An internalization theory perspective on the global and regional strategies of multinational enterprises

Many multinational enterprises (MNEs) claim to be pursuing a ‘global strategy’, but the majority of MNEs is not global, in the sense that these firms cannot emulate their domestic success outside of their home region. This inability is largely caused by compounded distance among regions and can be mitigated in part, by infusing a regional component into the MNE's international strategy. In this paper, we explore whether internalization theory can address the global versus regional strategy phenomenon. Specifically, we investigate whether internalization theory can predict under which circumstances MNEs will be able to pursue successfully a global strategy, and whether the theory can explain firm-level variations in utilizing regional components in international strategic governance. We argue that internalization theory can help regionalization scholars unbundle regional strategy by matching resource bundling needs with various firm-level resource recombination practices. We identify four distinct resource recombination processes with increasing complexity: fast bundling, principles-driven bundling, adaptive bundling and entrepreneurial resource orchestration, and argue that adopting the best-matched resource recombination practices will advance the MNE's success outside of its home region.     

破解小企业融资难题的制度经济学分析

小企业融资方式、结构的选择是在一定的制度背景下基于成本收益的比较,根据最大利益原则做出。解决小企业的融资问题,主要是看在制度方面能否创造对资金出让者和小企业都能够取得合理回报的机制,在技术上创新相应的服务模式和金融机构体系。     

Internationalization and breaking the glass ceiling: An institutional perspective

Gender diversity continues to serve as a thought-provoking and challenging topic for society and business alike. Even as organizations implement policies to minimize discriminatory practices in the workplace, evidence of gender inequality in firms around the world persists. Drawing on institutional theory, this study focuses on the effect that foreign investors and host country corporate social responsibility (CSR) policies have on gender diversity, and how professional groups can moderate this relationship. In analyzing 608 observations from listed firms in Taiwan, the findings demonstrate these relationships. It is shown that both foreign investor ownership and good host country CSR in firms are positively linked to the promotion of women into managerial positions. The assurance of professional groups in home countries further enhances this positive relationship. Our results further indicate how institutions carried across borders by organizations can influence firm decisions such as gender diversity through global norms of corporate CSR and also by the assurance of professional groups in the home multinational firm.     

Leaving home: An institutional perspective on intermediary HQ relocations

We investigate the effect of changing national institutions on relocations of intermediary HQs. Using a dataset of 154 cross-border relocations between the period from 2000 to 2015, we draw on the intermediary HQ’s middle position within the MNC and investigate how a decrease in institutional quality in the HQ’s host country and a change in institutional distance between different MNC units affect the relocation decision. Our findings advance the emergent literature on HQ relocations as well as our knowledge of intermediary HQs and the effect of changing institutions on organizational location choices. Beyond our theoretical contributions, we offer policy and managerial implications.     

Knowledge diffusion in the African context: An institutional theory perspective

Multinational companies have been increasing their investments in Africa as they become aware of the high returns available there. These investments often require relations with African partners and rely on knowledge transfer for their success. For these relations to be successful, we argue that multinationals must eschew the knowledge‐transfer approaches that reflect the ethnocentric assumption that codifiable knowledge can be disseminated with little regard to the unique circumstances of the African context, and by disregarding culturally embedded tacit knowledge. This article offers the conceptual lens of institutional theory as a way to improve the processes of knowledge diffusion and learning. We show how this theory can lead to a better understanding of the process of knowledge diffusion within the African context by requiring foreign investors and expatriates to improve their understanding of the African business environment. We then assess the role of boundary spanners in the diffusion process and identify some circumstances that might impinge on knowledge diffusion. © 2006 Wiley Periodicals, Inc.     

Internationalization and innovation performance of emerging market enterprises: The role of host-country institutional development

We examine how host-country institutional development influences innovation performance of internationalized emerging market enterprises (EMEs). Our panel-data analysis of Chinese EMEs shows that although host-country institutional development on average enhances innovation performance of the parent, such effects are more pronounced for EMEs with strong absorptive capacity and for those diversifying into a larger number of countries. Interestingly, EMEs with a higher level of state ownership gain more when entering countries with a lower level of institutional development. Our findings offer insights regarding how latecomer EMEs should configure their portfolio of subsidiaries in order to enhance innovation performance of their parent.     

Why and when firms respond accommodatively to the product-harm crisis: An institutional perspective

Accommodative response, as an attempt to manage product-harm crises to meet consumers' expectations by proactively accepting responsibility and actively taking remedial actions, is gradually becoming institutionalized. Our research explores the impacts of coercive, mimetic, and normative pressure on a firm's accommodating reaction and evaluates the possible mediating effects of top management beliefs (TMB) and participation (TMP), based on institutional theory and upper management echelons theory. The proposed hypotheses are empirically examined with survey data from 178 top managers in Chinese automobile firms. The potential endogeneity problem has been tackled by using firm size as the appropriate instrumental variable. Analysis results suggest that the three types of institutional pressures affect TMB and TMP differently, and TMP influences accommodative response positively while TMB exerts an indirect effect through TMP. Our findings emphasize the crucial mediating effects of top management and uncover the underlying mechanism through which institutional pressures affect accommodative response.     

