Under what conditions does the global economy serve as a means for the diffusion of labor standards and practices? We anticipate variation among internationally engaged firms in their propensity to ...improve labor standards. Upgrading is most likely when a firm's products exhibit significant cross-market differences in markups, making accessing high-standards overseas markets particularly profitable. Additionally, upgrading is more likely when lead firms attach a high salience to labor standards. Therefore, while participation in global production induces "trading up" behaviors among firms overall, the effect strength varies across industries. We test our expectations via a survey experiment, which queries foreign firms operating in Vietnam about their willingness to invest in labor-related upgrading. We find strong evidence for the effect of markups on upgrading choices and suggestive evidence for the saliency mechanism.
In recent years, Ethiopia has become a prime destination for labour‐intensive, export‐oriented manufacturing industries by virtue of its favourable investment climate and cheap labour. This article ...examines the labour governance and disciplinary strategies of foreign companies in Ethiopia's industrial park, focusing on the Blue Apparel Company (BAC) in the Bole Lemi Industrial Park, Addis Ababa. Drawing on ethnographic fieldwork conducted from August 2021 to August 2022, the study reveals how relaxed labour regulations and the absence of trade unions enable foreign firms to enforce strict, profit‐driven governance. The analysis highlights despotic management practices, hierarchical power dynamics and their impact on local workers. The findings shed light on the intricacies of labour control in globalized production regimes and highlight the challenges workers encounter in emerging economies.
This article argues that innovation in and from emerging economies is largely shaped by the challenges of sustained catching-up with the advanced economies. Just as firms and industries are ...constantly seeking to upgrade their technological and organizational capabilities, so too are their societies reconfiguring their institutions and networks to improve their knowledge resources. Such a co-evolutionary process requires IB scholars to draw on interdisciplinary work from the innovation and development literature in order to reconsider the key drivers of innovation at multiple levels within these economies. Innovation is not just limited to technological activities but includes organizational and transactional improvements, and is largely a process of recombination of local and imported knowledge, shared through multiple forms of collaboration. This can redefine the FSAs of local and foreign firms, often shaped by the strategies of domestic public and private actors. Simultaneously, policymakers need to develop the appropriate institutions needed to underpin R&D, training, standards, and knowledge coordination. MNEs play unique roles as instigators of innovation, as conduits for new knowledge, and as beneficiaries themselves, via their own recombination capabilities.
Research summary: Cross-border acquisitions may raise legitimacy concerns by host-country stakeholders, affecting the acquisition outcomes of foreign firms. We propose that theorization by local ...regulatory agencies is a key mechanism that links legitimacy concerns with acquisition outcomes. Given that theorization is time consuming and its outcome is uncertain, we argue that state-owned foreign firms experience a lower likelihood of acquisition completion and a longer duration for completing a deal than other foreign firms. Moreover, we introduce a set of firm characteristics (target public status, target R&D alliances, and acquirer acquisition and alliance experiences) that may affect the threshold level of legitimacy, thereby altering the proposed relationships. Our framework and findings provide useful implications for institutional theory on its core concept of legitimacy. Managerial summary: Cross-border acquisitions by state-owned foreign firms may lead to national security concerns and thus debates and discussions among local regulatory agencies. We argue that such institutional processes may reduce the likelihood of acquisition completion and prolong the duration of acquisition completion. Using cross-border acquisitions in the United States, we find that acquisitions by state-owned foreign firms are not less likely to be completed than acquisitions by other foreign firms, but they take more time to be completed. Moreover, state-owned foreign firms are less likely to complete an acquisition when the target firm has more R&D alliances. However, their acquisition experience and alliance experience in the host country increase the likelihood of acquisition completion, whereas their alliance experience alone shortens the acquisition duration.
Research has shown that firms typically expand into foreign locations with sizeable coethnic communities. However, in many cases the ethnic community influences the investment choice of the same firm ...in one location but not another. We offer an institutional lens to explain this heterogeneity. Ethnic groups function like informal institutions that facilitate transactions between foreign firms and customers, suppliers, and information providers through interpersonal exchange. Relying on ethnic communities to mediate transactions in foreign markets is valuable but limited by the relatively small scale of these communities. In contrast, relying on formal institutions allows firms to expand more broadly into foreign markets because the impersonal exchange inherent in formal governance is more scalable. This is manifested in "dual entry strategies" wherein ethnic communities have a significantly stronger influence on location choice in places with unreliable (weak and unstable) formal institutions than in places with reliable formal institutions. We found support for these ideas using a unique dataset of South Korean banks' investments in Chinese provinces during 1992–2013. To mitigate endogeneity concerns, we exploited a historical migration that created a quasi-random distribution of ethnic Koreans across provinces. Our work contributes to research on international expansion, ethnic communities, and institutional theory.
This study examines the international alliance activities of state‐owned enterprises (SOEs). We find that country‐level political and economic factors, such as autocracy, foreign ownership ...restrictions, foreign currency reserve, and industry dissimilarity, increase the likelihood of SOEs’ participation in cross‐border alliances. Our analyses further reveal that foreign firms tend to collaborate with local SOEs when facing high expropriation risks and the presence of a state‐dominated banking system in the host country. Further, foreign firms experience higher announcement returns when they ally with local SOEs rather than with non‐SOEs. This result suggests that the exclusive benefits from SOEs are value‐creating for the international alliance partners. Overall, our findings provide novel insights into the determinants and wealth effect of SOEs’ engagement in international alliance activities.
This study involves the compilation of a database detailing the exit of foreign companies from Russia in 2022 and the identification of their primary exit strategies. The current situation is ...unprecedented in its scale and has no analogues in the history of the Russian economy, therefore, it has not been sufficiently studied yet. A total of 28 industries across 25countries were selected for the initial study. Through an analysis of exit patterns, nine primary strategies were identified, including joint venture exits, soft closings, sales to local buyers, suspension, liquidation, management buyouts, selling shares to partners, carving out to local legal entities, and sales to foreign buyers. The subsequent research stage focusedon the oil and gas industry and examined the cases of its five leading companies: Shell, TotalEnergies, Equinor, Exxon-Mobil, and BP. It assessed both financial and non-financial losses incurred by these companies due to their decisions to withdraw from the Russian market. Financial losses were determined using the Discounted Cash Flow method and theEconomic-Value-Added valuation method, while non-financial factors were assessed through operational indicators such as reserves and oil and gas production. The fundamental value of the above-mentioned companies was shown to comprise to $20.6 billion, $1.1 billion, $0.5 billion, $17.8 billion, and $36.5 billion, respectively. The study revealed that companieswith strategically important and substantial projects in Russia, notably BP and TotalEnergies, pursued a “soft” exit strategy. Despite their decision to exit Russia, these companies continued to receive dividends and effectively retained ownership shares in assets, even though financial statements reflected impairments.
Studies suggest that home countries impose economic sanctions following host state expropriation of home firms. However, and not addressed in the empirical literature, is the possibility that ...sanctions lead targeted countries to nationalize firms from sender countries. Using bilateral expropriation data from 1985 to 2010, and controlling for endogeneity issues, we find that sanctions significantly increase expropriation risk, encouraging targeted states to inflict pain in a reciprocal manner on sender countries. Expropriations also enable targeted nations to acquire economic assets from foreign firms, undermining the restricting goals of sanctioning states, and provide opportunities for leaders to show political resolve at home by standing up to senders. Our results are robust using monadic or dyadic data and different statistical methods, indicating another sanction-busting strategy used by targeted countries.
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