Country-specific Advantages Research Articles

Understanding employee branding capability and country-of-origin image impacts for internationalised firms

This article focuses on understanding the role of employee branding capability (EmpBCap) in leveraging country-of-origin image (COI) as a firm resource. Drawing from the resource-based theory and signalling theory, we identify that EmpBCap enhances COI as a country-specific advantage (COI-CSA). Three sets of data were gathered, with 1,060 observations of executives working within internationalised Portuguese and Brazilian firms. Using psychometric procedures and SEM, the findings show that EmpBCap capability is an antecedent of COI-CSA and exerts an indirect effect on firm performance. The article extends previous research on COI from the supplier perspective by addressing calls for COI management research and provides further knowledge on internal brand management

Outward foreign direct investment from post-socialist to advanced economies: motives and determinants of Slovene investment in Germany

PurposeLong regarded as a far-fetched notion, companies from post-socialist economies (PSEs) increasingly compete with companies from advanced economies in their domestic markets and abroad. This study identifies PSE companies' motives and determinants of outward foreign direct investment (OFDI) in advanced economies.Design/methodology/approach This study analyses Slovenian business activities in Germany by juxtaposing eight Slovenian investors and three exporters using a multiple case study approach. The authors use content analysis to examine rich data from semi-structured interviews, databases and internal and external documents to provide comprehensive and in-depth insights into PSE investments in advanced economies.FindingsThe authors identify market-seeking motives and competitive advantages which differ from those of other emerging economy companies and offer theoretical suggestions. In contrast to findings from other emerging economies, the authors identify firm- and country-specific advantages, such as high technology, high service quality, a highly educated labour force, and European Union membership, which Slovene companies have employed to enter the advanced German market.Originality/valueThis study represents the first application of springboard theory to explain PSE company investment in advanced economies. The authors offer contextualised explanations of PSE investments in advanced host economies, which have been lacking thus far. The authors also contribute to the scarcity of studies on the effects of supranational institutions on OFDI from emerging economies.

Revisiting FSAs and CSAs in Sub-Saharan Africa: Evidence from Ghanaian Firms

Sub-Saharan Africa (SSA) is widely perceived as a region of countries with low technological capabilities, weak complementary assets competing on basic country specific advantages (CSAs) and relying on transferred technology. In this paper we argue against this perception. Integrating the extended concepts of Location Bound (LB) and Non-Location Bound (NLB) Firm Specific Advantages (FSAs) within a “revisited” CSAs/FSAs matrix, we provide evidence that home-market grown LB-FSAs and their transformation to NLB-FSAs are induced by domestic Ghanaian firms’ strategic and export orientation.

Firm- and Country-Specific Advantages: Towards a Better Understanding of MNEs’ Environmental Performance in the International Arena

International diversification is predominantly assumed to have a mixed (either positive or negative) linear relationship with environmental performance in multinational enterprises (MNEs). Departing from this assumption, we use firm-specific advantages (FSA) and institutional theory to hypothesise that international diversification, due to recombination barriers, has a curvilinear U-shaped relationship with MNEs’ environmental performance. Because of their key roles as boosters of country-specific advantages (CSA), we also examine whether home country competitiveness and environmental levels moderate the proposed curvilinear relationship. Results from panel data of 298 MNEs between 2006 and 2017 from 21 different countries in 11 sectors provide support for the main curvilinear relationship and the moderating influence of home country competitiveness. Our study contributes to the international business literature by casting doubt on the widely held assumption that international diversification always carries either positive or negative effects on environmental records.

How Do MNCs Conduct Local Technological Innovation in a Host Country? An Examination From Subsidiaries' Perspective

The growing tendency of local technological innovation (LTI) of multinational corporations (MNCs), together with the increasing significance of subsidiaries in MNCs' overseas operations, are promoting subsidiaries' engagement in conducting LTI activities in a host country. In this research, a systematic review methodology with the identification of 116 articles is adopted for the purpose of explicating MNCs' holistic and dynamic LTI process from subsidiaries' perspective. Concretely, we propose a thorough framework upon the typical input-process-output model by taking the antecedents, mechanisms, and consequences into consideration about the whole LTI process. It is suggested in this review that the trigger logic of LTI activities can be explained as the interactions between firm-specific advantages and country-specific advantages that took place at subsidiaries. Crucially, the elaborations on LTI mechanisms have been extended by means of evoking a duality lens of the top-down and the bottom-up pattern. Finally, the results show that differential consequences of LTI activities are presented by bringing divergent benefits to different parties. More importantly, the subsidiary takes the unique role in fostering a virtuous loop between dualistic LTI patterns. Overall, these insights reflect what we have obtained from extant literature and the challenges international business landscapes have ahead, which could point to the directions of future research.

