Drawing on transaction cost theories and the resource-based view of a firm, we posit that the value of corporate social responsibility (CSR) initiatives is greater in countries where an absence of ...market-supporting institutions increases transaction costs and limits access to resources. Using a large sample of 11,672 firmyear observations representing 2445 unique firms from 53 countries during 2003–2010 and controlling for firm-level unobservable heterogeneity, we find supportive evidence that CSR is more positively related to firm value in countries with weaker market institutions. We also provide evidence on the channels through which CSR initiatives reduce transaction costs. We find that CSR is associated with improved access to financing in countries with weaker equity and credit markets, greater investment and lower default risk in countries with more limited business freedom, and longer trade credit period and higher future sales growth in countries with weaker legal institutions. Our findings provide new insights on non-market mechanisms such as CSR through which firms can compensate for institutional voids.
Globalization has fundamentally changed the game of business. Strategic frameworks developed for the analysis of purely domestic business necessarily fall short in the international business context. ...Managers and business students require alternative approaches to understand and cope with these far-reaching changes. We must learn to think globally in order to succeed. Global Competitive Strategy shows how we can do this by providing a unique set of strategic tools for international business. Such tools include the 'star analysis' that allows strategy makers to integrate geographic information with market information about the global business environment. Also introduced is the 'global value connection' that shows managers how to account for the gains from trade and the costs of trade. Aimed at MBA students taking courses in international strategy, consultants and practising managers with responsibility for strategic development, this 2007 book offers a comprehensive strategic framework for gaining competitive advantage in the global marketplace.
This article examines how the international business (IB) literature has addressed social responsibility issues in the past 50 years, highlighting key developments and implications from a historical ...perspective. Specific attention is paid to the Journal of World Business (JWB), which has covered the whole period and published relevant articles related to these issues, in comparison to the Journal of International Business Studies (JIBS), the other long-standing IB journal. The article outlines that they illustrate different conceptualizations of IB and social responsibility. The 50-year review shows three subthemes: the (green) environment; ethics, rights and responsibilities; poverty and (sustainable) development. These are discussed consecutively, including main contributions and promising areas to further the field.
We study the internationalization of digital service multinational enterprises (SMNCs), focusing on how digitalization alters internalization theory’s assumptions about the nature of firm-specific ...assets (FSAs) and the theory’s predictions about governance choices in cross-border transactions. We invoke Simon’s (Proc Am Philos Soc 106(6):467–482, 1962) near-decomposability concept to explain how digitalization enables two distinct types of FSAs – technology and human capital. Applying the ideas of modularity and skill complexity, we further distinguish between core versus peripheral technology FSAs and between generic versus advanced human capital FSAs. Building on the transferability and appropriability of these strategic assets, we theorize on the FSAs’ internalization propensity in the digital age. We propose that with rising digitalization, the network plays a dual role–as a governance mode and as a strategic resource. Integrating insights from network economics, particularly increasing returns to scale, we propose that network advantages (On) emerge as a distinct strategic resource that merits separate investigation from the traditional asset-based (Oₐ) and transaction-based (Ot) advantages.
This paper investigates the role of individual firms in international business-cycle comovement using data covering the universe of French firm-level value added and international linkages over the ...period 1993–2007. At the micro level, trade and multinational linkages with a particular foreign country are associated with a significantly higher correlation between a firm and that foreign country. The impact of direct linkages on comovement at the micro level has significant macro implications. Without those linkages the correlation between France and foreign countries would fall by about 0.098, or one-third of the observed average correlation of 0.291 in our sample of partner countries.
This article examines the link between the condition of institutional voids in emerging markets and the use of the practice of corporate social responsibility (CSR) reporting by emerging market ...multinational enterprises (EM-MNEs). Based on neo-institutional theory and in light of the specificity of emerging markets, we propose a positive relationship between institutional voids and CSR reporting. Home-country institutional voids push companies to internationalize as a way to escape the institutional constraints and inefficiencies in their own markets, but at the same time create legitimacy challenges for these companies abroad. In particular, EM-MNEs from less institutionally developed countries are likely to face liabilities of origin - negative perceptions in host countries about these firms' willingness and ability to conduct legitimate business. CSR reporting is an effective strategy to overcome such liabilities and barriers to legitimation as it conveys to host countries and global stakeholders alignment with global meta-norms and expectations. Internationalization, listing on developed country stock exchanges, and time, further magnify EM-MNEs' legitimacy challenges and thus the use of CSR reporting to mitigate them. Our hypotheses are supported in a longitudinal study of 157 of the largest EM-MNEs ranked by the United Nations Conference on Trade and Development (UNCTAD) between 2004 and 2011.
In "Probing Theoretically into Central and Eastern Europe: Transactions, Resources, and Institutions," we outlined the contributions of research in Central and Eastern Europe (CEE) to theoretical ...debates in business research. In this retrospective, we reflect upon the evolution of the field over the past decade. With the fading impact of CEE's distinct shared history, we suggest that CEE best be analyzed as emerging economies, rather than as a distinct geographic entity. Emerging economy business research is converging on common themes and shared theoretical ideas, while identifying critical variations that constrain generalizations among and beyond emerging economies. This research thus highlights the need to develop a better understanding of the boundary conditions of scholarly theories of business knowledge. Over the past decade, the institutionbased view has emerged from distinct intellectual traditions in institutional economics, organizational theory, and the analysis of business-government bargaining. Research in these converging lines of theorizing places contextual variations at the center of explanations of business phenomena around the world. We suggest that the institution-based view is evolving toward a paradigm, and offer suggestions on how to advance this research agenda further, in particular by exploring how firms engage with different sets of potentially conflicting institutions at multiple levels and locations.
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