Abstracts
DISTINGUISHED PANEL 1: Global Strategy and Emerging Markets
Emerging Markets’ Institutional Environments and Firm Strategies
Michael A. Hitt, Texas A&M University, mhitt@cgsb.tamu.edu
Organizational Learning and Emerging Market Firms: Moving Outward
Marjorie Lyles, Indiana University, mlyles@iupui.edu
Frontier Issues on Emerging Market-Related Global Strategy
Yadong Luo University of Miami, yadong@miami.edu
Abstract:
In this presentation, I’ll share some of my thoughts on several critical yet understudied issues. I’ll focus on (1) new generation MNEs investing in emerging markets, (2) internationalization of emerging economy MNEs, (3) comparative strategic management across different emerging economies, (4) international competition with emerging market copycats, and (5) reorganization and restructuring international joint ventures/global strategic alliances in emerging markets. In illustrating each of these areas, I’ll state what specific research questions meriting us to explore, share my observations and recommendations on how to develop our research further along, and present some preliminary frameworks that unify antecedents, processes, and consequences on the said issues.
RESEARCH PRESENTATION SESSION: Frontiers of Research in International Business
Subsidiary Embeddedness as a Determinant of Divisional Headquarters Involvement in Innovation Transfer Processes
Hebrick Dellestrand, Uppsale University, henrik.dellestrand@fek.uu.se
Abstract:
This paper deals with divisional headquarters as an important hub-type firm within the MNE, orchestrating innovation transfer processes between subsidiaries. It is argued that divisional headquarters involves itself in transfer projects owing to the internal and external embeddedness of the subsidiaries hosting the innovation development and transfer. This highlights divisional headquarters as an active participant of local subsidiary business networks. Using data from 169 innovation transfer projects, and 146 internal and 121 externally embedded relationships at the subsidiary level, support is found for the argument of embeddedness as a driver of divisional headquarters involvement in subsidiary innovation transfer projects.
Keywords: innovation transfer; embeddedness; divisional headquarters
Intra-Organizational Conflict in MNCs, Subsidiary Tactics and the Role of Boundary Spanners
Andreas Schotter, Thunderbird School of Global Management, andreas.schotter@thunderbird.edu
Paul W. Beamish, The University of Western Ontario, pbeamish@ivey.uwo.ca
Abstract:
Scholars have recently pointed out that intra-organizational conflict in multinational corporations (MNC) between headquarters (HQ) and their foreign subsidiaries is not necessarily dysfunctional nor the result of inefficient global integration, as often stressed in prior management research. Conflict is now considered a normal consequence of managing and organizing across national borders. This study aims to advances the literature on MNC HQ-subsidiary relationships by adding new insights to the global integration versus local responsiveness discussion. We focus on both, the characteristics and effects of subsidiary conflict negotiation tactics and on individual managers that act as boundary spanners between MNC headquarters and their subsidiaries. The results show that in the presence of boundary spanners, dysfunctional conflict is less common and better overall performance can be achieved for both, the subsidiary and the MNC as a whole. However, the boundary spanning ability is only partly formalizable, but some MNCs are able to foster boundary spanners, and their effectiveness, better than others. Another important finding is that boundary spanners are most effective when located at subsidiaries instead of headquarters.
Keywords: Multinational corporations, headquarters-subsidiary relationships, intraorganizational conflict; global integration versus local responsiveness; managerial tensions, competing demands; boundary spanners; power.
The Performance Consequences f Ambidexterity in Domestic and International Joint Ventures
Irem Demirkan, Northeastern University, i.demirkan@neu.edu
Denise Dunlap-Hinkler, Northeastern University, d.dunlaphinkler@neu.edu
Abstract:
Prior studies on ambidexterity have typically focused on the limited physical aspects of a firm. In this study, we base our theoretical framework on the resource based view and social capital theories. We examine the effect of ambidexterity, which constitutes both physical and social dimensions, on the performance consequences of domestic and international joint ventures. Data were collected on 117 equity joint venture activities in the pharmaceutical, semiconductor, and computer industries over a span of fifteen years (1989-2003). Our results show that joint ventures performance is enhanced under conditions of ownership equity, non-cultural, structural and status ambidexterity. The relationship between cultural ambidexterity and alliance performance improves when joint venture partners share similar business domains and goal orientations. Our results shed light on the important factors which may help or hinder joint venture performance. We conclude with implications for joint venture theory and practice.
