American Multinational Corporations Research Articles

Earnings quality of multinational corporations: Evidence from Latin America before and after IFRS implementation

AbstractThis study evaluates whether Latin American multinational corporations (MNCs) report higher quality of accounting reports than companies with only operations in their home countries. In addition, it explores whether the impact of internationalization on the quality of accounting information has changed since the implementation of the International Financial Reporting Standards (IFRS) in the region. An emerging area of research studies the effect of firms’ internationalization on accounting and finance. Nevertheless, evidence of the impact of internationalization on the quality of earnings quality is scarce. Based on a sample of public organizations listed on the main stock exchanges of Brazil, Mexico, Peru, and Chile from 2000 to 2020, this study finds that companies with international operations present higher‐quality accounting reports than firms with only local operations. The impact of IFRS implementation on the quality of financial reports is significant only for companies with operations in their home countries. Latin American MNCs show a decline in the quality of accounting reports after adopting IFRS.

ХАРАКТЕРИСТИКИ ІНФРАСТРУКТУРИ ЕЛЕКТРОННОЇ ТОРГІВЛІ: ВИКЛИКИ ТА ПЕРСПЕКТИВИ РОЗВИТКУ

The article highlights the interpretation of the term "electronic commerce" in the context of its institutional and component prismatic perception. Features of the functioning of electronic commerce in the modern global geo-economic climate are outlined. The results of the latest research and publications are analyzed. The influence of the pandemic climate, which treated the fundamental principles of traditional economic activity, was studied. Geopolitical threats caused by Russian aggression against Ukraine are considered. Indicators illustrating the importance of the field of digital entrepreneurship were analyzed. The information of the Forbes Advisor online platform of economic direction was processed, and the global e-commerce market in 2024 was studied. It is proved that the indicators of the mobility and adaptability of the e-commerce phenomenon are such attributive properties as: geographical distribution of the electronic potential of digital commerce, the concentrated advantage of American multinational corporations in the digital commerce market, the integrability of the digital commerce phenomenon. The results of the annual Global Digital Overview report, as of the beginning of 2023, were studied, and it was determined that the indicators of the information gap also characterize the architecture of the Ukrainian online market. The problem of information inequality, which arose in the context of the world's struggle with the devastating consequences of the COVID-19 pandemic, is considered. The fundamental differences of the modern form of digital commerce from the structure of traditional trade are analyzed. The specified nature of electronic commerce demonstrates the integrativeness, interconnectedness, and sensitive adaptability to the relevant mainstreams of the modern geo-economic climate inherited from globalization. Current trends in e-commerce architecture are illustrated, namely the leading actors of the global digital market – both state players and transnational corporations. A trend-based argumentation for trading efficiency of a new type of productivity is described, which can be illustrated by a triad of levels. The key components of the overall potential of modern e-commerce are highlighted - "social" and "mobile" trade. Significant threats and prospects for the development of the phenomenon of "electronic commerce" are highlighted.

Reasons and dynamics of reshoring in the European Union and USA

Methods. The results of the study were obtained through the application of scientific research methods, namely: abstraction – to define the essence of the concept of «reshoring»; historical and logical – to study the evolution of the theory of reshoring; general and specific – to determine the forms of reshoring; comparative studies – to establish the specifics of reshoring in the countries of the European Union and the USA. Results. The essence of reshoring is established and it is presented as a process of returning to the homeland the assets of numerous European and American multinational corporations that have faced a decrease in the competitiveness and efficiency of their foreign branches, which affects the economic growth of national economies as a whole. Methodological approaches are presented, on the basis of which the economic activity of European and American companies in the field of reshoring is measured, as well as their comparison. The main reasons for the spread of reshoring have been identified and its most widespread forms in the developed countries of the world have been singled out. The impact of reshoring on the process of reindustrialization is demonstrated and the current trends in its development are determined. Novelty. The scientific novelty of the research results lies in identifying the current trends of reshoring in the countries of the European Union and the USA, determining the nature of its impact on the economic development of these countries, as well as the socio-economic consequences for the world economy. Practical value. The results of the study actualize the processes inherent in the modern economy, which is becoming more and more globalized. The identified modern trends in the spread of reshoring allow companies to build and implement more effective production strategies, and for politicians to adjust the directions of economic growth of national economies.

