Competition In Host Country Research Articles

Creating marketing innovation abroad: The value of marketing professionals in foreign MNC subsidiaries

When foreign MNC subsidiaries commercialize their products and services on foreign markets, they oftentimes rely on new marketing approaches such as a new pricing model adapted to local customers and competitors. Since MNC subsidiaries typically suffer from “liabilities of foreignness”, they depend on skilled marketing professionals who possess a deep understanding of host country markets to implement these marketing innovations. However, the value that these individuals can create for MNC subsidiaries vis-à-vis domestic firms and under which host country market conditions their B2B marketing skills are most valuable is poorly understood. We integrate mechanisms from research on value creation through marketing innovation in MNC subsidiaries into strategic human capital theory and predict higher value creation to translate into salary premiums for these individuals compared to when they would work for domestic firms. Moreover, we argue that these salary premium effects depend on the innovativeness of the host country competition which challenges MNC subsidiaries and makes marketing innovation even more salient. We test and support our hypotheses using employer-employee data for 25,374 marketing professionals from 2010 to 2012 in Denmark. The findings have broad relevance for the management of strategic human capital management in the creation of marketing innovation.

Can China’s belt and road investments improve the comprehensive international competitiveness of host countries?

ABSTRACT Since China proposed the Belt and Road Initiative in 2013, the effect of driving economic development in host countries has intensified. This study examines the effect and spatial mechanisms of China’s Belt and Road investment on the comprehensive international competitiveness of 48 countries along the Belt and Road route in three dimensions: the basic requirements, efficiency enhancers, and economic freedom. The results revealed significant contributions and spatial spillover effects, whose spatial mechanisms can be implemented by upgrading the level of infrastructure development, optimizing the market environment, and enhancing the innovation capability. Therefore, it can be said that China’s Belt and Road investment can promote the development of the host country’s comprehensive international competitiveness from multiple perspectives. Moreover, research indicates that the infrastructure distance between the host country and China provides a broad space for Chinese investment, under whose effect Chinese investment contributes significantly and exhibits a positive spatial spillover effect, while market distance and innovation distance have the opposite effects.

Analysis of the impact of FDI on the host country market concentration: Evidence from the Serbian banking market

Foreign direct investment (FDI) is an important factor in economic development. The impact of FDI on the host country is achieved by transferring capital, knowledge, technology, organisational structure, and strategies. In addition, FDI affects the condition of competition in host country markets, which is the focus of this study. Our purpose is to estimate the impact of FDI on market concentration and competition conditions using the example of the Serbian banking market. The autoregressive distributed lag (ARDL) approach was used to test the long- and short-run relationship between market concentration, FDI, and the number of banks from Q4 2004 to Q2 2019. The results suggest that increases in FDI volume reduce the Serbian banking market?s concentration level in the long and short run. On the other hand, a decrease in the number of banks leads to an increase in market concentration in the long and short run. Our study?s recommendation for competition authorities is to pay more attention to the concentration of undertakings, especially in financial sectors such as the banking market. The process of concentration of undertakings carries a high risk of violating competition conditions, and authorities need to mitigate this risk.

Cross-border Migration in the Context of Competitiveness of Host Countries

Cross-border Migration in the Context of Competitiveness of Host Countries

The heterogeneous competitive effects of trade and foreign direct investment: Firm‐level evidence for European countries

AbstractThis study evaluates the pro‐competitive effect of foreign market penetration with a broad firm‐level database that covers manufacturing industries in six European countries. The main contribution is the demonstration of the heterogeneous effects on host country competition of the two main channels of foreign market penetration that have been assigned fundamental differences by economic theory: imports and foreign direct investment. The results of dynamic estimates of firm‐level markups reveal a pro‐competitive effect of imports, while foreign direct investment shows no clear overall impact, suggesting a cancelling out of competitive pressure and spillovers. These findings matter for both future empirical research and policy considerations that must weigh the positive and negative effects of foreign market integration on the competitive environment and consumer welfare.