Keywords: Joint Venture Performance, Strategic Alliances, Ambidexterity; International, Social Capital;
Subsidiary Entrepreneurship, Strategy Development Processes and Strategic Initiatives
Pamela Scott, Dublin Institute of Technology, pamela.sharkeyscott@dit.ie
Patrick Gibbons, University College Dublin, pat.gibbons@ucd.ie
Abstract:
MNCs gain competitive advantage through leveraging initiatives generated by their subsidiary networks. Yet we have limited understanding of the conditions which promote initiatives. This paper explores the influence of the subsidiary’s approach to strategy development on the relationship between entrepreneurship and strategic initiative generation. We test our propositions on data generated from surveying the total population of Irish subsidiaries of foreign MNCs. Our findings indicate that an entrepreneurial subsidiary’s engagement in formal strategy development makes it better at generating strategic initiatives. This evidences the need for headquarters to encourage subsidiary entrepreneurship and strategy development.
Cybercrime Organizations’ Internationalization and Arbitrage Strategy: An Exploratory Study
Nir Kshetri, University of North Carolina-Greensboro, nbkshetr@uncg.edu
Abstract:
Frameworks for theorizing and organizing illegal activities as entrepreneurial activities have gained popularity in recent years. To improve our understanding of cybercrime organizations’ operations and to provide a clearer picture of their modus operandi, we investigate their internationalization pattern and examine how they benefit from various forms of arbitrage. Specifically, we examine how cybercrime organizations benefit from opportunities associated with differences in formal and informal institutions across countries (institutional arbitrage), exploit factors specific to a geographic location (geographic arbitrage) and take advantage of differences in economic factors across countries (economic arbitrage). The rapidly rising cybercrime industry has been a pressing policy and theoretical issue that adjoins larger concerns of our society as well as broad-based substantive interests within various social science disciplines. The findings thus have important theoretical, managerial and policy implications.
Keywords: Cybercrime organizations, arbitrage, internationalization, destructive entrepreneurship, criminal networks
POSTER PRESENTERS:
New Kids on the Block: A Contingency Model of the FDI Decision by Developing Country MNCs
Tolu Bewaji, St. Xavier University, bewaji@sxu.edu
Tess Han, Temple University, tesshan@temple.edu
Abstract:
This study aims to extend the knowledge on developing country multinational corporations (DMNCs) by examining firm-specific determinants of their FDI decisions. A review of prior research led to the development of a conceptual model that illustrates some unique behavioral antecedents (including links to government, business group association, social contact and prior experience) to DMNCs decision to engage in FDI are moderated by distinct motivations (including cost reduction, market-seeking and strategic assets-seeking). As an amendment to prior findings that DMNCs demonstrate different motivations in pursuing FDI than MNCs from developed countries, this study points to the behavioral predictors of FDI engage that are less relevant for developed country MNCs context. In addition, the fact that both motivation and firm competencies vary from one firm to another also that, instead of being a homogenous group, DMNCs are very likely to pursue different internationalization paths.
New Multinationals in Emerging Markets: The Effect of Business Group Affiliation on Technological Capabilites in the Software Industry in Asia
Anna Lamin, Northeastern University, a.lamin@neu.edu
Denise Dunlap-Hinkler, Northeastern University, d.dunlaphinkler@neu.edu
Abstract:
Scholars have become increasingly interested in ascertaining the competitiveness of firms from emerging markets as they are becoming important contributors to the global economy. This paper analyzes the trends in technological capabilities of new multinationals in an emerging market. Using data from 1992 to 2001, we examine the important role that business group affiliation, export intensity and other firm characteristics play in determining how Indian firms move along the technological capabilities trajectory in the software services industry. Our research aims to provide to a better understanding of the important factors that contribute to the development of more complex technological capabilities in firms from emerging economies. We find that both exporting and group affiliation, within a moderately diversified business group, facilitate the development of these capabilities. We conclude with implications for theory and practice.