In the Middle: American Multinationals in China and Trade War Politics

AbstractWhich factors make some American multinational corporations (MNCs) take political action in response to the US–China Trade War and cause others to stay on the sidelines? We identify China-based subsidiaries of US firms to identify firms’ political actions in response to the trade war. We combine data on firms’ tariff exposure, economic actions in China, and political actions in the United States during the trade war. Together these data highlight the divergent strategies with which firms engage. Even though more than 63 percent of MNCs in our sample were adversely impacted by tariffs, only 22 percent voice opposition and 7 percent exit in response to the trade war. Our analysis reveals that US MNCs in China differ in their business models, ownership structure, experience in China, and size of capital investments. These firm-level factors determine the degree to which US MNCs are embedded in China. This in turn shapes how firms perceive political risk and choose from the menu of options to deal with the trade war. Size and age increase voice while joint-venture status decreases it.

Who wins the race for knowledge-based competitiveness? Comparing European and North American FDI patterns

The geographical dispersion of value-added activities triggered by the ‘great unbundling’ of production has made the race for competitiveness increasingly shaped by the capability of multinational corporations (MNCs) to orchestrate global innovation networks at world scale. However, major differences in the distribution of foreign investments across value chain functions undertaken by MNCs based in different economic areas have drawn little attention in the empirical literature. This work attempts to fill this gap by focusing on the FDI patterns of European and North American MNCs, which have historically played a key role in the internationalization of production and innovation. To this aim, we compare outward FDI flows of European and North American MNCs in manufacturing and knowledge-intensive activities over the period 2003–2017. We show that while European MNCs are key players in global networks of production, they do not reach the heights of North American investors in the dispersion of knowledge-based activities. Most importantly, European MNCs rely on emerging economies more to offshore production than to set up R&D labs in these countries; by contrast, US-based MNCs are more prone to engage in knowledge-intensive FDIs towards the most dynamic emerging countries (especially China and India, as well as the Four Asian Tigers). Further, we account for the growing role of new entrants in global FDI markets by comparing the advanced economies’ foreign investment decisions with those from Chinese MNCs. Drawing from the literature on the globalization of R&D and cross-border knowledge transmission, a discussion is finally offered on the potential implications of the detected differences in internationalization patterns, together with possible directions for future research.

Internationalization and cash holdings before and after the 2008 financial crisis: an empirical investigation of Latin American firms

ABSTRACT This study investigates the determinants of corporate cash holdings for a sample of Latin American domestic and multinational corporations (MNCs) before and after the 2008 financial crisis. Our results show that MNCs have higher cash holdings than firms with only local operations. Before the financial crisis, there is no statistical difference in the cash holdings between the two groups. After the financial crisis, MNCs have higher cash holdings than domestic firms. The negative effect of political risk on cash holdings is less pronounced for MNCs. Internationalization appears to mitigate the impact of economic shocks in Latin American firms.

People Before Profit?

Focusing on the automobile industry in Port Elizabeth, South Africa, this article demonstrates how Ford Motor Company and General Motors challenged apartheid through adherence to the Sullivan Principles, while maintaining cordial relations with the capitalist South African government in the late-apartheid period. Designed to promote desegregation of the workplace and equal pay for equal work, the Sullivan Principles were a controversial code of conduct for US subsidiaries operating in apartheid South Africa. Leon Sullivan, an African American civil rights leader, unveiled the Principles in March 1977 with the support of US multinationals, including both Ford and GM. Drawing on archival sources from both the United States and South Africa, the author traces how these American multinational corporations did not sufficiently allay their workers' most pressing concerns, nor did they firmly challenge the South African government. The Principles’ shortcomings underscore the disconnect between the anti-apartheid movement’s calls for revolutionary transformation and the American business community’s focus on evolutionary change, thus highlighting the tensions between international capital and South Africa’s racialized labor relations.

