International Business Context Research Articles

Are Reshoring Decisions Influenced by External Stakeholders and Country‐Level Environmental Regulation?

AbstractThe rationale behind reshoring activities remains unclear. Multinationals reshore their subsidiaries when regulations in the host country become too costly or difficult to manage. However, it is unclear whether the positive association between the propensity for reshoring subsidiaries and the host country's regulations applies to all types of subsidiaries (i.e. majority or minority owned) and whether it is moderated by other factors. We suggest that external stakeholders play a crucial role in strengthening the relationship between the decision to reshore and the host country's regulations. Within the context of international business, we examine the reshoring decision of a panel of subsidiaries controlled by UK multinationals located in 39 countries and focus on a specific set of environmental and corporate governance regulations. Our findings suggest that reshoring amongst minority‐owned subsidiaries is more likely to happen in countries with weak protection of shareholders and mandatory environmental disclosure. Such a relationship is also strengthened by the presence of external stakeholders, namely, foreign directors sitting on subsidiaries’ boards. We contribute to the reshoring literature by showing the role of external stakeholders and the impact of institutions and regulatory requirements on reshoring decisions.

Social media and international business: views and conceptual framing

PurposeThe objective of this paper is to increase understanding of social media in international business context. To this end, the authors make an attempt to integrate the existing, still somewhat limited views in a framework that advances the knowledge of scholars and decision-makers on this topic.Design/methodology/approachThe authors conduct a conceptual study supported by use of a systematic literature review method.FindingsThis study shows marketing as a dominant area of discussion and reveals that many firm functions where social media plays a role have received relatively little attention. Furthermore, the study shows that the positive features of social media in international activity tend to be more widely acknowledged and better understood than the potentially problematic aspects.Research limitations/implicationsThe number of articles analyzed in this study was relatively small, resonating with the nature of an emerging research area. Research on social media has only taken off over the last years, and it is understandable that there is limited research that connects it specifically to phenomena of international business.Practical implicationsThis study reminds managers to be cautious when using social media in international markets. The relationship between social media and international business exhibits dynamism and is dependent on a variety of factors. Social media does not come without costs, nor is easily transferred from one market to another. Efficient use of this media in the international context may increase the need of specific and qualified human resources, and it may necessitate having the whole process from R&D to delivery, and beyond, ready for adaptation.Originality/valueIt can be argued that we know too little about the relevant factors and relationships between social media and international business. The authors hope that this study revealing the scarcely studied aspects and suggesting a tentative framework for capturing the dynamics of social media and international business can guide subsequent research and accelerate its emergence.

Scale-ups and scaling in an international business context

Scaling, the persistent rapid growth to deliver a viable business model, often incorporates an explicit international business dimension. However, research on the cross-border management and organization of scaling and scale-ups in international business has been limited. We therefore build on prior scholarly understanding to differentiate scaling in three settings – initiative, organization and ecosystem – and elaborate on their respective international business aspects. We are sensitive to different organizational purposes and their associated scaling for commercial and/or social impact. Our arguments advance the conceptual understanding of scaling in international business and offer an agenda for future research.

Resource dependence theory in international business: Progress and prospects

AbstractResearch SummaryResource dependence theory (RDT) has been widely applied in the context of international business (IB) over the past four decades. This study reviews and synthesizes the insights of RDT in IB literature accumulated over the past 40 years and derives an integrative addendum for future research. We highlight three critical dependence dimensions (i.e., locational, interorganizational, and intraorganizational dependencies) and three essential RDT themes (i.e., dependence solutions, dependence‐managing outcomes, and macro environmental conditions of RDT) in the IB context. Our review concludes that the IB literature has reached a good level of conceptual and empirical consensus concerning how multinational corporations (MNCs) take a large array of resource dependence actions and manage their resource dependence in various situations. We also find a strong need for further extension of RDT in IB research, offering suggestions for future research, including additional theoretical integration, underlying processes, and new dynamics that change the course of cross‐border interdependencies under the new global reality.Managerial SummaryThis study systematically reviews the stock of knowledge over the past 40 years on how the logic of resource dependencies unfolds in IB practices (e.g., cross‐border M&As, alliances and joint ventures, global supply chains, corporate political strategies, headquarters‐subsidiary relationships, and upper‐echelon decisions). Our findings and conclusions offer a decision roadmap for IB practitioners to assess various resource dependence situations with external and internal stakeholders in IB operations and to effectively manage such interdependencies. We also elaborate on the important implications of MNCs' strategies for effectively managing their resource dependencies in international exchanges in the modern world, which is characterized by the coexistence of trends leading of both globalization and de‐globalization.

