation collected from 185 companies operating in 10 energy-intensive industries in Vietnam. We find that multinational subsidiaries engage in various climate change activities and have a higher level of implementation than those of domestic firms. Further, the most active and proactive companies are large in size and from Europe, the United States and Japan.     

Subsidiary capability upgrading under emerging market acquirers

This article leverages a case study of a recent Chinese acquisition in the United Kingdom to explore the upgrading of capabilities in the subsidiaries in developed countries acquired by emerging market multinational enterprises (EMNEs). The seemingly implausible upgrading phenomenon is explained by the EMNEs’ complementary assets, their GVC lead firm positions and the unique power relationship between the acquirer and acquired firms, which enable the EMNEs to ‘impel’ upgrading and encourage ‘co-learning’ in their acquired subsidiaries. The contributions to the literature on EMNEs, global value chains, and organizational learning are outlined and discussed.     

Strategy and structure of service multinationals and their impact on linkages with local firms

Drawing on case studies of two leading UK service firms in five host countries (Argentina, Brazil, China, Korea and Malaysia), we examine how the strategy and organization of service multinationals shape the development of linkages with local firms in host economies. We find that there is reduced autonomy of subsidiaries to engage with local firms as a result of relatively centralized strategies of multinationals. Because of global policies ensuring consistency of services or global sourcing policies to reduce costs, service multinationals tend to prefer global suppliers. Backward linkages occur in a few cases when the relationship can be a vehicle for market expansion for the multinational in a particular host market. Local governments play an important role in the cases where backward linkages are developed.     

HRM in Thailand: a post-1997 update

This essay updates an earlier study of human resource management (HRM) practices in Thailand, focusing specifically on HRM in the post-1997 Asian financial crisis. HRM in Thailand has undergone gradual, but significant, change, with movement away from more traditional styles of HRM and management rooted in personalism and social relationships, toward more flexible employment systems in which employment opportunities are based on merit and performance rather than connections and personal characteristics. These changes are clearly more pronounced in subsidiaries of multinational corporations, particularly those based in Western countries.     

The spatial structure of foreign subsidiaries and MNE expansion strategy

Drawing on internalization theory and economic geography research, we examine how the spatial structure of MNE subsidiaries in supranational regions affects subsidiary location choices. Our analysis of foreign production investments by Japanese manufacturing firms from 1971 to 2006 supports our theoretical predictions: firms were more likely to establish new production subsidiaries in countries geographically more proximate to existing production subsidiaries, but not to trading subsidiaries, in the same region. The proximity effect diminished for production subsidiaries engaged in accessing natural resources or R&D. Performance of production subsidiaries was also stronger for those closer to other production subsidiaries in the same region.     

The relationships between types of network organization and adoption of management mechanisms: an empirical study of knowledge transactions of MNC’s subsidiaries in Taiwan

This paper examines the relationships of various types of network organizations and the adoption of management mechanisms through the application of network theory. We found that strong relationships exist as described within the four hypotheses by empirically evaluating case studies of MNC subsidiaries in Taiwan. Based on “the knowledge transaction density” observed between an MNC’s enterprise group and local firms, the subsidiaries can be classified into three categories of network organization, namely: (1) Self-sufficient, (2) Production- based, and (3) Operation-centered subsidiaries. The literature review suggests that there are four types of mechanisms that MNC headquarters use to control their foreign subsidiaries. These mechanisms are bureaucratic, personnel, performance and cultural controls. This research reports three major findings. Firstly, for Operation-centered subsidiaries, headquarters prefer to adopt two or more management mechanisms simultaneously. Secondly, for Production-based subsidiaries, headquarters prefer to adopt bureaucratic management mechanisms. Finally, for Self-sufficient subsidiaries, headquarters prefer to adopt performance and cultural management mechanisms.     

Is there an advantage of emergingness? A politico-regulatory perspective

The source(s) of competitive advantage of emerging-economy multinational enterprises (MNEs) remains a puzzle in international strategy scholarship, with some arguing that such firms are at a disadvantage compared to developed-economy rivals. Drawing on the concept of institutional advantage and using a sample of 233 foreign subsidiaries operating in 25 emerging economies over the period of 2000–2017, we find that foreign subsidiaries of emerging-economy MNEs are more adept than foreign subsidiaries of developed-economy MNEs at deploying their fixed asset management capabilities in emerging-economy host countries, especially when host-country politico-regulatory institutions are underdeveloped. Likewise, we find that subsidiaries of emerging-economy MNEs are more adept at deploying their tax planning capabilities when host-country politico-regulatory institutions become increasingly volatile. We discuss how these findings contribute to scholarly thought regarding the performance of emerging-economy MNEs.     

Multinational subsidiaries and green innovation

We address the questions of whether multinational (MNC) subsidiaries are more likely to introduce green innovation (GI) than domestic firms and how intra-MNC resources are likely contribute to this effort. Using the Community Innovation Survey for 14 European countries and adopting a knowledge-based view of the MNC, our results suggest that subsidiaries have an advantage of foreignness in GI as respect to domestic firms, especially when they have an innovation mandate (i.e., competence-creating subsidiaries). Our findings also support that intra-MNC and extra-MNC cooperation for innovation increases subsidiary probability to introduce GIs, the two being substitutes.     