“Exit” vs. “Voice”: Global Sourcing, Multinational Production, and the China Trade Lobby

AbstractThis paper examines the influence of three different forms of global economic engagement on the lobbying behavior of US businesses with regard to trade relations with China: (a) input sourcing; (b) downstream export; and (c) vertical foreign direct investment. It will be hypothesized that firms involved in all three forms of global economic activities should have incentives to lobby over China-related trade issues in order to maintain unimpeded access to sources of supply or markets and to ensure the smooth operation of the entire supply chain. Going further, drawing on the exit-voice framework developed by Albert Hirschman (1972), it will be argued that compared to firms in those industries mainly involved in input sourcing from China, American multinational corporations that have verticalized their production should have even stronger incentives to engage in lobbying activities and “voice” their policy preferences due to their greater “sunk costs” and hence the higher cost of “exit.” Statistical analysis of the China trade-related lobbying activities of US firms between 2006 and 2016 lends substantial support to these conjectures.

Global value chains and the “missing exports” of the United States

Many American multinational corporations have turned into factory-less. They outsource the production of their products to foreign companies and derive the largest share of their revenues from intellectual property and services embedded in physical products sold to international consumers. However, conventional trade statistics are compiled based on the value of goods crossing national borders, as declared to customs. The value added associated with intellectual property and services embedded in physical goods is not recorded as an export. Current trade statistics greatly underestimate US exports. In this paper, we use the case of Apple, the largest American consumer products company and a typical factory-less manufacturer, to illustrate the failure of conventional trade statistics to report actual US export capacity in the age of global value chains. According to our analysis of this case, if the value added of Apple intellectual property and services embedded in all Apple products sold to foreign consumers were counted as part of US exports, total US exports in 2015 would increase by 3.4%, and its trade deficit would decrease by 7.0%. In terms of bilateral trade, the value added under examination here would raise the US exports to China and Japan by 16.6% and 8.7% respectively, and lower its trade deficit with the two countries by 5.2% and 7.8% accordingly.

Американо-китайское технологическое соперничество: от “высокомерия” к бойкоту

The spread of the coronavirus pandemic and the slowdown in economic activity in the United States have strengthened the position of supporters of “decoupling” from China. The U.S.-China relations are progressing from “patient integration” to “impatient disengagement”. Escalating research spending, accelerated industrial modernization, and the expansion of China’s high-tech exports have been identified as major challenges to American technology dominance. The fragility of global value chains in cooperative relationships between US and Chinese companies has become particularly evident. The United States plan to free themselves from dependence on China’s innovative technologies and critical materials. Washington’s efforts to revive the country’s manufacturing industry received a new impetus. American TNCs have begun to return some of their enterprises to the USA. The “technological boycott” of China is aimed at causing maximum damage to the development of any competitive business that presents a challenge to American multinational corporations, and to slow down the progressive technological development of the PRC. Equally important are considerations of industrial policy aimed at crowding out competitors. Washington’s protectionist actions led to a reduction in trade and mutual investment and have put American companies targeting Asian consumers in a difficult position. Washington is beginning to fear that Beijing may powerfully respond to the United States with countermeasures that are sensitive to the American military-industrial complex and innovative sectors of the economy. Washington’s aggressive actions are mobilizing China’s efforts to move up the value chain and localize products to achieve self-sufficiency in key technologies. However, the threat remains that protectionism could become a “new normal” not only for U.S.-China relations. The only viable alternative to this scenario may be the joining of efforts of market participants interested in returning to international legal norms of trade.