ВЛИЯНИЕ ИММИГРАНТОВ НА РАЗВИТИЕ ПРЕДПРИНИМАТЕЛЬСТВА В СТРАНАХ ПРЕБЫВАНИЯ

Research subject. In the economic literature the question under discussion is whether the migrant entrepreneurs are more active in business and self-employment than native, as well as what role government should play when receiving entrepreneur migrants. This paper should provide answers to the abovementioned questions, and give recommendations to the governments of the host countries on migration policy taking into account the results obtained. The purpose of this article is to investigate the entrepreneurial activity of immigrants in the host countries, and to analyze the migration policy of the host countries concerning migrant entrepreneurs. Survey methodology. We used theoretical and empirical research methods; provided analysis of recent publications of scientists on the discussed subject, comparing the results obtained with statistical data, and provided practical recommendations based on survey results. Results. Migrants are often seen as those who have a considerable propensity for entrepreneurial activity. Proponents of this point of view suggested the case of migrant entrepreneurs’ success in China and the United States, arguing that workers may not need work with a formalized salary because of theirs entrepreneurial independence. Despite the theoretical basis of higher business activity, empirical studies of entrepreneurial activity of migrants are not clear. One of the arguments, which determine the attitude towards migrants, as more capable of entrepreneurship, based on the selectivity. The fact that a person has taken a relatively risky decision to migrate, ensure its stronger business activity and, consequently, the share of businessmen in this category of the labor force must be greater than the average for the country of immigration. Host governments often use both specific and general business support programs. Specific programs include the expansion of linguistic knowledge, business skills, and professional contacts of migrants’ labor force importer countries. Migrant entrepreneurs, especially when they work in the field of innovation or in sectors with high added value, play a great potential role in economic growth and competitiveness of host countries. Such migration can make a significant contribution in supporting economic activity and contribute to the social adaptation of migrants in destination countries. Conclusion. Entrepreneur migrants can help to stabilize the labor market, which will benefit both migrant workers and local residents. Given the fact that not all immigrants have the appropriate skills, ability, desire and opportunity to be entrepreneurs in the host countries, the introduction of a single incentive policy for immigration only entrepreneurs and investors, without taking into account the needs of the labor market seems to be counterproductive.

Are Stricter Investment Rules Contagious? Host Country Competition for Foreign Direct Investment Through International Agreements

We argue that competitive diffusion is a driver of the trend toward international investment agreements (IIAs) with stricter investment rules, namely defensive moves of developing countries concerned about foreign direct investment (FDI) diversion in favor of competing host countries. Accounting for spatial dependence in the formation of bilateral investment treaties (BITs) and preferential trade agreements (PTAs) that contain investment provisions, we find that the increase in agreements with stricter provisions on investor-state dispute settlement and pre-establishment national treatment is a contagious process. Specifically, a developing country is more likely to sign an agreement with weak investment provisions if other developing countries that compete for FDI from the same developed country have previously signed agreements with similarly weak provisions. Conversely, contagion in agreements with strong provisions exclusively derives from agreements with strong provisions that other FDI-competing developing countries have previously signed with a specific developed source country of FDI.

Are stricter investment rules contagious? Host country competition for foreign direct investment through international agreements

We argue that competitive diffusion is a driver of the trend toward international investment agreements with stricter investment rules, namely defensive moves of developing countries concerned about foreign direct investment (FDI) diversion in favor of competing host countries. Accounting for spatial dependence in the formation of bilateral investment treaties and preferential trade agreements that contain investment provisions, we find that the increase in agreements with stricter provisions on investor-to-state dispute settlement and pre-establishment national treatment is a contagious process. Specifically, a developing country is more likely to sign an agreement with weak investment provisions if other developing countries that compete for FDI from the same developed country have previously signed agreements with similarly weak provisions. Conversely, contagion in agreements with strong provisions exclusively derives from agreements with strong provisions that other FDI-competing developing countries have previously signed with a specific developed source country of FDI.

Foreign direct investments in agriculture

Foreign direct investments (FDIs) should have a significant positive influence on economic growth, export and competitiveness of host countries. Although agriculture is of fundamental importance for sustainable development and poverty reduction, FDIs in agriculture are modest, because they suffer from more risks than FDIs in other fields due to the impacts of water, climate and weakness of infrastructure, land and human resources. National policies are key for attracting FDIs, and increasing benefits from them. Because most of the FDIs in Serbia were market-seeking, privatization and services related FDIs, they had limited impact on agricultural production and export. To enhance its international competitiveness and export of agricultural products Serbia should attract more FDIs in agricultural greenfield and export oriented projects. .

Being a Foreigner Among Domestic Banks: Asset or Liability?

Studying a large number of banks in various countries between 1999 and 2006, we document that foreign banks perform better when from a high income country, when host country competition is limited, and when they are large and rely more on deposits for funding. Foreign banks' performance improves over time, possibly as they adapt, and is better when the home country is geographical or cultural (but not institutional) close to the host country. These findings show the importance of controlling for heterogeneity among foreign banks and help reconcile some contradictory results found in the literature on foreign banks' performance.

The recent evidence of MNEs' involvement in achieving national competitiveness in developing countries: the case of Kazakhstan

This study reviews the issue of foreign market entry by Multinational Enterprises (MNEs) and its effect in achieving national competitiveness of host countries, through the case of Kazakhstan, and considers policy implications for the nation. This study focuses on the following: the relationship between the operation of MNEs and the national gross domestic product growth; the relationship between MNEs' involvement and major industrial development of the country; and the relationship between FDI inflows and major economic activities in Kazakhstan. Descriptive analyses of secondary data are used in order to meet the research objectives, in particular, during the period of 2003-2006.

