Decision Factors Considered Important by MNCs in Their Reevaluation and/or Modification of Foreign Entry Modes During the Argentine Financial Crisis

ABSTRACT

Eighty-two multinational companies (MNCs) were surveyed during the recent (2001–2002) Argentine financial crisis to identify decision factors they considered important in reevaluating and/or altering their foreign entry modes during the crisis. The firms rated size of local demand, changes in trade barriers, changes in trade and tax policies, potential industrial growth, and customer attitudes as the most important issues to consider in their entry mode reevaluations. The least important factors were interactions between the host government and the IMF/WTO, physical infrastructure, neighboring economies, trading bloc associations, and availability of bargain assets. Differences were also found in factor importance ratings as to MNCs' willingness to reevaluate their foreign entry modes, their current modes of operations, and their willingness to change their foreign entry modes during the Argentine crisis. The research, managerial, and policy-making implications of the findings are discussed.

RESUMEN. Durante la reciente crisis financiera argentina (2001–2002), se examinaron ochenta y dos compañías multinacionales para identificar los factores inherentes a la toma de decisión, considerados importantes para reevaluar y/o alterar la modalidad de entrada de capital extranjero durante este período. Se tomaron en consideración los siguientes elementos, considerados importantes para realizar dicha reevaluación: tamaño de la demanda local de las empresas, cambio ocurrido en las barreras comerciales, cambios en el comercio, políticas impositivas, crecimiento industrial en potencia y reacción de los consumidores. Los factores menos importantes fueron las interacciones entre el gobierno anfitrión y el FMI/OMC, la infraestructura física, las economías vecinas, las asociaciones de bloques comerciales, y la disponibilidad de activos de negociación. También se encontraron discrepancias en la clasificación asignada a la buena voluntad que las CNM demostraban en reevaluar sus modalidades de entrada extranjera, así como sus modalidades corrientes de operación y su buena voluntad para cambiarlas durante la crisis argentina. Se discutieron además los resultados obtenidos cuanto a las implicancias investigatorias, gerenciales, y las relativas a la elaboración de políticas.

RESUMO. Analisaram-se 82 empresas multinacionais durante a recente crise financeira argentina (2001–2002), a fim de identificar os fatores decisórios considerados importantes para a reavaliação e/ou modificação do modo de entrada no mercado estrangeiro durante a crise. As empresas classificaram o tamanho da demanda local, as mudanças nas barreiras comerciais, mudanças nas políticas comerciais e fiscais, crescimento potencial do setor e atitudes dos clientes como os fatores mais importantes a serem considerados em sua reavaliação do modo de entrada. Os fatores menos importantes foram as interaç[otilde]es entre o governo local e o FMI/OIT, infra-estrutura física, economias vizinhas, associaç[otilde]es de comércio e disponibilidade de ativos para acordos comerciais. Foram encontradas também diferenças nas classificaç[otilde]es da importância de fatores como a disposição das multinacionais em reavaliar os modos de entrada no mercado estrangeiro, seus atuais modos de operação e sua disposição de alterar o modo de entrada no mercado estrangeiro durante a crise Argentina. O estudo discute também as implicaç[otilde]es dos achados para a gerência, as pesquisas e a elaboração de políticas.     

Brazilian OFDI Determinants

Recently, the global economy assumed a new setting in which emerging economies began to make substantial investments in the international market. This study aimed to investigate the determinants of outward foreign direct investment from Brazil from 2002–2011. The proposed models developed included attractiveness of the host country, characteristics of home country, and firms’ strategies. The results corroborate the existing argumentations concerning adaptation of mainstream theory with respect to the realities of emerging economies. Brazilian multinationals do not internationalize their activities in pursuit of cost reduction, efficiency, or to explore new markets or natural resources of the host countries. Results show that Brazilian investments were attracted by the availability of skilled labor, openness of the host market, geographic proximity, improved financial conditions of Brazilian companies, and national companies’ strategy of reaffirmation and consolidation as global players.     

WTO's Anti-dumping Rule and the Protection of Incumbents

Article VI of the GATT allows counter measures if goods are sold in a foreign market at a price below average production plus transportation costs. The present article analyses Article VI based on a simple game theoretic model with two countries and economies of scale in the production of one homogeneous good. It is shown that multiple equilibria exist under the WTO rule for some parameter values that do not exist without the rule. In some equilibria, the incumbent serves the entire market even if the entrant can produce at lower costs. The model supports the criticism of the anti-dumping rule as an instrument of protection by industrialized countries against competition from developing countries.     

The new exchange rate policy in the Asian emerging economies – goodbye trouble,hello comfort?