Organizational legitimacy of emerging multinational enterprises: An individual perspective

Drawing on the information processing perspective from psychology, the study builds and tests a conceptual model to explain how the country-of-origin image (COI) and media coverage are associated with the organizational legitimacy of emerging multinational enterprises (EMNEs), and how the relationships are moderated by the education level of individuals in a developed host country. This study investigates the relationships by highlighting the multidimensional nature of these concepts. Our findings suggest that affective COI is positively associated with both pragmatic and sociopolitical legitimacy, economic COI is positively associated with pragmatic legitimacy, and political COI is positively associated with sociopolitical legitimacy. The findings also demonstrate that media influence legitimacy; however, the extent to which media influence legitimacy depends on individuals’ education levels. These findings advance our understanding of organizational legitimacy and its antecedents, providing new insights into strategies for building legitimacy in foreign countries.     

The role of organizational service climate in generating control and empowerment among workers and customers

Previous studies have found a relationship between service climate and customers’ satisfaction. This paper presents two studies that used structural equation modeling to examine the role of control and empowerment in mediating this relationship. In the first study, questionnaires were administered to 113 pairs of customers and service workers. The results show that service climate is related to a customer's satisfaction through the mediation of a service worker's self-reported control of the service situation. In the second study, the service worker's sense of empowerment was predicted with service climate and the supervisor's empowering behavior. The data was gathered with questionnaires administered to 255 workers in service roles. Service climate was found to have a positive effect on empowering leadership behaviors of the service worker's supervisor which, in turn, enhance the service worker's sense of empowerment. The results are discussed in regard to the role of control and empowerment in service organizations.     

Judging a business by its cover: An institutional perspective on new ventures and the business plan

Business plans are widely spread among new businesses, and they are supported by various universities, governmental assistance agencies, management consultants and a wide array of literature. Business plans are often taken for granted as highly useful tools that should be frequently updated and used. This study is based on data from six companies and their environments, over five years, using several forms of data collection such as interviews, observations, and archival data. In contrast to previous studies, we found that initial conformity to business plan norms gradually and without exception lead to loose coupling. Entrepreneurs who wrote business plans never updated or rarely referred to their plans after writing them.     

A new perspective on the female expatriate experience: The role of host country national categorization

This study was designed to investigate host country national (HCN) categorization of female expatriates, in two samples—U.S. and India. Two hundred and twenty-two HCNs (104 in the U.S. and 118 in India) participated in the study. Consistent with prior research [e.g., Tung, R. L. (1998). American expatriates abroad: From neophytes to cosmopolitans. Journal of World Business, 33: 125–140], we found that female expatriates from the U.S. were not discriminated against. Indeed, we found that female expatriates from the U.S. were preferred by Indian HCNs, as co-workers, significantly more than male expatriates from the U.S. We discuss implications for organizations and offer suggestions for future research.     

The role of regional formal institutions and foreign direct investment in innovation in Chinese enterprises

China features high degrees of income inequality, regional disparity and regional institutional diversity. With disparities in institutional development across regions, Chinese firms tend to have different levels of innovation as the costs, risks, efficiency and incentives of firms in innovation are affected by the regional institutional building. This article investigates the role of regional formal institutions in the innovation process in Chinese enterprises. It suggests that regional formal institutions (reflected by government support), financial institutions, educational institutions and taxation institutions promote innovation in Chinese firms, while they fail to discover such an impact from legal institutions. Also, regional formal institutions positively moderate Foreign Direct Investment (FDI) spillovers on process innovation.     

An examination of restaurant firm financing and the cost of borrowing

The use of debt is prevalent in the restaurant industry. While there have been numerous studies on restaurant capital structure, this study examines the relationship between firm performance and effective interest rate on debt used by restaurant firms. This study uses a sample of 56 publicly traded U.S. restaurant firms for the years 2012–2014. We examine the relationship between effective interest rates and firm performance as measured by approximate Tobin’s Q, return on assets, and return on equity. We find a significant and positive relationship between effective interest rates and return on equity.     

