Entry mode and equity level: A multilevel examination of foreign direct investment ownership structure

Over the last two decades, strategy researchers have sought to understand the ownership structure of firms' foreign direct investments (FDI) as reflected in entry mode and equity level. However, prior FDI research has ignored the interrelated nature of these key FDI decisions. In addition, prior research does not fully account for the fact that individual ownership structure decisions occur within the context of a firm's broader FDI portfolio, and thus reflect a wide and frequently unobserved range of parent firm and host nation effects. Our research seeks to address both of these limitations. Using a rich dataset of 4,459 subsidiaries established by 858 Japanese firms across 38 countries over a 9‐year period, we specify a conditional bivariate, cross‐classified multilevel model of FDI ownership structure. Our model enables the joint estimation of entry mode and equity level, accounts for the portfolio nature of FDI, and compares the relative predictive power of transaction cost‐ and experience‐based explanatory variables across both facets of ownership structure. Copyright © 2007 John Wiley & Sons, Ltd.     

Corruption and change: the impact of foreign direct investment

This study examines influences on the level of corruption in countries from a strategic perspective. Corruption is one of the country‐level influences on market entry, investment, and other decisions fundamental to strategic management at the international level. The study examines the impact on corruption of change in levels of foreign direct investment (FDI). It uses the Corruption Perceptions Index (CPI) scores computed by Transparency International for 1999 and 2000. Results indicate that the more rapid the rate of change in FDI, the higher the level of corruption. Higher levels of perceived corruption are associated with each of two dimensions of national culture: uncertainty avoidance and masculinity. Research and managerial implications are also discussed. Copyright © 2004 John Wiley & Sons, Ltd.     

Shareholder valuation of foreign investment and expansion

This study analyzes when different foreign investment location choices are value creating for firms at different stages of international expansion. I argue that because direct investment in developing countries is riskier than in advanced countries, shareholders may not value a firm's investment in developing countries until that firm has experience from previous international investments and capabilities to better manage and hedge the higher levels of risk and uncertainty. Using a panel of 191 U.S. manufacturing firms and their foreign investments over a 20‐year period (1981–2000), the empirical results show that firm investments in advanced and developing countries are valued differently by shareholders, depending on the firm's prior international expansion, the firm's capabilities and experiences, and the knowledge intensity of the firm's industry. These results highlight the importance of considering firm location decisions, prior experiences, and resources when analyzing. Copyright © 2006 John Wiley & Sons, Ltd.     

Agglomeration economies,firm heterogeneity,and foreign direct investment in the United States

An overlooked aspect of agglomeration economies, which are positive externalities that stem from the geographic clustering of industry, is that firms contribute to the externality in addition to benefiting from the externality. This insight suggests that if firms are heterogeneous they will differ in the net benefits they receive from agglomerating. We argue that firms with the best technologies, human capital, training programs, suppliers, or distributors will gain little, yet competitively suffer when their technologies, employees, and access to supporting industries spill over to competitors. Therefore, these firms have little motivation to geographically cluster despite the existence of agglomeration economies. Conversely, firms with the weakest technologies, human capital, training programs, suppliers, or distributors have little to lose and a lot to gain; therefore, these firms are motivated to geographically cluster. As a result, when firms are heterogeneous we expect agglomeration to be characterized by adverse selection. We find supportive evidence of these arguments by examining the location choice and survival of foreign greenfield investments in U.S. manufacturing industries. Copyright © 2000 John Wiley & Sons, Ltd.     

The effect of own-firm and other-firm experience on foreign direct investment survival in the United States, 1987–92

We argue that foreign firms operating in a host country generate information spillovers that have potential value for later foreign direct investment. We test two predictions. First, we expect foreign direct investments by firms with experience in a host country to be more likely to survive than investments made by first-time entrants. Second, foreign direct investments will be more likely to survive the greater the foreign presence in the target industry at the time of investment, subject to two contingencies. The first contingency is that the relationship will be weak or nonexistent among firms with no experience in the host country, because these firms have difficulty evaluating and taking advantage of the information spillovers. The second contingency is that the presence of other foreign firms will not affect investment survival among firms that already have a presence in the target industry and undertake expansion. These firms already possess general information about the target industries and are unlikely to gain additional benefit from information spillovers. We find supportive evidence based on the survival to 1992 among 354 U.S. investments undertaken by foreign firms in manufacturing industries during 1987. © 1997 John Wiley & Sons, Ltd.     

The choice of entry mode in sequential foreign direct investment

Relatively few studies have examined the importance of an entry's sequential position to the choice of foreign entry mode. We use a dynamic model to analyze sequential entries into the United States from 1975 to 1992. Our findings show that several independent variables which explain a firm's initial mode of entry do not explain the modes of subsequent entries. These findings underscore the importance of experience in foreign investment, as companies learn from early entries and adapt the modes of subsequent ones. Copyright © 2001 John Wiley & Sons, Ltd.     

