Do All Emerging‐Market Firms Partner with Their Acquisitions in Advanced Economies? A Comparative Study of 25 Emerging Multinationals’ Acquisitions in France

Emerging multinationals’ acquisitions in advanced economies are a growing phenomenon that remains relatively unexplored. Although there is now a consistent body of knowledge concerning multinationals from major emerging countries such as China, empirical data encompassing a larger array of countries of origin are still lacking. This article contributes to a better, contextualized understanding of commonalities and differences among emerging multinationals in terms of how they manage their developed‐region‐based acquisitions. Adopting a comparative international management perspective, we discuss recurrent hypotheses about such multinationals’ management styles (e.g., their partnering or light‐touch integration approach following upmarket acquisitions) with empirical data on acquisitions in France by multinationals from 13 countries. While confirming some hypotheses, we refine the definition of the partnering approach and identify a new, previously overlooked integration mode. We also discuss the antecedents of integration approaches, highlighting the influence of administrative heritage and contextual factors on emerging multinationals’ international management practices. © 2016 Wiley Periodicals, Inc.     

Jumping from Springboard? The Role of Marginal Cultural Distance in Cross‐Border M&A Deal Completion

This article extends understanding of the cultural experience of a firm in a host culture as a mechanism to reduce cultural distances. Integrating organizational learning theory with cultural friction perspective, this study proposes that cultural experience of a focal firm is a unique, firm‐specific advantage. Time spent in a particular culture causes cultural friction that diminishes the cultural differences for the focal firm at the margin, which we term marginal cultural distance (MCD). Emphasizing the importance of learning from cross‐border acquisitions for firms from emerging markets, we propose that compared to country‐level cultural distance scores, MCD is a better predictor of the likelihood of cross‐border deal completion. © 2015 Wiley Periodicals, Inc.     

What is the Value of Luxury? A Cross‐Cultural Consumer Perspective

International luxury businesses are challenged by the identification and satisfaction of the common needs and desires of global market segments. Although luxury goods have become available to a wider range of consumers, the traditional conspicuous consumption model has been transformed into a new experiential luxury sensibility that is marked by a change in the way that consumers define luxury. Based on an empirical study in collaboration with American, European, and Asian researchers, the results provide evidence that consumers in various parts of the world purchase or wish to purchase luxury products for varied reasons but that such consumers generally possess similar values. Regardless of their countries of origin, the basic motivational drivers of luxury consumers are similar among the financial, functional, personal, and social dimensions of luxury value perceptions, although the relative importance of these dimensions varies.     

Ethical Distance in Corrupt Firms: How Do Innocent Bystanders Become Guilty Perpetrators?

This paper develops the concept of the ‘continuum of destructiveness’ in relation to organizational corruption. This notion captures the slippery slope of wrongdoing as actors engage in increasingly dubious practices. We identify four kinds of individuals along this continuum in corrupt organizations, who range from complete innocence to total guilt. They are innocent bystanders, innocent participants, active rationalizers and guilty perpetrators. Traditional explanations of how individuals move from bystander status to guilty perpetrators usually focus on socialization and institutional factors. In addition to these factors, we propose that the very distance between an act and its ethical consequences (ethical distance) may also play a determining role – if not always in the same way – in the transition process. Having developed this conceptual argument, we conclude with a discussion of managerial and research implications. An Earlier version of this paper was presented at the The Twelfth Annual International Conference Promoting Business Ethics, New York, October 2005     

Do Small and Medium‐Sized IT Firms Form Service Partnerships with Nonlocal IT Firms? An Assessment of Facilitators

For small and medium‐sized information technology firms (IT SMEs), the service partnerships formed with other IT firms are strategic instruments to overcome their resource constraints, increase efficiency, and offer complementary services to their customers. Although these firms have a tendency to form local partnerships due to ease of trust building, few of them are engaged in nonlocal partnerships. This research aims to explore the facilitators of this divergent firm behavior. The findings suggest that a firm's alliance capabilities and organizational proximities between distant partners can substitute the lack of geographical proximity and enable IT SMEs' engagement in nonlocal service partnerships. More importantly, the type of IT service rendered through the partnership acts as a moderator and determines the extent of the organizational capabilities and proximities.     

