Liability of foreignness in global competition? Financial service affiliates in the city of London

This study was inspired by the observation that foreign financial service firms operating in the City of London do not suffer the liability of foreignness to the extent suggested by theory. To examine the reasons for this departure from theory, the study advances a theoretical framework that distinguishes between three types of advantages that together account for the competitive performance of MNEs relative to that of indigenous firms. Empirical analyses of a sample of 296 foreign financial service firms in the City of London show that in this particular context major sources of competitive performance are the firm‐specific advantages and the advantages of multinationality, where British firms may not necessarily possess an advantage over foreign firms. An examination of the validity of the findings, in order to assess the extent to which this situation is unique to the City of London or rather signifies a more general trend that requires theoretical modifications and extensions, is emphasized as a major task for future research. Copyright © 2003 John Wiley & Sons, Ltd.     

Why does MNE performance vary across countries?: An inquiry into the competitive value of MNE assets

Variations in MNEs’ competitive positions across countries are a prevalent phenomenon in the business landscape, but are not fully explained by MNE theory. Building on competition theories and applying them to the context of MNEs, we hypothesize that the value of MNEs’ assets varies in relation to competitors of different nationalities and geographic scope, as well as across locations. These predictions are tested on US legal-services MNEs in competition with US domestic firms and non-US MNEs in the US and abroad. We find support for the hypothesized variations, particularly with reference to competitors’ location and nationality. These variations suggest that the value of MNE assets is relative, and that their varying market positions across countries are an inherent feature of international competition, calling for corresponding positioning and strategies.     

The persistence of distance? The impact of technology on MNE motivations for foreign investment

Why do firms go abroad when technology makes it possible to do business at a distance? We argue that the cost of distance differentially affects investment motivations across industries. We find support for this hypothesis in a study of U.S. inward and outward FDI. Knowledge seeking and efficiency seeking are the two most important explanations for international activity in information‐intensive industries, reinforcing the value of intangible resources in this sphere. In less information‐intensive industries, market seeking and the search for low‐cost export platforms are the dominant motivations for FDI. An important implication for the current debate on offshoring is that inward FDI flows into the United States occur in high‐ rather than low‐paying industries, and are of the knowledge‐seeking variety, while outward flows are driven by the search for efficiency and markets. Copyright © 2005 John Wiley & Sons, Ltd.     

The role of public intervention in R & D

The purpose of this paper is threefold: (1) we emphasize the rule of uncertainty in achieving an efficient allocation of resources to R & D activities; (2) we identify and discuss optional mechanisms that are directed at minimizing the role of uncertainty in determining R & D decisions; and (3) we analyze the role of public intervention in R & D via a formal structure. More specifically, we explain why and under what conditions a risk-averse decision-maker will invest less than a government in research and inventive activities. Sufficient conditions that lead to private underinvestment in these activities are established. Furthermore, if the option of buying information exists, then we identify a set of private governmental contracts that may lead to the acceptance of a research project that a priori is unfeasible.     

El sindicalismo y la desigualdad salarial en el régimen de «salario familiar»

Las leyes de igualdad salarial de numerosos países de la OCDE consagran el principio de igualdad de remuneración para hombres y mujeres por un trabajo de igual valor. Sin embargo, durante la primera mitad del siglo xx, antes de la promulgación de esas leyes, empleadores y sindicatos promovieron la desigualdad a través del régimen de «salario familiar». Se investigan los orígenes históricos y sociológicos del «salario familiar» desde una perspectiva comparativa e histórica, esta última referida al caso de Israel. La compleja decisión sindical de promover este complemento salarial reflejaba una concepción patriarcal de la sociedad y se regía por principios socialistas.     

Does having women on boards create value? The impact of societal perceptions and corporate governance in emerging markets

Many governments seek to impose gender equality on boards, but the consequences of doing so are not clear and could harm firms and economies. We shed light on this topic by conceptualizing the relationships as firm‐ and board‐specific and embedded within specific contexts. The theory is developed with reference to emerging markets, and tested on Malaysian firms. We find that female directors create value for some firms and decrease it for others. The impact varies across different performance indicators, firms' ownership, and boards' structure. The findings call for nuanced responses in relation to women's nominations from both governments and firms. Copyright © 2014 John Wiley & Sons, Ltd.     

Shareholders and stakeholders: How do directors decide?

This study examines how directors make decisions that involve shareholders and other stakeholders. Using vignettes derived from seminal court cases, we construct an index of directors' shareholderism as a general orientation on this issue. In a survey of the entire population of directors and CEOs in public corporations in one country, we find that directors' personal values and roles play an important part in their decisions. Directors and CEOs are more pro‐shareholder the more they endorse entrepreneurial values—specifically, higher achievement, power, and self‐direction values and lower universalism values. While employee representative directors exhibit a lower baseline level of shareholder orientation, they nonetheless often side with shareholders. Copyright © 2011 John Wiley & Sons, Ltd.     

Why Being Local Just Isn't Enough

For some industry clusters, being local may not be enough. A study of the media industries in the Soho district of central London suggests that global links are also essential.     

Geographic and Industrial Diversification of Developing Country Firms*

ABSTRACT This paper examines the impact of the industrial and geographical diversification activities of developing country firms on their performance, and draws attention to the unique attributes of these firms and of the circumstances under which their diversification activities take place. The empirical analysis is based on data from 345 developing country firms. The findings suggest significant and positive association between industrial and geographic diversification and performance, and considerable variation of these relationships across developing regions and diversification strategies.     

What Constitutes the Costs and Advantages of Firms Investing Overseas?

Different theoretical perspectives offer conflicting views regarding the sources of costs and advantages of firms investing overseas. Empirical analyses of financial services affiliates in London illustrate considerable inconsistencies with the predictions of Multinational Enterprise (MNE) theory regarding the significance of these attributes and their classification as costs or advantages. These analyses suggest that the performance consequences of the costs and advantages depend on a variety of contingencies and change significantly over time, questioning the categorical assignment of these attributes as costs or advantages in MNE theory. The findings provide a basis for adequate and nuanced strategic treatment of the costs and advantages. Copyright © 2011 John Wiley & Sons, Ltd.