Country-specific Advantages Research Articles

A New Perspective on China's Outward Foreign Direct Investment: The Hypothesis of Super-Ownership Advantage

-ownership mainstream FDI theories, extended theories proposed by East Asian scholars, and new institutional economics. We argue that under an uncertain environment, when firwithin their capabilities, OFDI based on static and dynamic advantages and country-specific advantages will be effective. On the other hand, when firms in their capabilities, they will pursue OFDI based on a hybrid governance mode, which includes implications for explaining OFDI by Chinese firms and the strategic guidelines for the synergistic interaction between business and government.

Local responsiveness strategy of foreign subsidiaries of Chinese multinationals: The impacts of relational-assets, market-seeking FDI, and host country institutional environments

We build upon the theoretical framework of firm-specific advantages (FSAs) and country-specific advantages (CSAs) to examine the determinants of the local responsiveness strategy of foreign subsidiaries of Chinese multinational enterprises (MNEs). Specifically, we focus on relational assets (R-assets is seen as a unique type of Chinese MNEs’ FSA), the market-seeking foreign direct investment (FDI) and host country institutional environments as drivers of the local responsiveness strategy. We empirically test our hypotheses using a survey data of the foreign subsidiaries of Chinese firms together with other secondary data sources. We find that both Chinese MNEs’ R-assets and the market-seeking oriented FDI are positively related to subsidiaries’ local responsiveness strategy in accommodating local customer needs, government policies, market conditions, and competitive intensity. Moreover, the impact of R-assets in motivating the local responsiveness strategy is stronger in a host country with a weak and underdeveloped institutional environment. While the evidence confirms the existence of the R-assets in influencing subsidiary level strategy, it also casts doubt on such relations-based firm resources in advanced host countries with highly developed institutions.

Technological innovation as a source of Chinese multinationals’ firm-specific advantages and internationalization

PurposeThe purpose of this paper is to examine how innovation-related firm-specific ownership advantage (FSA) plays a role in developing the competitive advantage of Chinese multinationals when they internationalize.Design/methodology/approachBased on a review of the existing literature concerning foreign direct investment by emerging economy multinational enterprises (EMNEs), the authors identify that numerous studies explain this phenomenon on the basis of their location-bound country-specific advantages. However, such views do not fully explain the key underlying factors behind the rapid rise and success of many EMNEs as these firms rapidly internationalize and develop global competitiveness in developed markets. The current research explores three leading innovative Chinese EMNEs from the engineering sector: BYD, Sany Heavy Industry and CSR China.FindingsThe authors find that EMNEs’ knowledge, and particularly their innovation-creating technological knowledge, has contributed greatly to their successful internationalization. The illustrative cases show that the three firms have now moved beyond the infant to the mature stage of EMNE development through developing their technological knowledge in order to realize FSA through internationalization. This study helps in contributing fresh reflections to the continuing debate concerning the causes of internationalization and global competitive development by EMNEs and the role of their FSAs in these processes.Originality/valueThis is one of the few studies which have demonstrated that some of the EMNEs do possess firms’ specific advantage which helps explain their innovative capabilities, competitive advantages and subsequent internationalization patterns.

Country- and firm-specific positions of different multinational enterprises: who is having what

This paper investigated country- and firm-specific positions of different MNE (multinational enterprises) types. A matrix has been developed based on the country- and firm-specific positions. Then, we have carried out 20 case studies and identified their positions in our matrix. Based on our findings we have installed five key propositions. Those propositions suggest that MNEs are more equipped with Firm-Specific Advantages (FSAs) whereas Emerging Market Multinationals (EMMs) have more Country-Specific Advantages (CSAs). MNEs are mostly persistent dominators and potential dictators and EMMs are mainly emerging operators and regional players. Finally, Micro Multinational Enterprises (mMNEs) are low on both CSA and FSA and they are mostly operation consolidators.

Effects of Firm-specific and Country-specific Advantages on Relative Acquisition Size in Service Sector Cross-Border Acquisitions: An Empirical Examination

Abstract Using a sample of 348 service sector cross-border acquisitions by U.S. firms in 44 countries during 1990–2006, our study seeks to identify factors that influence relative acquisition size (acquisition transaction value as a percentage of acquiring firm's asset value). Our findings indicate that firm-specific advantages (FSAs) in the form of available financial slack and target industry knowledge were positively associated with relative acquisition size. However, contrary to expectations, we observed a negative relationship between cross-border acquisition experience and relative acquisition size. In addition, our results suggest that country-specific advantages (CSAs) associated with higher market potential, lower political risk, and greater cultural similarity contributed to increased relative acquisition size in service industry cross-border acquisitions. Finally, our analysis reveals that the relationship between available financial slack and relative acquisition size is contingent on cultural similarity with the relationship being more pronounced when cultural similarity is high.