In this paper, we discuss new aspects of exchange rate policy that can be observed in the Asian emerging economies. In the first place, we show the alternative regimes they may choose and their respective pros and cons. Secondly, we concentrate on the recent strategy of systematic undervaluation of one's currency – figuring prominently among ‘big’ Asian players such as China and India – and the most likely implications of such a strategy for domestic allocation, distribution and stabilization goals. With the background of Germany's experiences in 1969, almost on the eve of the Bretton Woods' system collapse, we model a speculative attack on an undervalued currency in the vein of the Flood–Garber seminal paper from 1984. Now, however, the country in concern (just like India and China) possesses strong rather than weak fundamentals. The continuous accumulation of international reserves, in addition, leads to the question of an ‘optimal management’ of foreign exchange reserves in Asian emerging economies with regard to size and composition. We finally propose a sequence of reforms/policies that should be implemented in those Asian emerging economies on their still long journey to a regime featured by autonomous monetary policy, flexible exchange rate and capital mobility. A brief summary and an outlook for future research close the paper.     

Emerging risk of autoignition and fire in underground coal storage

The risk and prevention of autoignition in underground coal storage facilities are reviewed in the light of the recent incidents of smouldering fires. Also, the opportunities are considered on the efficiency of the alternatives to prevent and extinguish closed-space fires. The complexities in avoiding and extinguishing underground fires are highlighted in the case example, describing the observations and outcome of a smouldering coal fire in the storage. The principles of self-heating and most critical factors in spontaneous combustion such as the condition and quality of coal are fairly well known, but usually only provide partial help in fire prevention. The documented cases and the case example suggest that nitrogen injection can be useful for extinguishing controllable fires. Three-phase foams and oxygen-displacing exhaust gases appear preferable against uncontrolled fires, particularly if access to the fire area is limited or impossible. Otherwise, efficient fire extinction during power plant operation can be challenging, as any air ingress tends to feed the fire and results in losses of the extinguishing agent and the heating value of coal. Methods and indicators for detecting and predicting the ignition are discussed, and improvements are suggested to enhance the storage and plant availability.     

当前世界经济走势分析

当前,面对国际经济危机复苏放缓,有的人对世界经济发展前途甚感担忧,甚至怀疑中国经济能否继续保持繁荣。但本文对近二百多年来世界经济发展过程的分析表明,世界经济正在孕育快速发展时期,不久就会到来。在新的快速发展时期,中国等新兴国家是新时期快速发展的启动者、引领者和主导者;新时期的发展将惠及全球85%的人口;科技集成将带动经济的快速发展;人、社会与自然将更加和谐地快速发展。     

“Third World” Multinationals Revisited

Abstract

The notion of “Third World Multinationals” has always been, at least, slightly misleading, and has now also become obsolete, taking into account the dismantlement of most of the ideological divides between different political and economic blocks since the early 1990s, and the new rules of the games imposed by globalization. Furthermore, new multinationals emerging from China, and also from the former Soviet republics, are demanding a new and more flexible taxonomy. The present paper re-defines “Multinationals from Developing Countries” (MEDCs) and it reviews first, the current literature on multinationals, looking at the key factors which may explain the internationalization process of enterprises coming from outside the traditional, developed, and industrialised world, and also whether they may enjoy specific sources of comparative advantages, different from those ascribed to the old, established multinationals. A statistical appendix provides a brief but comprehensive survey of the current status of MEDCs, pointing out that, at the end of the day, there are roughly only four such enterprises in the usual rankings of the first one hundred multinational corporations, worldwide, and that the prospects of a forthcoming, and enhanced upgrading in the global corporate structure are heavily geared towards Asia. The data would also seem to support the argument that sheer “scale”, as such, of the enterprises does not explain a greater or lower degree of “transnationalization,” a conclusion which, added to that of the greater flexibility provided by the new information technologies, could be goods news for small-and medium-sized enterprises coming from the developing world.     

Stock Returns,Productivity, and Corruption in Eight European Fast-Emerging Markets

This article addresses the impact of productivity, corruption, and trade openness on the stock returns of 265 industrial companies listed in eight Eastern European fast-emerging markets, over the 2004-2013 period. Through a three-factor model that includes both measures at firm level and macro-level control variables, our findings suggest that country corruption index is negatively correlated with the total annual return of the stocks of the listed industrial companies of our sample. Moreover, the most productive firms are featured by higher stock returns, while leverage seems not to be a key predictor of stock returns. In addition, the article uncovers innovative evidence about trade openness that is negatively correlated with stock returns due to its connection with the recent financial crisis. That is, firms operating in markets that are more open to trade show a higher degree of interconnection with other economies and are more likely to undergo the effects of negative fluctuations from foreign markets during the economic crisis. © 2015 Wiley Periodicals, Inc.