The Belt and Road Initiative, Economic Development and Terrorism Reduction: An Institutional Theory

The Belt and Road Initiative (BRI) brings opportunities for the participating countries to improve their institutional environment. Based on the Global Terrorism Database, this paper constructs a panel data covering 152 countries from 2004 to 2018, and analyzes the policy effects of the BRI on reducing terrorist activities using the Generalized Difference-in-Differences model. The main findings include: firstly, the BRI can supplement the local political institution directly, and not only reduces the number of terrorist attacks, but also reduces the casualty of such attacks. Secondly, the policy effect of the BRI can be achieved through the improvement of the economic institutions, such as trade, FDI, digital infrastructure and economic growth. Finally, the policy effect of the BRI is weakened in the countries having relatively poorer social institutions, such as when the countries are at civil wars. This paper contributes to the research on the institutional theory and country specific advantage theory, and provides practical guidance for firms doing international business in the BRI participating countries with weak institutions.

The internationalization of meatpacking firms: a competence-based approach

Purpose This study seeks to empirically and theoretically show how and why food chain specific advantages along with country-specific and firm-specific advantages impact the development of competences and shape distinct strategies for international growth.Design/methodology/approach Case studies were conducted with three Brazilian meatpacking firms with solid global operations. Top managers in charge of international operations were interviewed and documents were collected. Data were coded and submitted to triangulation. Content analysis was used as data analysis technique.Findings Results suggest that a meso-level of analysis is important to understand the development of competences and strategies for internationalization of meatpacking firms. Additionally, it was found that the internationalization process of meatpacking firms are supported by four supportive competences, namely: technical, production, sales and logistics competences. Findings also reveal that these companies tend to pursue either a raw material seeker or local taste supplier strategy.Originality/value International business scholars have struggled to incorporate meso-level characteristics into mainstream literature. This paper tries to fill in this gap by incorporating distinctive features from the food supply chain in the analysis. Two novel international strategy typologies were introduced by considering firm-, food chain- and country-specific advantages. It also proposes sound theoretical and managerial evidence to support public and private decision-making.

Export intensity of foreign subsidiaries of multinational enterprises

PurposeThe author contributes to the theory of the multinational enterprise by examining subsidiary-specific capability in financial management, defined as the stock of knowledge and capability to plan, manage, control and direct financial resources effectively and efficiently, and the perceptions of subsidiary managers of host country financial development as drivers of export intensity (the share of sales that are exported) of foreign subsidiaries of multinational enterprises (MNEs). The author theorizes that subsidiary-specific capability in financial management is conceptually a valuable subsidiary-specific advantage and it is as important as other traditional competitive advantages, such as research and development and marketing intensity. Perceptions of subsidiary managers of host country financial development are argued to be largely related to the characteristics of the host country-specific advantages.Design/methodology/approachThe author uses a survey dataset of the foreign subsidiaries of Western multinational enterprises (MNEs) together with other public data sources.FindingsThe author provides empirical evidence to support for these arguments that export intensity of MNE foreign subsidiaries depends on subsidiary-specific advantages and host country specific advantages.Originality/valueThe study broadens the understanding of the relationships between subsidiary-specific advantage in financial management, host country specific advantage, and export intensity of MNE foreign subsidiaries. In this way, the author makes an original contribution to new internalization theory by emphasizing the internal capability building of subsidiaries. The author discusses the implications of the findings for MNE foreign subsidiary managers, and policy makers because exporting is critical to the overall strategy of foreign subsidiaries, and it also contributes to the balance of trade and economic development of host countries where foreign subsidiaries operate.

Employing brand governance mechanisms with export channel partners: What are the performance consequences and contingent effects?