Does Vanity Describe Other Cultures? A Cross‐Cultural Examination of the Vanity Scale

Vanity is a psychological construct that describes a person's excessive concern with physical appearance or achievement. A scale, recently developed to measure this construct, has been psychometrically validated using data from U.S. respondents. The goal of this paper is to determine if this scale can be used cross‐culturally. If the scale has cross‐cultural applicability, it can be used as a counseling device to guide and alert individuals to certain tendencies. The scale also can be used to track foreign cultures as they adopt a consumerism ethos more aligned to Western consumer culture. Based on data from 475 young adults in China, India, New Zealand, and the U.S., the scale was found to have similar dimensionality and factor structure, internal consistency, discriminant validity, and metric invariance. Implications and future directions for research are discussed.     

What Explains Cross‐country Industry Growth Patterns? Trade,Development and the Equity Financing Channel

We test theories that examine how economic and financial development affect cross‐country industry growth patterns. Finance theory suggests that financial development affects growth by lowering the cost of external finance. This has the implication that industries in more finance‐hungry sectors will grow faster in countries where financial markets are more developed. In addition, if financing constraints are lessened when stock market performance is high, firms in sectors more dependent on external finance should grow more rapidly following periods of good stock market performance. Trade and development theories, on the other hand, imply that a country's product‐mix and the pattern of industrial growth reflect which stage of development it is in and its factor endowments. Thus, one implication of trade/development theories is that countries that are close to each other in terms of GDP per capita should have similar patterns of industrial growth. Our tests find support for each of these theories.     

Cross‐Functional Influence and the Supplier Selection Decision in Competitive Environments: Who Makes the Call?

This paper presents the results of a multiple‐case study that examines how procurement and engineering personnel share priorities, have a common vision, and influence the supplier selection decision in competitive environments of varying risk and uncertainty. We interviewed 113 procurement and engineering respondents from 26 different companies/business units across up‐, mid‐, and downstream segments of the oil and gas industry. Following a middle‐range theorizing approach, we develop a series of working propositions and theoretical frameworks, utilizing goal congruence theory to sharpen proposition development and create suggested extensions for theory. In general, we find that engineering personnel tend to dominate cross‐functional decision making in higher risk environments and that more equal arrangements exist when both risk and uncertainty are low. When competitive environment risk is low but uncertainty is high, considerable disagreement arises over which function “leads” this decision. Higher risk environments drive higher goal congruence through shared vision and consensus on who makes supplier selection decisions.     

Who Do Start‐Up Firms Imitate? A Study of New Market Entries in the CLEC Industry

Institutional theory contends firms imitate other firms with ideal traits, whereas the strategic groups literature on imitation suggests firms imitate similar firms. We address this debate by studying 1,067 market entries by founder‐managed start‐ups in the U.S. Competitive Local Exchange Carrier industry from 1996 to 2004. In support of the strategic groups literature, start‐ups imitate entry decisions of and gravitate toward markets that are densely populated by other start‐ups. Though start‐ups avoid markets already densely populated by corporate ventures, they imitate the market entries of corporate ventures. Our discussion of these and other findings provide insights for start‐ups navigating new industries.     

Do Mature Firms Gain Higher Economic Value from R&D Investment?

Despite the significance of economic value indicators in the measurement of firm value, not much attention has been dedicated to how research and development (R&D) influences firms’ economic value. This study examines the relationship between R&D investments and firms’ economic value and considers the moderating role of age in the relationship using a dataset from manufacturing and information and technology firms in China. The results show that R&D investments impact firms’ economic value positively. This suggests that firms that invest in R&D are rewarded with a monopoly, which increases their market shares, thereby increasing economic value. Again, we find that older firms increase their economic value more than younger ones when they both invest in R&D. Thus, younger firms in China suffer from the liability of newness when they invest in R&D. It is recommended that these younger firms should strive to shorten the time to reap the returns from R&D investments.

     

Why Do Firms in Customer–Supplier Relationships Hold More Cash?

A firm is in customer–supplier relationships when its business depends on a small number of major customers/suppliers. In this paper, we provide evidence that relationship‐specific investments undertaken by firms in customer–supplier relationships are associated with high cash holdings in these firms. The evidence is consistent with the prediction of Titman's stakeholder theory that a firm relying on relationship‐specific investments maintains a high cash reserve as a cushion to sustain its relationship‐specific investments when negative shocks occur. Our findings suggest that relationship‐specific investments are important determinants of the precautionary motive to hold cash.     

Are bilateral and multilateral aid‐for‐trade complementary?