Money laundering as a transnational business phenomenon: a systematic review and future agenda

Purpose Money laundering continues to emerge as a transnational phenomenon that has harmful consequences for the global economy and society. Despite the theoretical and practical magnitude of money laundering, international business (IB) research on the topic is scarce and scattered across multiple disciplines. Accordingly, this study aims to advance an integrated understanding of money laundering from the IB perspective. Design/methodology/approach The authors conduct a systematic review of relevant literature and qualitatively analyze the content of 57 studies published on the topic during the past two decades. Findings The authors identify five streams (5Cs) of research on money laundering in the IB context: the concept, characteristics, causes, consequences and controls. The analysis further indicates six theoretical approaches used in the past research. Notably, normative standards and business and economics theories are dominant in the extant research. Research limitations/implications The authors review the literature on an under-researched but practically significant phenomenon and found potential for advancing its theoretical foundations. Hence, the authors propose a 5Cs framework and a future agenda for research and practice by introducing 21 future research questions and two plausible theories to help study the phenomenon more effectively in the future. Practical implications In practical terms, the study extends the understanding of the money laundering phenomenon and subsequently helps mitigating the problem of money laundering in the IB environment, along with its harmful economic and societal impacts. Originality/value The authors offer an integrative view on money laundering in the IB context. Additionally, the authors emphasize wider discussions on money laundering as a form of mega-corruption.

International environmental complexity and the demand for generalists and specialists in executive selection

AbstractResearch SummaryThis study investigates the selection of generalists and specialists as an organizational response to the complexity of firms' international operations. Drawing on the concept of executive job demands, we identify institutional ambiguity and economic sophistication as two distinct sources of country environmental complexity resulting from a firm's foreign investment and predict how they affect the selection of new executives at multinational firms. Our hypotheses associate institutional ambiguity and economic sophistication with the appointment of executives with generalist and specialist backgrounds, respectively. We also examine how the two sources of environmental complexity interact and test multiple alternative specifications to enhance our understanding of environmental complexity as a determinant of executive job demands in the context of international business. Our empirical analyses are performed on a sample of 436 executive appointments occurring in 132 UK‐based manufacturing firms, observed between 2008 and 2018. Findings show general support for our main hypotheses. We discuss the theoretical and practical implications of our findings as well as directions for future research.Managerial SummaryThis study suggests that companies operating across different international environments through their subsidiary operations will be exposed to distinct demands that vary according to the type of environmental complexity. Our results reveal that companies tend to appoint top managers with specialist backgrounds when their focus is on economically sophisticated environments, whereas top managers with generalist backgrounds tend to be preferred in institutionally ambiguous environments. Our findings enhance our understanding of the demand for executive generalists and specialists in the international business context by showing that top managers' backgrounds are matched with the prevailing type of complexity deriving from the international operations of the firm, thus, questioning the widely held notion that executive generalists are generally preferred over specialists. Our study has important implications for the composition of top management teams and the shaping of executive career paths at multinational firms.

CEO Overconfidence and MNCs’ Foreign Entry

Upper echelon theory (UET) has been a widely researched theory in management research, explaining that a firm’s strategic actions are driven by the psychological traits of its top executives. However, there still have been few studies that link UET to strategic actions of multinational companies (MNCs) in the context of international business (IB). In this paper, we apply UET to IB and examine how CEO overconfidence influences MNCs’ decision to enter a foreign country. We also investigate contextual factors (geographic distance and host country experiences) which affect the relationship between CEO overconfidence and MNCs’ foreign entry. By creating and analyzing the unique longitudinal dataset of Japanese MNCs, we contribute to unpacking theoretical mechanisms of CEOs’ overconfidence in their MNC’s foreign entry decisions. We extend UET to the context of IB and shed new light on explaining MNC strategic actions.

Geopolitics in Business Schools?

