This paper examines the impact of ownership structures of emerging-market firms, which are shaped by local institutions, on the decision of these firms to undertake outward FDI. Our results suggest ...that family firms and firms with concentrated ownerships (both ubiquitous in emerging markets) are less likely to invest overseas, and that strategic equity holding by foreign investors facilitates outward FDI. We conclude that organisational forms such as family firms, which are optimal outcomes of institutions prevailing in emerging markets, may be suboptimal in a changing business environment in which outward FDI is necessary for access to resources and markets.
We explore factors of convergence and divergence in corporate governance of emerging and developed market economies, focussing on the role of firm internationalisation. In particular, foreign ...investments by emerging economy firms led to upgrade of their governance capabilities. These firms also became advocates for home-country policy reforms that mandated the development of similar capabilities for local firms. We present a broad overview of the literature and propose an approach that considers the evolution of corporate governance, both at the national level and the firm level, with MNEs from both emerging market economies and developed economies as active actors in this process.
This paper investigates the impact of offshore outsourcing across 5746 European service multinational enterprises (MNEs) on employment at home. We estimate labour demand equations and specifically ...isolate the global financial crisis (GFC) by undertaking analysis through our longitudinal 19-year panel data, separately for the pre- (1997–2007) and crisis period (2008–2016). We distinguish between offshoring to high and low income countries, as well as between service industry groups. We show that there is some evidence that offshoring by location intensive service firms is associated with employment growth at home during the crisis period, while offshoring in information intensive industries in high income countries is associated with a reduction in employment at home, as firms offshore to be nearer to the client. Overall, our findings suggest that the crisis period has lessened the impact of offshoring service FDI on employment at home.
Despite the recent attention in the media and focus in the academic literature on tax havens and tax mitigation strategies, we know very little about how the use of tax havens relates to a firm’s ...internationalisation strategy. In this paper, we develop a conceptual model that explains how FDI into tax havens relates to the standard FDI motives identified in the literature. We subsequently use a novel dataset that allows us to empirically investigate how these motives impact upon tax haven FDI in the South Korean context, which has experienced very rapid economic development over the last few decades and is now considered an advanced economy. We find that tax haven FDI is strongly linked to market-seeking and efficiency-seeking FDI, whereas its link with resources-seeking FDI is only found with respect to the most secretive tax haven locations. Furthermore, we find no relationship between technology seeking FDI and tax haven use. We argue that as tax haven use increases over time, the economic proceeds of outward FDI leak out and remain offshore.
•We link effective technology sourcing to firm performance.•While location matters, the position of the affiliate within the parent company determines effective technology sourcing.•We develop a ...“falsification test” to confirm the importance of the parent–affiliate relationship.
We examine the extent to which the knowledge or technological capability of foreign affiliates actually enhances the performance of their parent companies. Our results draw on a firm-level panel of more than 1600 multinationals and more than 4000 of their overseas affiliates, covering 46 home and host countries. We find considerable evidence of enhanced parent productivity as a result of their affiliates’ performance, which we interpret as evidence of reverse knowledge transfer from affiliates to parents. This effect is robust to different tests including IV estimation and a falsification exercise based on unconnected ‘matched’ affiliates. We find that both physical and strategic location markedly affects the affiliate-parent relationship, and that distance reduces the positive impact that affiliate performance has on that of the parent.
This paper applies property rights theory to explain changes in foreign affiliates' ownership. Post-entry ownership change is driven by both firm-level characteristics and by the differences in the ...institutional environments in host countries. We distinguish between financial market development and the level of corruption as two different institutional dimensions, such that changes along these dimensions impact upon ownership change in different ways. Furthermore, we argue that changes in ownership are affected by the foreign affiliate's relatedness with its parent's sector, as well as by the affiliate's maturity. We use firm level data across 125 host countries to test our hypotheses.web URL:http://www.sciencedirect.com
To provide new understanding of the effect of historical ties in the field of international business, through the lens of institutional theory and the concept of the liability of foreignness, we ...examine how prior colonial relationships influence inward FDI from former colonisers to their former colonies in Africa. With an estimation based on a balanced panel of annual observations from 2001 to 2012, we find that prior colonial ties are positively related to inward FDI from colonisers to former colonies. However, there is substantial heterogeneity in colonial relationships, with the nature of British colonialism more likely to exhibit the colonial relationship in explaining inward FDI. Moreover, there is ambiguity associated with the influence of the time period of colonization and the time period of independence on inward FDI. We report a negative relationship between the period a country was a colony and FDI from the coloniser and a U-shape relationship between the period of independence and FDI from the coloniser. Our findings indicate that the nature and influence of colonial ties on FDI from colonisers are more nuanced and complex than previously considered.
We conduct a Meta-analysis of 54 papers that study the relationship between multinationality and firm performance. The aim is to understand if any systematic relationships exist between the ...characteristics of each study and the reported results of linear and curvilinear regressions to examine the multinationality-performance relationship. Our main finding, robust to different specifications and to different weights for each observation, is that when analysis is based on non-US data, the reported return to multinationality is higher. However, this relationship for non-US firms is usually U-shaped rather than inverted U-shaped. This indicates that US firms face lower returns to internationalization than other firms but are less likely to incur losses in the early stages of internationalization. The findings also highlight the differences that are reported when comparing regression and non-regression based techniques. Our results suggest that in this area regression based analysis is more reliable than say ANOVA or other related approaches. Other characteristics that influence the estimated rate of return and its shape across different studies are: the measure of multinationality used; size distribution of the sample; and the use of market-based indicators to measure firm performance. Finally, we find no evidence of publication bias.
► This is the first attempt to explain the prevalence of firms to invest in conflict countries. ► Ownership structures and institutions in the home country are important determinants of this ...decision. Firms from countries with relatively strong traditions of CSR are less likely to engage in conflict. ► Where CSR is strong the returns to investing in conflict zones is lower.
The purpose of this paper is to examine the determinants of a firm's strategy to invest in a conflict location. To the best of our knowledge, this has not been done before. We examine this using a standard model of international business, overlaid with the fundamental approach to corporate social responsibility. We start with the population of multinationals who have chosen to invest in low income countries with weak institutions. We then split this sample in order to distinguish between firms that have invested in conflict regions compared to those that have not. Our analysis then proceeds to explain the decision of those firms to invest in conflict locations using a simple Probit model. We find that countries with weaker institutions and less concern about corporate social responsibility (CSR) are more likely to invest in conflict regions. Finally, firms with more concentrated ownership are more likely to invest in such locations.
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