Corporations and human rights - new challenges and solutions

Introduction. The article examines the issues of legal personality related to human rights in international and national law and whether these relations are limited by the interaction of the state and the individual.Since 2016 the United States has been investigating alleged Russian meddling in the US election, which, in addition to hacker attacks, might have been carried out through social networks and services owned by the American multinational corporations – Facebook, Youtube, Twitter, etc. Discussions in the Senate shed light on the business activities of the companies themselves which had an opportunity to manipulate and most likely manipulated the public consciousness, which is a violation of the basic human rights to freedom of choice, freedom of the media and others. At the same time this activity occurred with the alleged observance of legislation and contract law.The article discusses various aspects of the activities of Google and Facebook during a number of American electoral campaigns as evidence of corporate human rights violations.Materials and methods. The methodological basis of the study comprises general scientific (analysis, analogy, comparison) and special methods of researching legal phenomena and processes (method of interpretation of legal norms, technical-legal, formal-legal and formal-logical methods).The results of the study. Nowadays Corporations have reached a level of influence comparable to that of the states. But if for economists or political scientists there is no question of including companies in the legal personality structure, lawyers still have doubts. The analysis shows that the traditional approach to human rights as a relationship exclusively between the state and the individual does not fully meet modern realities. The person of legal relations is a participant in interaction regulated by the rules of law. The electoral campaigns in the United States in recent years show that large transnational corporations are able to violate the fundamental rights of the person enshrined in the constitution while observing secondary norms designed to ensure their implementation as well as contract law concerning user agreements.Discussion and conclusions. The necessity of considering human rights in the system of relations “state corporation – physical individual” was substantiated. The conclusion is made that corporations are a threat to the observance of human rights. The topicality of researching the American experience regarding Internet companies influencing the electoral processes in Russia was shown.

A Comparison of Contemporary Human Resource Management and Employment Relations Practices of Japanese and US Multinational Corporation Subsidiaries: Evidence from Four Countries

This paper compares Japanese and US multinational corporations (MNCs) on their deployment of human resource management (HRM) and employment relations (ER) practices within four countries. Debate about convergence is used to reconcile findings. The context is the shift from the dominance of the Japanese economy in the 1980s and early 1990s towards the renewed dominance of the US economy in more recent decades. We draw on data from representative, parallel surveys of MNCs operating in Canada, the UK, Spain and Australia to test a set of hypotheses examining similarities and differences between subsidiaries of Japanese and US MNCs in relation to management control across borders, remuneration, representation and worker involvement.The findings demonstrate that, despite the pressures of globalization, and the partial movement away from traditional Japanese management practices in Japan, there are clear country of origin effects for Japanese and American MNCs. Results indicate that Japanese and US MNCs behave differently in terms of the control that they exercise, with Japanese firms exhibiting a greater tendency to use personal forms of control in their foreign subsidiaries and a lower tendency to use procedural forms of control. In terms of HRM practices, Japanese MNCs are distinctive in relation to pay systems. For example, they are less likely than their US counterparts to use performance-related pay and, more likely, to adopt non-union representative structures in subsidiaries.In line with Kaufman (2016), we argue that the study’s findings provide evidence for the ‘converging divergence phenomenon’ in that both Japanese and US MNCs are adopting the most universal aspects of each other’s management practices and integrating them into their own unique systems of management in response to global market forces. We discuss the theoretical implications for the convergence and divergence of HRM and ER systems, and the development of such systems in Japanese and US MNC subsidiaries.

Global Value Chains and the Missing Exports of the United States

More and more American multinational corporations (MNCs) are outsourcing the production and assembly of their products to foreign companies. When they do so, they derive the largest share of their revenue from the intellectual property embedded in core technological innovation and brand names. However, conventional trade statistics are compiled based on the value of goods crossing national borders, as declared to customs. Generally, the value added associated with intellectual property rights and embedded in physical goods is not recorded as either export or import of any country. Hence, current trade statistics greatly underestimate US exports and substantially exaggerate its trade deficit. In this paper, we use the case of Apple, the largest American consumer products company, to illustrate the failure of conventional trade statistics to report actual US export capacity in the age of global value chains. According to our analysis of this case, if the value added of Apple intellectual property sold to foreign consumers were counted as part of US exports, total US exports would increase by 3.7%, and its trade deficit would decrease by 7.5%. In terms of bilateral trade, the value added under examination here would lower the US trade deficit with the Greater China region by 6.7% and that with Japan by 9.1%.