The impact of geopolitics on business activities is undeniable as all MNCs now consider it to be a specific risk. Yet, business school curricula only rarely contain standalone geopolitics modules. I suggest that it is time to bring geopolitics into business schools as a subject worth of serious attention can only enrich our teaching by providing a geopolitical approach of the international business context. I first explain the different streams of thoughts in geopolitics (classical and critical) and methodological foundations. Integrating classical geopolitics helps understand the new world order and how states’ grand strategies may impact business activities (and helps avoid “geopolitical traps”); critical geopolitics helps deepen the political risk perspective with a relational and multiscale geopolitical approach (and helps avoid “geopolitical mistakes”). I suggest two ways of incorporating geopolitics into our teachings: offering classical geopolitics courses to ensure the conceptual integration of key strategic issues into the class discussion and teaching the students the systemic method of analysis. Adopting a geopolitical perspective will also help fulfill our broader mission as business schools: to develop our students’ capability to generate sustainable value in business and society.

Exploring the role of managerial and organizational capabilities for the inbound internationalization of small and medium-sized enterprises

ABSTRACT This study investigates the inbound internationalization of small and medium-sized enterprises (SMEs). Inbound internationalization refers to a process of internationalization where firms attract foreign customers to their home market instead of entering foreign markets. While a plethora of studies have documented outward firm internationalization, knowledge of inbound internationalization is limited. We draw on the dynamic capabilities perspective and conduct qualitative research with owner-managers of tourism and hospitality SMEs. Our findings show that both managerial and organizational capabilities (networking, marketing, technology, and innovation) drive inbound internationalization. We contribute to the SME internationalization literature by investigating an underresearched phenomenon and by identifying the operational and dynamic capabilities that drive inbound internationalization. Furthermore, we add to the capability perspective in an international business context by showing that managerial and organizational capabilities complement each other and jointly influence inbound internationalization. Our study also contributes to the international business literature in a Latin American context.

Technology multinational enterprises from emerging markets: Competitive interplay of international entry timing decisions

Given the context that technology is becoming ever more important, research about technology multinational enterprises (MNEs) is also increasing, but from technology in the international business context, especially concerning entry timing, there is scant literature. Therefore, from the perspective of game theory this research examines how different aspects of host countries and players’ resources affect the decision on entry timing into foreign countries. The data comprise 979 technology-based Taiwanese firms operating in service and manufacturing industries, mainly collected from the Taiwan Economic Journal and World Bank databases. The empirical findings show that firm resources and experiences, host country uncertainties, and investment payoff all influence the entry timing into foreign countries. This research contributes to the current knowledge about technology-based service and manufacturing firms on what factors they consider when choosing the time to invest into foreign countries, especially for technology MNEs from emerging markets.

International expansion or stagnation: market development for mature products

PurposeThe purpose of this paper is to explore international market development for mature products and practices used in a novel business context.Design/methodology/approachTaking a qualitative approach, the case study method was chosen to investigate how firms develop markets in relation to a new international business context. Critical international decisions are analysed using a managerial perspective.FindingsThe success of international ventures depends on managerial learning and effectiveness. In this paper, the authors argue that decisions about international market development can add significantly to the understanding of how business firms enter and develop markets in novel business contexts. Two case studies show different approaches for meeting challenges in distant markets. Four propositions are developed.Originality/valueA theoretical contribution of this study is the importance of factors that explain international market development decisions in novel business contexts. The balance between incomplete knowledge and making resource commitments is of central concern to international managers. Some of this is tacit knowledge that a firm achieves and learns during the process of market development and other knowledge can only become available after an actual market entry. A second theoretical contribution of this study is the significance of contextual market knowledge in a novel business context.

Does the concept of “creating shared value” make sense for multinational firms?

PurposeThe paper aims to explore how Porter and Kramer’s “Creating shared value” (CSV) framework supports the multinational corporation’s business model to turn social problems into business opportunities in two contextually different international markets.Design/methodology/approachConceptually, the paper uses the CSV framework to argue that evaluation of business models in different societal contexts (geographically, culturally and economically) might be able to shed more light on the firm-societal needs. Empirically, the paper conducts a comparative content analysis of the business models of an international brand of a three-wheeler vehicle – Piaggio Ape – in Italy and India since its launch right after World War II. The content for qualitative analysis was identified using the Nexis Uni database.FindingsFindings reveal that CSV outlines the strategy for firms to integrate societal concerns uniquely into their business models, rather than solving them in isolation. However, the business model performances resulting from these firm–society linkages may vary in an emerging market and a developed market. Regulatory fit is yet another factor that decides how well CSV could be applied.Research limitations/implicationsGiven CSV’s contradictory perception in corporate governance literature, the study empirically establishes its theoretical value in explaining the actions and success of strategic decisions that large multinational firms take. The interactions between the underlying attributes of four CSV strategies, the regulatory fit and business model success are articulated in the form of propositions and an integrated CSV framework. Given the paper’s two-case comparative analysis, the generalizability of the identified attributes of the four CSV strategies is limited and therefore calls for future research using larger samples of firms practicing shared value perspectives.Practical implicationsCorporate and international business managers can use the study findings and the proposed framework to comprehend scenarios beyond business systems and to apply CSV as a tool to address market needs in concurrence with addressing environmental and societal concerns.Originality/valueThe paper is one of the initial attempts to evaluate and extend the “CSV” perspective in the international business context and, thus, promises a broad future research scope.