Export strategy,export intensity and learning: Integrating the resource perspective and institutional perspective

Export intensity (EI) has been widely examined as a performance outcome of exporting firms. To date, studies on the determinants of EI have generated mixed and even contradictory results. To reconcile such inconsistencies, this study dichotomizes export strategy in emerging economies into two distinctive types, expansion-oriented vs. escape-oriented, with the former inspired by exploiting firm-specific competencies as portrayed by the RBV and the latter motivated by avoiding the domestic institutional deficiencies as informed by the institutional perspective. Different from prior findings in the International Business literature, this research finds that a firm’s extremely high EI might not result from their superior competencies. Instead, high EI firms might focus on export mainly for the purpose of escaping from their home country’s deficient institutional environment that places extra burdens in terms of costs of doing business. Such escape-oriented exporters are more sensitive and responsive to changes in the environment while they do not enhance their learning as much as those expansion-oriented exporters. Furthermore, institutional environment has heterogeneous impacts on firms with different ownership types. Our study helps integrate the insights from both the RBV and the institutional perspective, and our dichotomization of export strategy adds precision and sophistication to the understanding of EI and export performance. Our hypotheses are supported by an empirical study based on a sample of exporting firms in China between 1998 and 2007.     

The role of the state in foreign borrowing by developing countries

The debt crisis that has been rumbling for many years repeatedly necessitates fresh rescheduling negotiations. These debt rescheduling conferences bring together two fundamentally different partles: on the one side are the emissaries from the big international banks and on the other the government representatives from the debtor country in question.     

A South-South perspective on emerging economy companies and institutional coevolution: An empirical study of Chinese multinationals in Africa

In this paper, we show how international tenders act as defining moments in building asymmetric coevolution-based mechanisms between Chinese multinational enterprises and local institutions in developing African countries. We used a case study methodology to explore how three Chinese multinationals – Citic, Sinopec, and Chinalco – developed non-market relations with the institutions of three African countries, namely, Algeria, Gabon and the Republic of Guinea, both during and after the submission of international tenders, to win strategic contracts and securely embed the company in question within the target host country. We found that Chinese companies not only submit tenders, but also develop multiple kinds of alliances in order to influence local institutions over the long term, transplant new business practices and standards, and expand in an unparalleled way, with host-country institutions and Chinese MNEs acting as partners in the new ecosystem. Based on our findings, we propose a model which highlights the specific mechanisms through which successful coevolution processes emerge and prosper between Chinese multinationals and developing country institutions. This study contributes to the international management literature by extending the field of institutional theory to co-evolutionism in international business.     

Differentiated effects of formal and informal institutional distance between countries on the environmental performance of multinational enterprises

This research examines the influence of environmental institutional distance between home and host countries on the standardization of environmental performance among multinational enterprises using ordinary least-squares (OLS) regression techniques and a sample of 128 multinationals from high-polluting industries. The paper examines the environmental institutional distance of countries using the concepts of formal and informal institutional distances. The results show that whereas a high formal environmental distance between home and host countries leads multinational enterprises to achieve a different level of environmental performance according to each country's legal requirements, a high informal environmental distance encourages these firms to unify their environmental performance independently of the countries in which their units are based. The study also discusses the implications for academia, managers, and policy makers.     

Headhunter-assisted recruiting practices in foreign subsidiaries and their (dys)functional effects: An institutional work perspective

This paper applies the institutional work perspective to elucidate how and why dysfunctional effects are reproduced by HRM practices. Our analysis of headhunter-assisted recruitment of local employees in foreign subsidiaries demonstrates how mutual dependence, self-interests, and a stratified labor market lead to specific candidate search criteria and limit the scope of search. It also shows how these practices result in limited positive effects from the key actors’ perspective, but in the long run reproduce voluntary turnover, communication-competence misalignment, and limited use of local talent pools. However, because these practices have become commonly used, the actors are unwilling and/or unable to change the system.     

Small firms and the failure of national skills policies: adopting an institutional perspective

Both skills and small firms have been increasingly prominent in policy agendas across the world in recent years. Skills are now seen as being crucial to economic prosperity, yet evidence consistently shows much lower levels of training, on average, in small firms than in larger businesses. Policy makers in various countries have sought to address this perceived problem and to stimulate skills development in small firms, but have attempted to do so in different ways and with varying degrees of success. It is this divergence in national skills policies, as well as its causes and implications for skill formation in small firms, that this paper seeks to illuminate. In doing so, it adopts an ‘institutional’ perspective that advances current understanding of how and why skills policies adopted in different countries appear to have varying effects on small firms. Through employing this institutional analysis, the paper promotes an awareness of how historical, social and economic forces in the ‘corporatist’ systems, found for example in Germany and Scandinavia, tend to provide a more supportive context for skills development in small firms than the liberal free market systems found elsewhere in the world, such as in the USA, Canada and the UK – which is highlighted as an illustrative case in this paper.     

An international perspective: factors that affect female midlife and older displaced workers' re-employment earnings

Workers affected by structural unemployment are often referred to as displaced workers. This study compares factors that affect re-employment earnings of male and female displaced workers. The study focuses on midlife and older workers and is derived from the US 1988 Current Population Survey: Displaced Worker Supplement. Findings indicate that women's re-employment earnings are largely affected by their human capital investment education. Men, on the other hand, have numerous factors that increase re-employment earnings. As the economies of the U.S. and the European communities adapt to changes in technology and global competition, worker displacements will continue to be an important issue.