For decades leading international business scholars have assessed the benefits accruing from successful governance mechanisms. Although the critical importance of initiating and maintaining good relationships with export channel partners is recognized within the literature, there has been little research focus placed on the optimal approach for governing intangible aspects of these relationships. We offer the first integrated definition of export brand governance of channel partners (EBGoCP) and investigate its influence on export performance. Drawing from relational governance theory and contingency theory, we develop and test a model of the contingent effects of different country specific advantages and firm characteristics on the performance upshots of EBGoCP. Using survey data from UK exporters, our findings validate the hypothesized enhancing effects of EBGoCP on export performance outcomes. Furthermore, consistent with our contingency based predictions, we find country-of-origin-image, firm size and scope of exporting moderate the impact of EBGoCP on export performance. Along with providing fresh insights from the results, this study opens up a new stream of international business governance research and offers productive future research paths to follow.

Internationalization motives, location advantages and performance: the case of Indian firms from knowledge-intensive industries

PurposeRecent empirical findings on the relationship between internationalization and firm performance (I–P) suggest a significant role of firm's context. Extending this line of argument, the authors study the effect of internationalization on firm's performance for emerging market firms from knowledge-intensive industries, taking into account the firm's motive of internationalization and host country’s location-based advantages.Design/methodology/approachThe authors link host country-specific advantages (CSAs) with firm-specific advantages (FSAs) to identify three distinct settings of internationalization for emerging economy firms – (1) asset-exploitative internationalization in developing or least developed countries, (2) asset-exploitative internationalization in developed countries and (3) strategic asset-seeking internationalization. The authors test this study’s hypotheses on a sample of 415 Indian firms from knowledge-intensive industries.FindingsThe authors find that firm's performance upon internationalization is non-linear in each of the three different settings. The nature of the non-linear relationship depends upon location-based advantages of the host country and the motive of internationalization.Originality/valueThe motive of internationalization and the location-based advantages sought during internationalization are unique for emerging economy firms. Hence, the study extends understanding of the I–P linkage in an emerging economy context.

Benchmarking of Singapore maritime cluster: the role of cluster facilitators

PurposeThis article analyses the role of cluster facilitators in the Singapore maritime cluster. Singapore has been recognised for its pro-business policies and its ability to attract international shipping companies to set up the ship ownership headquarters and ship management activities in Singapore.Design/methodology/approachThe research is an empirical investigation on the approach for industrial cluster development of the Singapore maritime cluster, using the case study research methodology. The case study approach leverages on multiple sources of evidence from deep interviews (of 24 Singaporean firms and 13 Norwegian firms) related observations, documentation and archival records. As a means of contributing to the cluster renewal process, Singapore as the country embarks on the next stage of maritime cluster development, a benchmarking against the Norwegian Innovation Cluster has been incorporated.FindingsThe research findings reveals that Singapore is lacking in innovation activities that entails multi-firms collaborations and collaboration between multi-firms and research institutions. The existence of cluster organisation to facilitate collaborations between firms in the cluster and between firms in the cluster with research institutions is another contributing factor that are not institutionalised in the Singapore maritime cluster.Research limitations/implicationsThough the research is grounded primarily on the international business theory, particularly from firm- and country-specific advantages of location decisions, the economic geography theory and cluster theory also complement the theoretical grounding.Practical implicationsThe findings derived from this research aim to facilitate policy makers, maritime leaders and practitioners to develop effective courses of action in current and future maritime industry development.Originality/valueThe research provides value to maritime industry stakeholders, maritime leaders and policy makers in their firm positioning strategy. Thus, the research adds values to the maritime industry with similar country perspectives and firm values for developing policies.

Conceptualizing country-of-origin image as a country-specific advantage: An insider perspective

This study proposes a new approach to the Country-of-Origin Image (COI) literature. Unlike previous research which gathers COI from an outsider (external) perspective, it argues that the COI phenomenon should be understood from insider (internal) perspective, that is how national stakeholders within the home country perceive COI. Measuring the image of a country from the insider perspective can help its national stakeholders recognize COI as a valuable resource that can be translated into a Country-Specific Advantages (CSA). It thus introduces the construct ‘Country Self-image’ (CSI) that covers an insider perspective and identifies it as an antecedent of COI based CSA (COI-CSA). It adapts and validates a scale of CSI to this effect and test the relationship between CSI and COI-CSA by performing a structural equation modeling (SEM) on a dataset collected from two different surveys. The adapted scale of CSI comprises six dimensions and twenty-three items.