Equity Market Participation and Local Subsidiary R&D

In this paper, we distinguish between Operational Country Specific Advantages (O- CSAs) and Equity Market Country Specific Advantages (EM-CSAs) in the context of MNE subsidiaries operating in overseas locations. Building on internalization theory, we posit that local listing facilitates subsidiary access to local knowledge and networks that are associated specifically with the equity markets (EM-CSAs), expanding their access to local resources beyond those available through the local networks associated with business operations (O-CSAs) and enhancing their ability to do complex knowledge work, such as R&D. Furthermore, comprehensive access to CSAs through participation in both the real economy and the financial markets creates the potential for the subsidiary to harness relatively more sophisticated firm specific advantages (FSAs), thus strengthening their capabilities and facilitating knowledge work locally. We find strong support for our theory in a sample of manufacturing MNE subsidiaries in India during the 2000-2012 period. We conclude with discussion of results and avenues for future research.

The effectiveness of government policies for export promotion on the export performance of SMEs Cocoa exporters in Cameroon

PurposeThe purpose of this paper is to examine the significance of the direct and indirect effects (through country and firm’s specific advantages) of government policies for export promotion (GPEP) on the export performance of small and medium-size enterprise (SME) Cocoa exporters in Cameroon.Design/methodology/approachTo test the proposed model, data were obtained through self-administered questionnaires using snowball sampling technique to 101 SME Cocoa exporters. This was analyzed using structural equation modeling (SEM) techniques to examine both the direct and indirect effects of GPEP on the export performance of SME Cocoa exporters in the South and Centre Regions of Cameroon.FindingsThe findings suggest that GPEP had both direct and indirect effects on the export performance of SME Cocoa exporters. Direct effect was on the usage of GPEP which reduces operating cost and increase performance. The indirect effects were through the provision of country and firms specific advantages. However, the only significant path was through the provision of export marketing information.Research limitations/implicationsThe research is limited to one country, one sector, and two regions and does not take into consideration other factors that may influence the effect of GPEP, country, and firms specific advantages on export performance. Moreover, the non-significant paths should be interpreted with caution and further testing required in a different context.Practical implicationsEmpirical findings are relevant for the government and SME Cocoa exporters. It informs the government about the effectiveness of GPEP and the need to disseminate marketing information using every possible medium best understood by the SMEs. It suggests an opportunity for engagement of both SMEs and government authorities in accessing the outcome of GPEP which will increase transparency, awareness, usage, and export performance.Originality/valueThe research has successfully developed and tested a model for analyzing the direct and indirect effects of GPEP on export performance based on the resource-based view and SEM in a context where there is a call for more empirical and theoretical work on export performance due to limited studies. The framework reveals positive effects of GPEP, country, and firms’ specific advantages as determinants of export performance.

Dynamic Capabilities of Multinational Enterprises: The Dominant Logics Behind Sensing, Seizing, and Transforming Matter!

The dynamic capabilities approach explains how firms create and sustain competitive advantages in dynamic environments if they exhibit technical and evolutionary fitness. Multinational enterprises (MNEs) are not only exposed to industry dynamism, but also to dynamism in the different country environments in which they operate. Understanding the dynamic capabilities of MNEs thus requires analyzing not only the firm dimension, but also the country dimension and firm–country interactions of international business. Building on the analytical disaggregation of dynamic capabilities into: (1) sensing opportunities (or threats), (2) seizing (or neutralizing) them via expedient investments, and (3) transforming the firm and its resources and capabilities accordingly, we conceptualize the relationships between the dominant logics behind MNEs’ sensing, seizing, and transforming and evolutionary fitness. First, we propose that a dominant logic behind sensing, based on an application of resource-based view thinking to the international business context (which we develop to separately explain the three component parts of MNEs’ competitive advantages, i.e., non-location bound firm-specific advantages, country-specific advantages, and location bound firm-specific advantages), positively moderates the effect of sensing processes and routines on evolutionary fitness. Second, we propose that a dominant logic behind seizing, based on internalization theory thinking, positively moderates the effect of seizing processes and routines on evolutionary fitness. Third, we propose that a dominant logic behind transforming, based on a broad agency perspective extended to the international business context, positively moderates the effect of transforming processes and routines on evolutionary fitness.