Keywords: emerging markets, Indian software industry, multinationals, technological capabilities, business groups, new firms.
The Inter-firm Linkages between Manufacturing Multinational Enterprises (MNEs) and Engineering Services in Klang Valley, Malaysia
Sharifah Dawood, University Science Malaysia, sdawood@usm.my
Abstract:
The modern economic era has witnessed a considerable degree of growth in the global periphery with the expansion of manufacturing production and producer services. These are important indicator of the complexity of an international investment scenario in which Global Production Networks especially Multinational Enterprises (MNEs) and Knowledge Intensive Business Services (KIBS) have become common elements of influence. The central argument of this paper is that the linkages between MNEs and engineering services orchestrate the growth patterns of contemporary regional and local economies. It is in this respect that regions like the Klang Valley, Malaysia have repositioned itself within the global system of regions by restructuring its industrial growth to achieve higher levels of manufacturing and service activities. The linkages relationship between the MNEs and the engineering services can be seen from three aspects: (i) the types of engineering services outsourced by the MNEs, (ii) the motives for outsourcing and nature of linkages; (iii) the decision making process between the MNEs and the engineering services firms. Analysis of the manufacturing MNEs firms included those operating in the most rapidly and internationally linked industries particularly the electrical and electronics sectors. The aim is to examine the extent of business transactions, interaction and nature of linkages between MNEs and engineering firms. Finally we discuss the extent to which the interaction between the MNEss and engineering services deepens the level of localization of the MNEs and creates a network relationship resulting in the changing local and spatial economy of the Klang Valley region. The paper provides significant insights in to the emergence of industrial regions in the Pacific Asia and issues surrounding the localization of MNEs and inter-firm linkages including a schematic model of MNEss linkages formation in the region.
The International Expansion of Emerging Economy Firms: The Influence of Path-Breaking Change
Kiattichai Kalasin, HEC Paris, kiattichai.kalasin@mailhec.net
Abstract:
Much of past literature provides the mechanisms behind the internationalization of Emerging MNEs to less developed countries. They generally build upon the ownership-advantage perspective. Firms can leverage their specific advantage to expand in less developed countries, where they can exploit knowledge and experience in the institutional-void business environment in less developed countries. However, to expand in an advanced economy, such firm-specific advantage may loss its value when transferred. Hence, a theoretical extension is needed. This study introduces a mechanism that explains the international expansion of Emerging-Market MNEs to advanced economies. It aims to provide a theoretical explanation for global champions from emerging economies. We propose path-breaking changes as a complementary view that aims to explain the internationalization of these firms. We argue that path-breaking change is a prerequisite step before emerging-economy firms build and leverage ownership advantages. We find strong support that the extent of path-breaking changes of a firm positively correlates with international expansion in advanced economies.
Keywords: emerging economy MNEs; path-breaking change; international expansion; foreignness and emerging economies
Chinese Technology Firms’ Entrepreneurial Activities in the Developing World: Strategic Fit and Institutional Legitimacy
Nir Kshetri, University of North Carolina-Greensboro, nbkshetr@uncg.edu
Abstract:
This paper seeks to examine Chinese high-technology firms’ internationalization activities in the developing world in terms of strategic advantages, value delivery and legitimacy. The findings indicate that Chinese technology products tend to have low cost and be relevant in the context of the developing world. Moreover, Chinese high-technology companies seem to possess soft resources that help them to make decisions that are isomorphic with respect to institutions in developing countries and compatible with business parameters in these countries. Evidence of institutional isomorphism of Chinese technology firms is more readily apparent in developing economies that are less democratic. Thus, the paper argues that both the hard and soft resources of Chinese technology companies vis-à-vis those in the industrialized world tend to have a higher degree of strategic fit in the context of the developing world than in the industrialized world .