Are aliens green? Assessing foreign establishments' environmental conduct in the United states

Previous research has found that foreign‐owned establishments often lack specific capabilities needed to respond to local business conditions and are held to a higher standard by local stakeholders. These establishments compensate, however, by possessing offsetting capabilities such as technological excellence. In this article, we investigate how these conflicting forces shape the environmental conduct of foreign‐owned facilities. Using data from the Environmental Protection Agency, we find that foreign‐owned establishments generate more waste yet manage more waste than U.S.‐owned establishments. We also find evidence that both domestic and foreign‐owned firms generate more waste if they operate multiple facilities across multiple jurisdictions in the United States. Copyright © 2001 John Wiley & Sons, Ltd.     

Economic and strategic considerations surrounding Chinese FDI in the United States

The growth of outward investment from China has generated expressions of concern from policymakers in the United States regarding the economic and national security impacts of such investments. While inward foreign direct investment (FDI) has come to be viewed by most observers as generally imparting net economic benefits to the host economy, acquisitions of US companies by Chinese multinational companies (MNCs) have been criticized on several grounds. One is based on the mode of entry itself: some critics believe that entry by acquisition brings lower benefits than greenfield entry. A second and more prominent concern is that acquisitions of US companies by Chinese state-owned enterprises (SOEs) may be motivated by non-commercial objectives which, in turn, make those acquisitions of questionable value to the host economy. In this paper, we argue that Chinese FDI in the United States is more likely to take the form of acquisitions than greenfield investments for the foreseeable future. However, there is no strong case to be made that the host country economic benefits from Chinese FDI would be larger if entry took place primarily through greenfield investments. Furthermore, most of the alleged costs to the US economy from inward FDI from China are either unlikely to occur or are already anticipated by existing US laws and regulations, thus necessitating no additional, specific legislation.

Political capabilities,policy risk,and international investment strategy: evidence from the global electric power generation industry

Whereas conventional wisdom holds that multinational enterprises (MNEs) invest less in host countries that pose greater policy risk—the risk that a government will opportunistically alter policies to expropriate an investing firm's profits or assets—we argue that MNEs vary in their response to host‐country policy risk as a result of differences in organizational capabilities for assessing such risk and managing the policy‐making process. We hypothesize that firms from home countries characterized by weaker institutional constraints on policy makers or greater redistributive pressures associated with political rent seeking will be less sensitive to host‐country policy risk in their international expansion strategies. Moreover, firms from home countries characterized by sufficiently weak institutional constraints or sufficiently strong redistributive pressures will seek out riskier host countries for their international investments to leverage their political capabilities, which permit them to attain and defend attractive positions or industry structures. We find support for our hypotheses in a statistical analysis of the foreign direct investment location choices of MNEs in the electric power generation industry during the period 1990–1999, the industry's first decade of internationalization. Copyright © 2010 John Wiley & Sons, Ltd.     

Property rights and international investment in information technology services

Many modern information technology services are increasingly being produced in a host country to serve clients in an offshore location. As a result, the internationalization of service functions is beginning to resemble that of their more traditional manufacturing counterparts. This paper examines the role of formal and de facto property rights protection in the offshore location choice of information technology services. I also explore the role of a firm's global subsidiary network and its experience with similar property rights regimes. Using investment data based on 152 firms and their international information service investments between 2002–2006, the empirical results highlight the role of de facto property rights protection and related experience in location choice.Copyright © 2012 John Wiley & Sons, Ltd.     

International diversification,subsidiary performance,and the mobility of knowledge resources

We examine the link between international diversification, organizational knowledge resources, and subsidiary performance. The success of international corporate diversification depends on a firm's capability to transfer knowledge to its subsidiaries, and how its local subsidiaries effectively utilize that knowledge. As knowledge resources are imperfectly mobile, a firm may find it difficult to transfer knowledge to its subsidiaries. In our analysis of 4964 Japanese subsidiaries over a 14‐year period, we find that knowledge that is valuable, but not rare, positively affects subsidiary performance in the short term, but not the long term. In contrast, knowledge that is both valuable and rare affects subsidiary performance in the long term, but not the short term. Copyright © 2007 John Wiley & Sons, Ltd.     

Group influence activities and the performance of strategic initiatives

This study examines relationships between group influence activities and the performance of strategic initiatives. Theory suggests that the strength of these relationships is contingent upon the degree of exploration inherent in an initiative's goals. An analysis of 96 initiatives in three large firms supports the moderating role of exploration for the use of formal authority and coalition building, demonstrating that these group influence activities are more important to performance in more exploratory initiatives. Although the direct relationship between rational justification and initiative performance is significant, there is no evidence of the moderating effect for this form of influence. The results show how groups associated with strategic initiatives use different forms of influence to reduce the investment and political uncertainties that limit initiative performance. Copyright © 2011 John Wiley & Sons, Ltd.     