Using the first comprehensive estimates of ad valorem tariff equivalent bilateral trade costs spanning the time period 2002–10, we examine whether the aid‐for‐trade (AFT) inflows reduce bilateral trade costs facing aid recipients. If so, we ask whether the trade costs reduction effects of AFT from bilateral and multilateral sources are complementary. By showing the extent to which the observed trade cost reduction effects of AFT from bilateral (multilateral) sources correlate with the magnitudes of AFT disbursements from multilateral (bilateral) sources, we present plausible explanation for the cross‐country variations in the extent to which AFT promotes trade flows. Our findings have, thus, important policy implications for shaping future discourses on the coordination of disbursements for enhancing the effectiveness of AFT.     

Do High‐Skill Immigrants trigger High‐Quality Trade?

This paper investigates the links between product quality and the pro‐trade effect of ethnic networks using a large panel on bilateral stocks of immigrants with information for 19 OECD destination countries and 177 origin countries. In line with the approach of Rauch and Trindade, we classify traded goods according to their quality level and separately estimate pro‐trade elasticity of ethnic networks for each subgroup. We allow for heterogeneity of immigrants according to both the level of per capita income of their country of origin and their education level. Our findings suggest that the trend of the pro‐trade effect of immigrants over quality seems to be driven by the North–South specialisation across varieties for both supply and demand. Indeed, ethnic networks mostly facilitate imports of those varieties for which their countries of origin have a comparative advantage; as for exports, ethnic networks are more effective in promoting exports to their homeland of those varieties for which there is relatively higher demand. We show that the same trend applies to products characterised by the same degree of differentiation according to the classification proposed by Rauch and – given their lower liquidity constraints and advantages in human capital – we find a greater impact of high‐skilled migrants consistent across all quality levels.     

Subsidizing Away Exports? A Note on R&D-policy Towards Multinational Firms

In this paper, I investigate whether instead of strengthening home-based production, government R&D-subsidies can induce R&D-intensive firms to locate production abroad. Investigating firm-level data on Swedish MNEs, however, I find no evidence of such relocation. R&D subsidies rather tend to encourage export production at the expense of foreign production. The theory presented suggests that this is consistent with technology transfer costs, which outweigh trade costs for physical goods.     

Do the Same Models Apply to Consumers and Business Firms? Comment on the Paper by Frey

Journal of Consumer Policy -     

Why Doesn't the Black‐‐Scholes Model Fit Japanese Warrants and Convertible Bonds?

In this paper, we investigate the systematic departures of traded prices of Japanese equity warrants and convertible bonds from their theoretical Black–Scholes values. We briefly consider transactions costs and the dilution adjustment as potential explanations of the discrepancy. However, our major focus is on shifts in volatility of the prices of the underlying stocks as a function of the stock price changes; such shifts are not taken into account in the Black–Scholes values. We assume that the pseudo‐probability distributions of prices of stocks of cross‐sections of companies which are roughly similar in size are identical. This simple assumption, which can be generalized, enables us to infer the implied probability distribution and binomial tree for stock price changes using the Derman and Kani (1994), Rubinstein (1994) and Shimko (1993) approach. The cross‐section of warrant prices implies an inverse volatility smile and a positively skewed probability density for stock prices. Rubinstein's identifying assumptions generate an implied binomial tree in which the relative size of up‐steps and down‐steps, and thus volatility, changes systematically as stock prices change. We briefly consider potential explanations for the implied behaviour, and for the difference in the smile pattern between index options and the warrants and convertibles.     

Manual dishwashing process – a pre‐assigned behaviour?

Global studies have observed many techniques of manual dishwashing causing different levels of performance and using quite different amounts of water, energy, time and detergent. It is not known, however, if these techniques are pre‐assigned to a person and persist when dishes are washed under different conditions, or are adapted to the specific type of dish‐cleaning process. Here we explored this question in a study with 40 test subjects selected equally from Germany and East European countries by asking them to wash two place settings of dishes with different amounts of soil three times. The results showed that the test subjects did not adapt their washing‐up behaviour to the amount of soil. In general, no significant differences were found in the water, energy and detergent consumption for all test subjects. Only the time used by the German test subjects to wash the fully soiled dishes was significantly longer compared with the dishes with only a quarter the quantity of soil, and no significant difference was observed for all other parts. The only significant difference found between the level of soiling of the dishes was the cleaning result achieved: The less soiled the dishes were, the better the final cleaning result was, and this related to all test subjects. This lends support to the proposition that the consumers did not adapt their washing‐up behaviour to the specific circumstances of the dishwashing job to be done but retained some pre‐assigned behaviour.