Keywords: China, developing countries, institutional legitimacy, intellectual property, OLI paradigm, kaleidoscopic comparative advantage
Licking the Dirt to Survive and Succeed: Multinational Companies from China and India
Tanvi Kothari, University of Wisconsin Oshkosh, kotharit@uwosh.edu
Masaaki Kotabe, Temple University, mkotabe@temple.edu
Abstract:
An emerging phenomenon of global competition is the increasing participation of firms from emerging economies in various industries and across value-chain activities. As very little is known about the competitive advantages of these Emerging Nation Multination Companies (EMCs), we propose to conduct in-depth case-studies of eight Indian and Chinese companies. Methodologically, the study illustrates the usefulness of semantic network analysis tools, especially centering resonance analysis, in identifying and interpreting the concepts that provide coherence to a set of textual data. The initial results suggest that EMCs’ competitive advantage is based on their ability to acquire resources and absorb them to build their own advantage (supply-side dynamics) and their ability to find some market niches, i.e., entering into markets untapped by traditional MNCs (demand-side dynamics).
Keywords: Emerging Nation Multinational Companies (EMC); Lick the Dirt, Case-Studies; Internationalization Strategies; Content Analysis; Semantic Network Analysis;
Multinational Firms and Brand Disposal Strategies: A Conceptual Framework
Sonia Ketkar, Towson University, soketkar@gmail.com
Jeffrey Podoshen, Franklin and Marshall College, jpodoshe@fandm.edu
Abstract:
The purpose of this conceptual paper is to identify strategic elements related to brand disposal and divestment for the multinational firm. This paper examines brand disposal strategies in the global context and we develop a conceptual framework that maps the influence of brand entry mode and brand relatedness on disposal strategies. We then illustrate the applicability of the framework using examples of recent brand disposals by firms in the global consumer marketplace. We believe that multinational firms with multiple global and local brands in foreign markets frequently alter their brand portfolio through the addition and disposal of these brands from a dynamic resource-based perspective as brand portfolios can be viewed as a source of competitive advantage. The proposed framework for brand disposal introduces the resource based view to brand divestment literature, strengthens the notion of brands as firm capabilities and offers new insight related to brand portfolio management.
Keywords: Global brands, Local brands, Brand disposal, Brand strategy, Resource Based View, Brand portfolio, Brand exit
DISTINGUISHED PANEL 2: Multinationals from Emerging Markets: Changing Rules, Changing Times
Multilatinas: What Can We Learn from the Emergence of Latin American Multinational Companies?
Alvaro Cuervo-Cazurra, University of South Carolina, acuervo@moore.sc.edu
Abstract:
I review what we know about the emergence of Multinationals, Latin American multinationals, to assess what we know and do not know about this phenomenon. We have a good understanding the importance of Multinationals, the process used to upgrade competencies to the international level, their Multinationalization process, and how the pro-market reforms of the last three decades favored their transformation and multinationalization. However, it is unclear whether these firms are achieving profitability in their foreign investments, and whether they will be able to transform into large multinational firms with a global presence before being acquired by other firms.
Internationalization Strategies of Indian Firms
Ravi Ramamurti, Northeastern University, R.Ramamurti@neu.edu
Abstract:
I will explore the question of why Indian firms have begun to internationalize briskly in the last decade, what their international competitive advantages are, and the strategies (paths) by which they are building global presence. I will argue that different firms build on different “India advantages,” combined with important firm-specific advantages. I will conclude with observations on the theoretical value of studying new multinationals from countries like India.