中国15个省市 FDI 技术外溢潜力的比较研究

本文在对 FDI 技术外溢效应相关文献分析的基础上,构建了 FDI 技术外溢潜力指标,并利用2007～2011年的面板数据测度了中国15个省市的 FDI 技术外溢潜力,结果表明：各个省市 FDI 技术外溢潜力存在着较大差异。其中,北京、广东、江苏、福建、浙江发生 FDI 技术外溢的潜力较大,而贵州、山西、湖南、安徽较小,其他省市居中。因此,具有较高潜力的省份应该给予外商投资企业更高的投资激励吸引外资企业以获取技术外溢,潜力较小的省份应该采取提高本地企业技术水平、改善投资环境等措施来与外资企业接轨。     

我国服务业FDI结构、技术进步与经济增长

服务业外商直接投资可分为生产性服务业外商直接投资和消费性服务业外商直接投资,二者对国家经济增长有着不同的影响。本文从技术进步的角度,利用面板模型,研究了我国不同类型服务业外商直接投资对经济增长的影响,并分别讨论了东西部地区服务业外商直接投资对技术进步和经济增长的差异性影响。研究结果表明生产性服务业外商直接投资对经济增长和服务业技术进步均有明显促进作用,消费性服务业外商直接投资对经济增长有促进作用,但对服务业技术进步有阻碍作用,且这一趋势在我国东西部地区之间存在显著差异。     

Strategic schemas,strategic flexibility,and firm performance: the moderating role of industry clockspeed

We examine the moderating effect of industry clockspeed on the relationship between strategic schemas, strategic flexibility and firm performance. We employ two key properties of strategic schemas: complexity and focus. Using a sample of 225 firms from 14 industries, we show that the pattern of relationships among the theoretical constructs is different in fast‐ and slow‐clockspeed industries. The results suggest that complexity of strategic schemas promotes strategic flexibility and success in fast clockspeed industries, whereas focus of strategic schemas fosters strategic persistence, which is effective in slow‐clockspeed industries. Copyright © 2007 John Wiley & Sons, Ltd.     

Foreign Direct Investment,Imports and Innovations in the Service Industry

The paper analyses for the first time empirically the impact of foreign competition due to inward foreign direct investment and imports on the innovation activities using data of German service firms. Based on the hypothesis that foreign competition has a disciplining effect on domestic markets derived from the manufacturing sector, a positive impact can be expected on innovation in the service sector, while other theoretical considerations do not absolutely support this optimistic view. In the empirical analysis, variants of two probit models are estimated for a sample of 2,019 service firms to explain their product and process innovation activities. The results show that both foreign direct investment and imports have highly significant positive effects on product and process innovations. Vice versa, the export and foreign production activities of domestic firms support innovations, too.     

市场需求和中国工业行业FDI流入

本文研究中国工业行业的市场需求对外商直接投资流入该行业的影响。本文利用中国工业行业 2003～2014年度行业层面的面板数据进行的实证检验发现,行业市场需求规模促进了FDI的流入,在外资集聚度较高的行业,该种促进作用更加明显。在考虑了FDI的动态效应后,发现外商直接投资存在“惯性”,前期FDI的流入会促进新的FDI流入。估计结果在考虑了内生性后,各检验结果依然稳健。     

谁从谁获益:中国制造业中的外商直接投资

本文利用中国制造业1995年和2003年的行业数据，实证研究了不同国别外资企业与不同所有制内资企业组合产生的溢出效应模式。结果发现．外资存在与内资企业绩效间的关系并不是普遍而一致的．而是与外资企业的国别和内资企业的所有制类型密切相关。我们研究的主要结果表明，西方国家的投资较港、澳、台和海外华人投资对内资企业的影响相对更大。进一步发现西方企业对国有企业具有正向的溢出效应。而港、澳、台和海外华人企业则改进了内资非国有企业而不是国有企业的绩效。本文所发现的外资在中国制造业中溢出效应的有趣模式建议外资政策设计应着力促进不同类型外资与内资企业之间的特定组合，特别是西方跨国公司与本土国有企业及港、澳、台和海外华人企业与本土非国有企业之间的合作和良性互动．从而最大化外资溢出带来的溢出好处。     

吸收外商直接投资与产业结构优化升级--"十一五"时期利用外资政策目标的思考

作者认为，改革开放以来吸收外商直接投资的成效。证明这是实现我国产业结构优化升级的一条重要途径。未来在全面建设小康社会进程中。要把继续利用外商直接投资促进产业结构进一步优化升级作为重要政策目标。作者分析了在国内经济方面出现的若干新形势、新要求和新任务；还分析了在国际方面跨国直接投资和产业转移出现的新机遇。针对未来的新形势、新任务，作者提出了利用外商直接投资促进产业结构优化升级的新认识和对策措施。