Strategic choices of firms in expanding overseas business

Based on a case study of Pfizer’s production scope evolution in China from 1993 to 2002, we propose that MNCs usually have to face dual pressures of keeping integration among global businesses on the one hand, and remaining responsive to local market conditions on the other. When there is large discrepancy between the two, due to the bounded rationality of the decision-makers, the development paths of the subsidiaries are likely to exhibit recursive pattern, instead of the sequential mode as suggested in the extant literature. On the other hand, we argue that companies can make strategic choices to facilitate the development of their overseas subsidiaries. By the adjustment of the strategic parameters pertaining to the content and processes of their development paths, companies can accumulate knowledge about the local market and strike a balance between the dual pressures they have to face. The implication of our study for the indigenous Chinese companies in their international expansion is that when facing unfamiliar business environment in overseas market, paying attention to the idiosyncratic local market condition and keeping strategic flexibility are pivotal to their success. __________ Translated from Guanli shijie 맜理世界 (Management World), 2005(10): 123–138     

A multilevel perspective on knowledge transfer: evidence from the Chinese automotive industry

We adopt a multilevel perspective to study the transfer of collective and individual knowledge. By making a clear theoretical distinction between collective and individual attributes in concepts such as knowledge, teaching approach, and absorptive capacity, this study extends the knowledge transfer literature and provides fresh insights into the ways in which collective and individual knowledge are transferred. Based on a survey of the capability transfer activities of 161 engineering units of multinationals in the Chinese automotive industry, we empirically validate the distinction between individual and collective teaching activities and absorptive capacity. More importantly, we find that the largely underexplored collective‐level mechanisms, such as collective teaching and collective absorptive capacity, are more effective in transferring both collective knowledge and individual knowledge in comparison to their individual‐based counterparts. Our findings also have important implications for management of multinationals and international joint ventures, particularly in emerging economies. Copyright © 2009 John Wiley & Sons, Ltd.     

经济转轨、跨国公司进入与国有企业改革

任何转轨国家向市场经济过渡都要面临改革与开放的问题.因此,本文在经济开放的背景下,着重突出跨国公司与转轨国家之间经济的紧密联系,建立跨国公司、转轨国家政府、国内企业三者之间的混合寡占博弈模型,并以市场开放、自由化、私有化等政策变量作为影响转轨进程的外生变量,分析开放程度和经济调控手段以及跨国企业的投资策略等对转轨国家国有企业民营化进程和转轨国家国有企业竞争力的影响.研究表明,转轨国家在经济开放的条件下,对国有企业完全民营化并非是改革的最优方案,而对国有企业的部分民营化效果反而会更好,也符合社会福利最大化的原则.而税率、技术、转移价格等也是影响转轨国家社会福利和转轨国家企业产量和竞争能力的重要因素.     

Terrorism as an external threat factor in global value chains

Global terrorism incidents and business‐related threats have intensified in scale and scope over the past 17 years. Multinational corporations are thus exposed to direct and indirect negative impacts on their international activities. Previous research lacks thorough theoretical frameworks to analyze these impacts. The global value chain (GVC) framework offers a perspective that is both comprehensive and quantifiable for the evaluation and expansion of this prior research. The GVC enables us to assess terrorism impacts on international business overall and at each stage of the value chain. On this basis, we develop a “terrorism resilience theory”) that can be used in future theoretical and managerial analyses of the response to terrorism risk.     

Why has the United States continued to receive net investment income as a debtor country?

Why has the United States been able to keep receiving net international investment income as a debtor country? Several authors have pointed out that it is because US direct investments abroad have been generating better returns than have foreign direct investments in the United States. However, there is no consensus on why this is the case. This paper investigates this issue by conducting panel regressions to identify the main determinants of return on US direct investment abroad (RUSDIA) and those of return on foreign direct investment in the United States (RFDIUS), using data from 49 countries over the 1994–2013 period. Our findings suggest that the largest contributor to the RUSDIA‐RFDIUS gap is USDIA's advantage in the internalisation effect, which more than offset any negative age effect. The second largest contributor is income‐shifting activities by US‐controlled MNCs aiming to lower their overall tax payments. The third contributor is the negative age effect of inward FDI in the United States, which more than offset its weak internalisation effect. Altogether, those effects account for about 50% of the average return gap from 1994 to 2013. The contribution of the risk‐compensation hypothesis to the return gap is negligible.     