The Globalization of Chinese Firms: Challenges and Opportunities
Denis F. Simon, Pennsylvania State University,
dfs12@psu.edu
Abstract:
As China has become more integrated into the fabric of international business, Chinese firms have started to think beyond the traditional joint ventures and domestic market focus that dominated their thinking during the first several decades of their opening to the outside world. They have recognized that membership in the WTO represents a two edged sword--just as China's entry into the WTO seemingly has opened up more opportunities for foreign firms in the PRC, it also has created a variety of new chances for Chinese firms to invest abroad through FDI. The initial thrust of the Chinese push overseas largely has concentrated on a range of "intermediate market" economies rather than on the major industrialized economies. Investment activities in these economies has been welcomed, for the most part, by the host countries and has provided Chinese firms with a series of excellent opportunities to learn how to operate abroad and thereby strengthen their capabilities for penetrating foreign markets without excessive dependence on intermediaries.
DISTINGUISHED PANEL 3: Form and Function in Contemporary Organizations: The Role of Alliances and Networks
Building Social Capital in Strategic Alliances: Positive and Negative Outcomes
Michael A. Hitt, Texas A&M University, mhitt@cgsb.tamu.edu
Abstract:
All firms, large and small, established and new ventures, use networks and alliances to gain access to needed resources and capabilities. Large firms often have over 300 alliances at any one time, while entrepreneurs largely depend on their social networks when they start new ventures. Alliances help firms to gain access to capital, suppliers and customers. They facilitate firms’ entry into new markets, especially international markets. Alliances serve as a source of knowledge and building new capabilities. But there is also a dark side to networks and alliances. Firms can become overly dependent on relationships (e.g., foreign governments). Firms also risk appropriation of valuable technological knowledge on which their competitive advantages are based. Additionally, new venture firms often rely heavily on families whose expectations can reduce the entrepreneur’s focus on the venture, thereby harming its performance. To achieve positive returns requires effective management of the alliances, including careful selection of partners, appropriate governance mechanisms and developing embedded relationships.
Research Frontiers in Capability-focused Collaboration: The Importance of Alliance Management Professionals, Partnering skills, and Knowledge Development in Alliances
Marjorie Lyles, Indiana University, mlyles@iupui.edu
Abstract:
For many firms, alliances provide a structure for being able to acquire or at least access their partner’s knowledge base. Few firms recognize the importance of collaborative know-how and the development of alliance capabilities. I will address the results of alliance research over fifteen years, specifically the role of professional alliance managers and their effectiveness in improving alliance performance especially in multinationals.
Communities, Alliances, and Knowledge Networks in Multinational Firms
Stephen Tallman, University of Richmond, stallman@richmond.edu
Abstract:
The contemporary multinational firm is commonly described as a network organization, and as an organization that resides in a wider external network of organizations. The critical functions of these networks relate to the gathering, transfer, recombination, and exploitation of knowledge in a global marketplace. The focal unit of analysis of most studies of knowledge networks, whether internal or external, is currently the subsidiary or affiliated firm. Recent developments in the study of knowledge in multinational firms suggest that both study and practice of knowledge-related activities might more accurately be considered at the level of the sub-units that create and use knowledge. These have been described as communities of practice, centers of excellence, and knowledge communities or groups. All such terms apply to groups of individuals, typically from various formal elements of the firm, who self-assemble around a set of common interests and practices and create new, often highly tacit, knowledge of certain activities – research, manufacturing processes, marketing, after-sales service, and the like. The evidence of such informal but essential groups as critical sources of value within subsidiary firms is fairly established. Local networks of communities within regional knowledge clusters have been identified in various cases, and the existence of internationally dispersed communities or networks of communities within multinational corporations has been proposed and supported with some evidence. It seems quite likely that successful external alliance relationships among firms also involve active connections between subordinate groups of individuals with intense common interests in certain value-adding activities, rather than formal contracts between top managers alone. Recognition of such networks of communities within and beyond the individual multinational firm offers opportunities to better understand both how tacit, practice-related knowledge can be transferred and transformed within multinational firms and how best to study the processes, mechanisms, and outcomes of knowledge management in the contemporary multinational.