Soft Power, Tough Sell

When American public diplomats of the Cold War era set out to win hearts and minds, they heard voices. As they exhorted the people of Latin America, Asia, and Africa to beware the evils of communism, they learned that their audiences worried more about racism, poverty, and colonialism. The people they strove to influence were not impressed by the history of racial segregation in the United States, the impact of American multinational corporations on the economies of the Global South, or the collaboration between the United States and European imperial powers. Instead the people of the Global South spoke out about what they did and did not want. They wanted equality and development; they did not want to be drawn into the global confrontation between the United States and the Soviet Union. As Latin Americans, Asians, and Africans rejected the East-West worldview of the superpowers, Jason C. Parker argues, they constructed out of their shared perspective a distinct identity as the Third World.

Book Review: The New Confessions of an Economic Hit Man by John Perkins

Author John Perkins writes a bold, yet compelling, account of his personal experiences as an economic hit man (EHM), involving manipulating data and foreign government officials, deception, lies, sex, assassinations, and attempted murder. His true story recounted in the book <em>The New Confessions of an Economic Hit Man</em> is an eye-opener for those who are unaware of the underpinnings of the government’s ability to bully other countries into large debt to benefit American multinational corporations and secure our place as the sole superpower.

Trends in the Social [Ir]Responsibility of American Multinational Corporations: Increased Power, Diminished Accountability?

The purpose of this invited essay is to assess the future of the CSR performance of American multinationals in light of several ongoing trends. These trends include companies’ voluntary CSR programs and the global self-regulatory standards for responsible company activities that are developing in almost every industry. Moreover, the decade-long project at the United Nations to identify multinational companies’ responsibilities with respect to international human rights, ultimately spearheaded by Special Representative John Ruggie, has for the first time established global expectations of responsible corporate activity. At the same time, however, legal developments in the United States may be trending in the opposite direction, toward increased power and diminished accountability for corporations. Two legal developments that highlight this counter-trend will frame this discussion. The first, the Supreme Court’s decision in Citizens United v. Federal Election Commission, 558 U.S. 310 (2010) recognizes a constitutional right for corporations to give financial support to a wide range of electioneering activities, including by using corporate funds to pay for and broadcast advertisements for specific candidates for office. The effect is to allow American companies to further consolidate their already substantial political power. The second, the opinion by the U.S. Court of Appeals for the Second Circuit in Kiobel v. Royal Dutch Petroleum, 621 F.3d 111 (2d Cir. 2010), reh’g en banc denied, 642 F.3d 379 (2011), aff’d, 569 U.S. __ , 133 S. Ct.1659(Apr. 17, 2013), denied the possibility of corporate liability under the Alien Tort Statute for Royal Dutch Shell’s employees’ alleged violations of Nigerian community members’ international human rights. A 2-1 majority held instead that violations of international law could only be asserted against natural persons or nations. The Supreme Court granted certiorari and in a decision handed down on April 17, 2013, the Court unanimously affirmed the judgment of the Second Circuit. The five-Justice opinion of the Court held that the ATS cannot be used to redress violations of the law of nations that occur outside the territory of the United States, except in exceptional circumstances not found in Kiobel. Neither the majority opinion nor the concurrence addressed the corporate liability issue, which means that the Second Circuit’s ruling on that issue remains the law of the Second Circuit — an important outcome, given the significance of the Second Circuit as a venue for ATS cases. Taken together, the overall effect of the Second Circuit’s rejection of corporate liability for human rights violations and the Supreme Court’s rejection of exterritorial application of the ATS to any defendant, corporate or otherwise, is the substantial evisceration of companies’ legal accountability for international human rights violations under the ATS. On a theoretical level, these decisions send mixed messages about corporate personhood and identity. But on a practical level, the two decisions work in unfortunate concert to increase the already considerable political power of U.S. corporations at home, even as they reduce the risk of legal accountability for their actions abroad. By doing so, they shrink the shadow of the law — the threat of hard legal regulation — that has been an important incentive to the adoption of voluntary, soft-law CSR standards. Thus, these legal developments, though ostensibly unrelated to the voluntary pursuit of CSR activity, may in fact act as a disincentive to that activity.