Breaking the looking glass: Understanding how emerging market multinationals develop unique firm-specific advantages

Work on firm-specific advantages developed by emerging market multinationals largely focuses on their ability to copy those created by similar companies from the developed world. The predominance of new institutional economics in this field has limited our understanding of how these firms develop different firm-specific advantages by presuming not only that the institutional context in advanced industrialized countries is the best for creating such advantages, but also that local context does not shape the potential effectiveness of any such advantage. This article argues that comparative institutionalism better enables scholars to understand this phenomena. However, until now this theory has only examined how firm-specific advantages are derived from country-specific advantages. I argue that it needs to be revised so that it can account for how emerging market multinationals develop firm-specific advantages suited to emerging markets by building on their experience in addressing what this author terms location disadvantages. It illustrates this argument by examining how an Argentine Multilatina, IMPSA, was able to outperform its competitors from the developed world and become the leading producer of dams and windmill parks in Latin America by addressing location disadvantages in supplier markets.

The Cloud’s fearsome five renewable energy strategies: Coupling sustainable development goals with firm specific advantages

Abstract Google, Apple, Microsoft, Amazon and Facebook, the fearsome five of cloud computing, have committed to providing their data centers with renewable energy. In so doing, this paper argues that their strategies are fulfilling two main Sustainable Development Goals, while demonstrating a new evolution in the relation between firm specific advantages and country specific advantages in understanding foreign direct investment. This paper elaborates an environmental interpretation of the relationships between firm-specific and country-specific advantages to appreciate how the cloud companies have developed and globally diffused new firm-specific advantages inspired by the Sustainable Development Goals. The analysis compares the evolution of these ‘green’ firm-specific advantages in home and host countries, supporting the idea of multinational enterprises as pro-active institutions in the global economy.

A Few Implications of the COVID‐19 Pandemic for International Business Strategy Research

A Few Implications of the COVID‐19 Pandemic for International Business Strategy Research

Chinese Service Multinationals: The Degree of Internationalization and Performance

We investigate the degree of internationalization of Chinese service multinational enterprises (MNEs) and their performance relative to global peers operating in the same industries, using the benchmarking method with the industry financial data. Our theoretical development is based upon Verbeke and Forootan (2012)’s framework, grounded in “new” internalization theory, arguing that an MNE’s financial performance is fundamentally determined by its firm-specific advantages (FSAs). Here FSAs include not only conventional strengths in R&D and brand names, but also the recombination capabilities, which is a higher-order FSA. We theorize that Chinese service MNEs develop FSAs, which are built upon home country-specific advantages (CSAs) and thus their FSAs are home country-bound in nature. They have not yet been able to develop advanced management capabilities through recombination with host CSAs. We empirically examine the largest 500 Chinese service firms. We find that only 23 Chinese service firms are true MNEs, whereas the majority of them are purely domestic firms. The financial performance of Chinese service MNEs is poor relative to global peers. They internationalize mainly through acquisitions of foreign firms, which help them increase their foreign sales, but they are not able to achieve superior performance in overseas operations. We discuss the strategic implications of our findings for managers, public policy makers, and academic research.

The fit of competitive strategies and firm-specific advantages with country-specific advantages in explaining manufacturing location choices