Power in the multinational corporation in industry equilibrium

Recent theories of the multinational corporation introduce the property rights model of the firm and examine whether to integrate or outsource firm activities locally or to a foreign country. This paper focuses instead on the internal organization of the multinational corporation by examining the power allocation between headquarters and subsidiaries. We provide a framework to analyse the interaction between the decision to serve the local market by exporting or FDI, market access and the optimal mode of organization of the multinational corporation. We find that subsidiary managers are given decision power to run the firm at intermediate levels of host country competition. We then provide comparative statics on the optimal organization of the multinational corporation for changes in fixed FDI entry costs, trade costs, as well as changes in information technology.

FDI Effects on National Competitiveness: A Cluster Approach

Despite the close relationship between the activities of multinational enterprises (MNEs) and the competitiveness of host countries, few studies have linked these two subjects from a global perspective. Combining Porter’s approach and the work accomplished by international business economists provides a powerful analytical tool with which to review the recent empirical and theoretical literature on the effects of foreign direct investment (FDI) on national competitiveness. The contention is that FDI can indeed be a source of competitiveness but that previous studies have neglected the role of location, in particular the role of clustering on the absorptive capacity of the host State. The aim of this paper is to provide a comprehensive conceptual framework for assessing the effects of FDI on competitiveness to guide policy-makers as well as further research.

Strategic R&D Location in European Manufacturing Industries

We develop and empirically test a model of foreign R&D investments that takes into account strategic interaction in R&D location decisions by multinational firms in the context of R&D spillovers and foreign technology sourcing strategies. In a two-country, two-firm model with cross investments, the optimal share of R&D performed abroad depends on the efficiency of intra-firm international technology transfer, the degree of inter-firm R&D spillovers, the intensity of product market competition, and the importance of the general knowledge pool. The impact of these factors differs markedly between technology leading firms and technology laggards. We find support for most of the predictions of the model in an empirical analysis of patents based on innovations in foreign countries by 131 leading European manufacturing firms in 22 ISIC industries in 1996-1997. For technology leaders, the share of patents originating in other EU countries responds positively to host country product market competition and is strongly increasing in the level of intellectual property rights protection. Foreign R&D by technology laggards is discouraged by host country competition but increases with the efficiency of (reverse) technology transfer. Foreign R&D of both leaders and laggards increases with the size of the local knowledge pool and the size of production operations in the host country.

WHICH TIES MATTER WHEN? THE STRATEGIC IMPACT OF NETWORK LINKAGES ON FOREIGN SUBSIDIARY SURVIVAL.

We draw upon network theory and international management research to examine the contingent value of ownership linkages on foreign subsidiary survival. We find that additional foreign ownership linkages contribute most to subsidiary survival when the MNE internal network is large or the resource endowment is not rich. Local ownership linkages benefit foreign subsidiaries when host country competition is strong or the resource endowment is poor. Both foreign and local linkages yield similar outcomes when the host country network is less open to foreign investments. In other situations, more network linkages neither contribute nor threaten foreign subsidiary survival.

Strategic R&D Location in European Manufacturing Industries

We develop and empirically test a model of foreign R&D investments that takes into account strategic interaction in R&D location decisions by multinational firms in the context of R&D spillovers and foreign technology sourcing strategies. In a two-country, two-firm model with cross investments, the optimal share of R&D performed abroad depends on the efficiency of intra-firm international technology transfer, the degree of inter-firm R&D spillovers, the intensity of product market competition, and the importance of the general knowledge pool. The impact of these factors differs markedly between technology leading firms and technology laggards. We find support for most of the predictions of the model in an empirical analysis of patents based on innovations in foreign countries by 131 leading European manufacturing firms in 22 ISIC industries in 1996-1997. For technology leaders, the share of patents originating in other EU countries responds positively to host country product market competition and is strongly increasing in the level of intellectual property rights protection. Foreign R&D by technology laggards is discouraged by host country competition but increases with the efficiency of (reverse) technology transfer. Foreign R&D of both leaders and laggards increases with the size of the local knowledge pool and the size of production operations in the host country.

Host country competition, labor skills, and technology transfer by multinationals

In Chapter 13, we examined aggregated data on the technology imports of US affiliates in thirty-three host countries, and found some weak support for the hypotheses proposed by Wang and Blomstrom (1992). Our results showed that the affiliates’ technology imports were positively related to the income level of the host country and (crude proxies for) the competitive pressure in the host economy, but negatively related to the level of distortions and various host country performance requirements. In this chapter, we use more detailed data from a single host country, Mexico, to analyze how the technology imports of foreign firms are related to various industry characteristics. We are particularly interested in the hypotheses that market rivalry and availability of skilled labour may encourage the multinationals to bring more technology to their foreign operations.1