“New Normal” implications for global talent in the wake of economic nationalism and slowdown

AbstractAs a result of global economies' protectionist policies, followed by economic nationalism and a downturn, there is a shortage of talent with the requisite skills, knowledge, and abilities to meet the contingencies amid COVID‐19. The recent developments have necessitated multinational businesses to manage their talent in a new international business context. Therefore, the purpose of this paper is to explore the implications of the “New Normal” for global talent which is manifested by economic nationalism and slowdown. This study used an inductive method to qualitative research, conducted in‐depth interviews with 28 top executives from multinational corporations. The implications for the global talent emerged from the current study as skill enhancement based on the emerged business model; training and development pertinent to new responsibilities and activities; adaptability to changes in the macroenvironment; emphasis on employee proactivity, experimentation, and risk‐taking; emphasis on hyperspecialization to take on contract positions; global talent needs to participate in remote learning; global talent must emphasize on mental health issues; and registering in talent exchange programs to fill talent skill shortages.

Corruption as a perverse Innovation: The dark side of digitalization and corruption in international business

Digitalization has had pervasive effects on corruption, introducing new opportunities and challenges to minimize the use of corruptive behaviours. This study investigates the dark side effects of digitalization, documenting its facilitation of corruption across countries as a form of perverse innovation. Building upon the theory of moral intensity and the extant literature on innovation, modularity, and complexity and considering the international business context, we develop a multilevel conceptual model with testable future research propositions. The core of our model is that each act has a component of moral intensity that determines the likelihood of individual MNE agents engaging in corrupt business behaviour. Furthermore, the complexity and modularity of products and services, coupled with a highly complicated international business environment, can facilitate the ease with which individual actors can engage in corrupt business practices. Finally, we provide recommendations for both theory and practice.

The influence of cross-cultural stable and dynamic competencies on expatriate adaptation and outcomes: the case of Taiwan

PurposeThis study investigates the influence of cross-cultural stable and dynamic competencies on expatriate adaptation and outcomes.Design/methodology/approachThis study surveys 10 expatriates in Taiwan and conducts qualitative analysis based on the newly collected original data.FindingsThe study's results confirm that cross-cultural stable and dynamic competencies improve expatriates' cross-cultural adaptation, enhancing expatriate outcomes in cross-cultural environments.Originality/valueThis study contributes to cross-cultural management research by clarifying the characteristics and action mechanisms of cross-cultural stable competencies (including cultural empathy, emotional stability, social initiative, open-mindedness and flexibility) and cross-cultural dynamic competencies (including relational skills, general self-efficacy and non-ethnocentrism) in the international business context. The study's findings suggest future research directions in the empirical investigation of the antecedents, characteristics and results of cross-cultural competencies, cross-cultural adaptation and expatriate outcomes.

Toward an action-based view of dynamic capabilities for international business

A growing body of research highlights the importance and development of dynamic capabilities as well as the contingencies that can affect such development. However, existing research pays limited attention to the demands of competition in today’s dynamic, volatile, and ambiguous international markets. The international business (IB) realities and contexts require companies to develop and effectively deploy dynamic capabilities to achieve evolutionary fitness, adapt, and successfully exploit opportunities (and neutralize threats) stemming from technological, social, geopolitical, institutional, and economic changes and interdependencies among various layers of embeddedness. Consequently, in this article, we discuss dynamic capabilities that tailor to the specifics of IB contexts, underscore their conceptual properties relevant for the IB realities, and articulate the processes involved in their building and leveraging by established and young MNEs. We further clarify the entrepreneurial foundations and actions essential for development and effective deployment of dynamic capabilities for IB. Finally, we offer our suggestions on how future IB research should explore these issues so as to make dynamic capabilities thinking actionable.