PurposeThis paper aims to clarify the fit of competitive strategies and firm-specific advantages (FSAs) with country-specific advantages (CSAs) in explaining manufacturing location choices at product category level in the European automotive industry.Design/methodology/approachSeven hypotheses are formulated and tested using binomial logistic regression with data from 148 passenger car models (i.e. product category level) that are sold in Europe and manufactured in countries that offer CSAs of either cost advantages or differentiation advantages. The first four hypotheses test manufacturing location choices of product categories pursuing cost leadership strategy, differentiation strategy, focus strategy and hybrid strategy. The other three hypotheses test whether FSAs of R&D capability, marketing capability and operations capability will impact on the manufacturing location choice. The tests control for the type of passenger cars as well as the manufacturer’s region of origin.FindingsWhile pursuing cost leadership strategy leads to manufacturing in countries that offer cost advantages, pursuing differentiation strategy as well as strong R&D capability and marketing capability result in manufacturing in countries that offer differentiation advantages. Focus strategy, hybrid strategy and operations capability do not have an impact on the manufacturing location choice at product category level.Research limitations/implicationsConducting empirical research at product category level is subject to limitations in the choices of FSAs due to lack of availability of data.Practical implicationsManagers should assess the competitive strategies and FSAs of their product categories and then decide about manufacturing locations based on their fit with host country CSAs. Policymakers should understand the CSAs of their countries and target to attract manufacturing FDI from product categories with matching competitive strategies and FSAs.Originality/valueThe research contributes to discussions in explaining manufacturing location choices. Its originality lies in being the first study to test the fit of competitive strategies and FSAs of product categories with CSAs.

Assessing the Competitiveness of Chinese Multinational Enterprises Development: Evidence From Electronics Sector

Multinational enterprises (MNEs) are key drivers of globalization. The study investigated the performance of leading Chinese electronics MNEs, Huawei, Lenovo, and Haier, and made a comparison between Chinese electronics MNEs and American electronics MNEs along with their specifications in terms of globalization by using Asmussen’s model, Petersen’s model, Rugman’s firm-specific and country-specific advantage (FSA-CSA) matrix, and the Porter’s diamond model. Findings revealed that only Huawei is the truly global company at present; nevertheless, Lenovo and Haier are both on the right track, reaching the same status as Huawei. These firms can successfully utilize their country-specific advantages by capitalizing on China’s external partnerships and existing trade agreements. Chinese projects seem to be able to provide Chinese MNEs with the ability to maximize their opportunity to seek growth externally and enter the global market. An examination of MNE practices facilitated by American and Chinese firms imparts relevant commonalities but differences in operational practices. Small enterprises can follow the process and strategy, while policymakers will receive a suggestion to implicate an industrial-friendly policy.

Locus and Revenue of Export Manufacturers: Why Extra-Regional Markets?

ABSTRACT Despite substantial research on exporting in Africa, there has been negligible if any empirical research on a choice between regional and extra-regional markets as the locus of firms’ expansion. Using multiple-case studies, this paper provides an in-depth analysis of the drivers of exports revenue from extra-regional markets. The paper also explores whether two main theories, transaction cost economics (TCE) and resource-based view (RBV) compete or complement each other in explaining the choice of this market category. Data and information from an open-ended interview with four firms and five supporting institutions show that country-specific advantages attract investors with superior resources and capabilities to lucratively exploit preferential market opportunities in extra-regional markets, particularly USA. When choosing the latter over regional markets, firms anchor their operations in the global value chains, the TCE and RBV intertwine in providing further explanations. In conclusion, this study urges governments and business managers targeting high-value markets outside Africa to tie buyer-driven industries such as clothing to similar value chains.

Assessment of Competitiveness Improvement on Multinational Enterprises based in Korea

Purpose – This study’s the ultimate goal is to analyze competitiveness improvement on multinational enterprises as firstly providing which factors are to strengthen or weaken competitiveness, secondly investigating if hypotheses development and research design is correct and thirdly finding significant implications for research and practices across country specific advantage. Design/methodology – Using feedback data provided by 250 firms, we extracted variable factors and hypotheses, which were empirically carried out by reliability and validity testing, correlation analysis, path analysis, and confirmatory factor analysis to prove which factors are to make the positive effect on the improvement of overseas subsidiaries’ management performance and competitiveness. Findings – Through proceeding empirical analysis study, we found out that technology management capability, knowledge management capability, and local management capability had a statistically significant effect on the improvement of overseas subsidiaries’ competitiveness, while linked activity capability revealed a negative effect. Originality/value – During business globalization, overseas investments and establishment of overseas subsidiaries have been essential. It is anticipated that this study results would be meaningful for analysis on multinational enterprises’ competitiveness and helpful in promoting their entry into Korean market and enhancing their competitiveness. This paper would also help Korea government develops new FDI model and induce more investment from global major companies to Korea region.