The Strategies and Characteristics of Exporting SMEs:

The behaviour of exporting firms is the result of the complex interaction of many factors of the external and internal environment both at the national and international level. This paper presents the main findings from an exploratory study which assessed the characteristics and marketing strategies of small- to medium-sized exporting firms in a developing country, Peru. Statistical analysis using non-parametric methods to measure the behaviour of these firms used criteria taken from studies of firms in mostly developed countries. The observations from the analysis indicate that characteristics such as size and management perceptions and commitment, and strategies related to market concentration in developed countries taking into consideration export sales volume as a measure of performance (dependant variable) were positively associated to the success of these Peruvian firms and added to their competitiveness.     

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.     

Sequential internationalization,heterogeneous process and subsidiary roles: the case of Hyundai Motor Company*

This paper proposes a new conceptual model to better understand the internationalization process of firms, especially those from rapidly developing East Asian economies. The model is illustrated through a comprehensive analysis of the internationalization process of Hyundai Motor Company (HMC). A comparative case analysis of the development of HMC's five major foreign subsidiaries shows both capability building through sequential investment from the headquarters' perspective and heterogeneous development of operational knowledge at the subsidiary level. The research emphasizes the importance of the post-FDI phase of subsidiary development to the study of firm internationalization, and highlights the process of decision-making and learning as the key to understanding the sequence of investments in subsidiaries.     

Performance feedback and location choice of foreign direct investment

Integrating the behavioral theory of the firm and the OLI paradigm, this paper studies how performance feedback affects the location choice of emerging market firms between developed countries (DCs) and less developed countries (LDCs) during the process of internationalization. Using the sample of 1,306 Chinese public listed firms which established new foreign subsidiaries between 2008 and 2019, we find that the further a firm’s performance is below aspiration, the more likely it will invest in LDCs than DCs, whereas the further a firm’s performance is above aspiration, the more likely it will invest in DCs than LDCs. In addition, technology-based capability and labor intensive production capability have moderating effects on the relationship between performance feedback and location choice between DCs and LDCs. This paper complements and extends the OLI paradigm by injecting dynamic and non-economic factors to explain OFDI location choice.     

Do Japanese MNCs use expatriates to contain risk in Asian host countries?

We investigate the impact of host-country risk on the expatriation strategies of multinational firms, using data on Japanese subsidiary firms in manufacturing industries in 13 host countries in Asia. We find that country risk is negatively correlated with the degree of expatriation and that, rather than host-country risk, firm-specific factors (particularly capital intensity, ownership share of parent firms in subsidiaries and the age of the venture) explain most of the variation in the degree to which subsidiaries rely on Japanese expatriates. Contrary to previous studies, the capital intensity of production is a key explanatory firm-specific variable that correlates positively with the degree of expatriation. Japanese multinational companies do not rely on expatria127=tes to off-set host-country risk, but to mitigate risk to parent investment in subsidiaries.     

Determinants of voluntary environmental management practices by MNE subsidiaries

There have been few empirical studies of the determinants of voluntary environmental management practices (VEMPs) of MNE subsidiaries operating in emerging countries. To provide insight on this issue, this study explores the antecedent factors that drive MNE subsidiaries to adopt VEMPs, using data drawn from a key emerging country – Turkey. Based largely on the arguments of institutional theory and the resource based view of the firm, a number of hypotheses are formulated in order to investigate the effects of stakeholder pressures, perceived polluting potential, customer focus and competitive intensity. Each of these factors, with the exception of competitive intensity, is found to positively influence the adoption level of VEMPs by MNE subsidiaries. Some of the study's parent-level and subsidiary-level control variables are also found to have significant effects on the extent of VEMPs adoption by MNE subsidiaries.     

The Life Cycle Model as a Framework for Understanding Barriers to SME Growth in Hong Kong

There is limited research on turnaround in the Asian context, particularly from a contextual perspective. This article reports the findings of an exploratory study of turnaround strategies and management at the level of the firm in Malaysia using a case study approach. The contextual impact along dimensions such as different ethnic/cultural background, ownership types and role of government has been examined in seven case studies of Malaysian firms. The findings reveal some differences among the firms, as well as turnaround characteristics similar to those reported in recent literature on East Asian versus western turnaround. These findings are discussed and propositions for future research made.     

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.     

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.     

Regulative Distance,Cultural Distance,Host Country Risk,and the Choice of Subsidiary Activity: Evidence from Brazilian Multinationals

This study examines the relationship between regulative distance, cultural distance, and host country risk, as well as the choice of production or distribution activities by emerging country multinationals when establishing a subsidiary abroad. The study uses a sample of 280 subsidiaries of 133 Brazilian firms in 39 countries. Binary logistic regression was used to test the research hypotheses. The impact of regulative distance on the decision on subsidiary activity follows the predictions in the literature. However, findings on cultural distance and host country risk showed an inverted sign, suggesting that Brazilian firms tend to establish production facilities in countries with higher cultural distance and higher cultural risk.