Tiered expatriation: A social relations approach to staffing multinationals

This article applies a social relations discourse to examine the use of expatriates in Chinese multinational companies (MNCs). Expatriates are analyzed based on two sets of social relations: the social functions of expatriates (which include the global function of capital and the collective function of labor) and the pathways of expatriation (which include intra‐ and interfirm transfers). In particular, the framework incorporates the collective function of labor into the analysis of expatriation, which has received limited attention in the existing international HRM literature. Conceptually, the social relations discourse allowed us to frame staffing in an open system in which HR practices involving expatriation are shaped by the intersections between the choices of MNCs, the actions of workers, and the mediation of institutional players. Empirically, this article presents three case studies of Chinese MNCs in Europe to illustrate the tiered expatriation of managerial staff, technicians, and operational workers from interchangeable sources of labor. The HR policy implications suggest greater diversity in the formation of international staffing for MNCs.     

跨国公司在中国的人力资源管理策略研究

世界经济一体化使得跨国公司逐步成为世界范围配置资源的核心力量,日益开放的中国吸引了众多的跨国公司进入中国市场。跨国公司进入中国面临着复杂的经营环境,相比于传统人力资源管理,其在中国的人力资源管理面临着严峻的挑战。文章从平衡人力资源管理实践的全球整合和本土响应的角度来探讨跨国公司在中国的人力资源管理策略。     

An empirical analysis and extension of internalization theory in emerging markets: The role of firm-specific assets and asset dispersion in the multinationality-performance relationship

This study examines the relationship between firm multinationality and financial performance with a focus on firm-specific assets and dispersion of these assets for MNCs from emerging markets. Drawing upon internalization theory, the authors reveal that while the financial performance of manufacturing MNCs depends on technological assets, service MNCs are more dependent on marketing assets to succeed in international markets. Study findings further emphasize the critical role of the industry context in emerging markets as the authors demonstrate that international asset dispersion weakens the effects of internationalization on financial performance more for MNCs in manufacturing industries than for MNCs in services.     

Business Models for Frugal Innovation in Emerging Markets: The Case of the Medical Device and Laboratory Equipment Industry

This study investigates business models for frugal innovation (i.e. a specific form of resource-constrained innovation) in the medical device and laboratory equipment industry in the context of emerging markets. Based on original data from five case studies, we investigate how firms can set up value creation and value capturing mechanisms to reach new customer segments in remote rural areas with unprecedented value propositions. With this research, we contribute to the literature on frugal innovation and business models in emerging markets. It is among the first empirical studies to apply a fine-grained perspective on resource-constrained innovation in emerging markets. In doing so, we focus on its most disruptive form, which is when these innovations entail entirely new applications. We advance and detail the value proposition for frugal innovation in these industries and argue that frugal innovation create new markets. Further, we show how firms set up their value creation and value capturing mechanisms to achieve the value proposition and identify two distinct Research & Development (R&D) strategies for frugal innovation.     

Japanese multinationals in the post-bubble era: new challenges and evolving capabilities

Since the bursting of Japan's bubble economy, from 1990 onwards, Japanese multinational companies (MNCs) have faced new competitive challenges and questions about the management practices on which they had built their initial success in global markets. Japanese engagement in the international economy has undergone a number of phases. In the period before the Second World War, Japanese companies learnt from foreign MNCs in trading, shipping, and manufacturing, frequently through strategic alliances, and leveraged their capabilities to succeed in overseas and largely Asian markets. In the immediate post-war decades, during the Japanese ‘economic miracle’, there were notable examples of MNC investment in raw materials and labour intensive production, but both inward and outward foreign direct investment were not significant. Japanese companies achieved leadership in management and technology, in order to support a strategy of export-orientated industrialization. Changes in government policies in the developed economies of the US and Western Europe forced leading Japanese manufacturers to convert themselves into MNCs and to transfer their home-grown capabilities to overseas subsidiaries. The period after 1990 marked declining Japanese competitiveness and it asked questions about the ability of Japanese MNCs to be more responsive and global in their strategies, organization and capabilities.