Integrating the circular economy and industry 4.0 for sustainable development: Implications for responsible footwear production in a big data-driven world

In the past few years, the implementation of a more sustainable mode of production has become necessary for manufacturing companies to thrive in the international business context. Professionals and researchers are also paying increasing attention to Industry 4.0 (I4.0) and big data, as well as Circular Economy (CE) concepts, due to the many advantages they can provide for the manufacturing industry. The purpose of the CE is the effective utilization of resources, and the I4.0 concept has been established to help achieve this objective and requires further exploration in the field of sustainable production. Research gaps exist in the literature regarding challenges to I4.0 and CE in terms of Sustainable Footwear Production (SFP) in emerging economies. Therefore, the purpose of this study is to deliver an original analysis of the most significant challenges regarding the interaction of I4.0 and CE for SFP. A comprehensive literature review is performed to establish the challenges to I4.0-CE for SFP in the context of emerging economies. Further, the challenges identified are prioritized based on the assessment of a real case study from the footwear industry. A mixed methodology (i.e., both qualitative and quantitative) is adopted to identify the cause-effect interactions among the identified challenges. The results of our analysis show that the five most important causal challenges obstructing the execution of SFP in the footwear industry are ‘deficient legislative-industry strategies towards SFP adoption’, ‘lack of competence in I4.0 and CE concepts for SFP adoption’, ‘understanding of synchronization among suppliers for attaining SFP’, ‘uncertain economic benefits of I4.0 and CE application for attaining SFP’ and ‘inadequate support for industries towards SFP efforts’. This study may be beneficial for industry managers, practitioners and decision makers to establish an understanding of I4.0-CE initiatives and to mitigate the most significant challenges regarding the successful implementation of I4.0-CE for SFP.

Neglected elements: What we should cover more of in international business research.

The international business (IB) field is maturing and developing conceptual frameworks, dedicated applications, and precise tools. In the course of this progression, the field has started to break away from its disciplinary roots, establishing parsimonious models using finely tuned but confined approaches. While fruitful in solidifying the sovereignty of the field, this progression comes at the expense of detecting and building on major undercurrents that define the rich IB context. We return here to the foundations of IB research to identify neglected elements and offer suggestions as to why they should and how they can be incorporated to deepen and strengthen the field’s reach and impact. We discuss the neglected elements in five clusters, namely audiences and actors (intended readers and key players), locations (research sites), environmental layers (contextual tiers), history (prior paths), and interactions (among players and elements). We highlight how those clusters taken together on their conceptual underpinnings and empirical proxies will support IB research, first by way of producing a virtuous cycle of theory-to-issue research to open the perennial “black box”; and second by enabling eclectic, interdisciplinary research and retrospective investigation using a multifaceted lens.

Emerging market firm’s persistence with failed innovations

We explore the conditions under which firms persist with failed innovations. While prior literature suggested firm’s persistence with failure may vary by their experience with novel vs incremental innovations, we argue the institutional experience of the innovating firm can explain their persistence via their ability to interpret failure events. Firms from advanced economies may react to failure by persisting with innovations after setback, whereas firms from emerging markets may react to failure by abandoning failed innovations. Additionally, emerging market firms may transform negative feedback from one type of innovation into developments for another (i.e., switch the type of innovations they undertake). We test hypotheses using FDA-approved drugs (1998-2019). Our analysis provides insights on learning from failure and innovation efforts in an international business context, and their consequences.

Risk mitigation strategies in international B2B relationships: Role of institutions and governance

The ubiquitous presence of B2B relationships in the international business context makes it imperative for scholars to understand the risks involved in these relationships. Yet, we have an inadequate understanding of the nature and extent of risks that MNCs face in international B2B relationships. We present a comprehensive model of risks that MNCs face in different types of B2B relationships. We then discuss the strategic choices that MNCs pursue to manage these risks. Specifically, we argue that the national differences affect the nature and extent of risks that MNCs face in their B2B relationships. We then focus on equity-based B2B relationships and argue that the governance structure that MNCs choose helps alleviate both the ex-ante and ex-post risks in a B2B relationship. We also discuss the contingencies – national differences, intangible assets of the MNC, and host country- and partnership-specific experience of the MNC – that impact MNCs’ risk management strategies.