EU's new member states: an untapped (and underappreciated) source of talent for MNCs?

The main purpose of this exploratory research was to study the strategic importance of Central and Eastern Europe (CEE) as an emerging source of professional talent for European and American multinational corporations (MNCs) operating in Western Europe. The findings, based on in-depth interviews with 34 human resource leaders and consultants from 16 firms in the European Union and Switzerland, suggest that the new member states currently hold little strategic importance in the context of recruiting knowledge workers to Western Europe, and that MNCs' global staffing strategies may be excluding a strong and untapped source of professional talent. The less obvious and perhaps most important findings about why most of these MNCs do not systematically recruit from CEE countries lead to perceptions about CEE cultures and the communist legacy that still linger today.

American multi-national corporations in the UK oil industry: sectoral differentiation in diffusion and adaptation

There is a significant literature around the idea that American multi-national corporations (MNCs) diffuse a ‘country of origin’ effect which claims the export from America of an individualistic ideology comprising distinctive employment practices based on the national business system. This literature usually conflates the sector of the firms, but recently several critiques have emerged which limit the discussion to discrete sectors (generically in the engineering industries) and which digress from the previous literature's dichotomous nature, where home versus host country influences are evaluated. This article adds to that recent literature by offering evidence of structural factors within the MNCs, as well as of institutional norms and societal influences. This evidence is taken from extensive longitudinal data on American MNCs in two sectors of the UK oil industry. These comprise the exploration and production activities on the UK continental shelf (part of the North Sea), known as the ‘upstream’ sector, and the related activities of refining of oil and manufacturing chemicals, known as the ‘downstream’ sector. The findings provide a theoretical addendum to the literature: in this study we are able, unlike other studies, to explain the adaptation of the industry to local institutional, cultural and labor market contexts through the different structures of the industry's two sectors. Even within the same MNC, the divisions prove to be differentially adapted to the UK context. Such evidence casts doubt on the broad conclusions drawn from a large part of the existing literature. We therefore show that structure and sector are far stronger forces explaining MNC actions than the diffusion of a country of origin effect.

The relationship between ceremonial adoption of popular management practices and the motivation for practice adoption and diffusion in an American MNC

The literature on multinational corporations (MNCs) has assumed that the parent is generally motivated to transfer practices to subsidiary units that will improve subsidiary efficiency or facilitate comparison of subsidiary performance. Based on this assumption, problems with the transfer process have been understood as related to difficulties in balancing local versus global requirements. In this paper, we question this assumption. Using case-study data, we argue that MNCs may transfer management practices aimed at preventing longer-term economic and social losses, and implementation efforts may be low. In such circumstances, ceremonial adoption may be a possible outcome.

Industrial Policy Formulation and its Impact on Foreign Investment: The Growth of American Multinational Corporations in the Nigerian Economy, 1950-1966

The Second World War turned industrial capital outwards in the United States and the scientific and technological changes in the post-war period led to the expansion of American private capital investment particularly in the Third World countries. The private sector in the United States became a vital sector for the expansion of national interest in American international economic relations in the post-Second World War period as couched in the Marshall Plan (1948-52). The expansion of American foreign capital investment coincided with a favourable domestic environment of operation in the host countries. Third World economies were deficient in their developmental processes from the 1950s and needed foreign capital investment to stimulate their economic growth. For these reasons, they created liberal investment legislations and signed investment agreements favourable to foreign capital investments for industrialisation. This paper sets out to examine Nigeria’s industrial policies, the American government’s disposition to her private sector’s operation in international investment environment, and the growth of American entrepreneurship in the Nigerian economy between 1950 and 1966.