Country-of-origin image (COI) as a country-specific advantage (CSA): Scale development and validation of COI as a resource within the firm perspective

The study discusses the country-of-origin-image (COI) as a country-specific-advantage (CSA) for internationalised firms. We developed and validated a scale to measure the importance of the incorporation of the COI as a resource in a firm's international strategy, the COI-CSA. Several psychometric procedures were adopted. We analysed data gathered from two case studies, validation procedures with experts and researchers, and three data sets from executives working in internationalised firms. The results validate the COI-CSA scale as a multidimensional construct reflected in a set of four dimensions: textual and visual elements, senses, cultural resources, and natural resources.

The influence of firm-specific and country-specific advantages in the internationalization of emerging market firms: Evidence from Turkey

This paper examines the role of institutional factors that enable firm- and country-specific drivers of emerging market (EM) firms’ internationalization based on case-based research conducted in one EM, Turkey. Findings indicate that 10 major factors comprised of firm-specific and country-specific advantages drove the focal case study firms abroad: the firm-specific factors ranged from financial and operations supremacy; excellence in value chain activities; inexpensive human resources; rapid learning capabilities in production and technology development; and adaptability to foreign markets; while the country-specific factors included home-government policies supporting internationalization; logistical advantages arising from geographical position; adaptability capabilities resulting from former survival through institutional voids; strong social ties formed through networks; and availability of low cost resources. These findings are discussed and future research questions are offered.

Multiculturalism and Creative British South Asian Films

Globalization has enabled countries such as the UK to attain multiculturalism; however, there is no investigation in relation to the advantages of multiculturalism at the film industry level. Multiculturalism is related to the Commonwealth immigration after the Second World War period. The introduction of new cultures into the UK has enabled the growth and development of successful global industries such as the British Urban Music and British Asian Film, which have prospered over time and have now become mainstream export-led industries. Why is cultural diversity significant towards the generation of competitive advantages within the British South Asian film sector? We will explore the country specific advantage of multiculturalism in the UK and their impact on creativity of screenwriters that has contributed to successful films in the industry.

The Factors Affect Company Performance in Renewable Energy Industry

Concerns about global warming and climate change are generating interest in renewable energy measures with the purpose to minimize environmental impact. Promoting renewable energy production becomes indispensable since its represent a tiny fraction of energy consumed. The purpose of this study is to identify the performance determinants are divided in country specific advantages and firm specific advantages. Companies were selected from Bloomberg and filtered due to its information ava ilability from COMPUSTAT to construct a Panel Data structure. The results proved that both country level (shares of renewable and energy consumption) and firm level (market capitalization, employee growth rate and capital intensity) determinants were signi ficant in the renewable energy industry. Through the analysis, it’s possible to realize that return on assets it’s a performance measure with long term results, but unlike it, gross profit margin is variable that demonstrate short term results. We conclude that renewable energy industry has a great potential due to its results performed.

Emerging countries’ country-specific advantages (CSAs) and competitiveness of emerging market multinational enterprises (EMNEs)

PurposeA significant stream of literature focuses on host countries’ locations when explaining why firms internalize some of their activities in specific countries. At first glance, home location schemes and specificities seem to have attracted less attention in the scientific community. The purpose of this contribution is to provide a literature review linked to the specific issue of emerging countries’ country-specific advantages and the competitiveness of emerging market multinational enterprises.Design/methodology/approachThe approach is to present the main theoretical developments related to the role of home countries in the internationalization process of domestic firms in general and as far as the home context of emerging countries is concerned.FindingsA rigorous analysis of the literature shows that theoretical developments and empirical studies on international business do refer explicitly or at least implicitly to the role of home countries in the international expansion of firms.Originality/valueThe value of this review is to develop the main streams of the literature and to serve as a basis for the other contributions published in this area.

Outward direct investment by Chinese state-owned enterprises

PurposeThe paper aims to investigate outward foreign direct investment (OFDI) by Chinese state-owned enterprises (SOEs), aiming to unveil whether the Chinese OFDI policy acted as a country-specific advantage (CSA) that has been turned by Chinese firms, particularly SOEs, into a firm-specific advantage (FSA).Design/methodology/approachUsing a data set spanning 18 years (1996-2013) on international mergers and acquisitions (IM&As) by Chinese companies (SOEs and private-owned enterprises – POEs) and drawing on extant literature, the paper systematically compares the behavior of Chinese SOEs and POEs, aiming to identify differences in their behavioral patterns that indicate that SOEs have benefitted more from policy-induced advantages than their private counterparts.FindingsAmong other aspects, significant differences were found regarding the behavior of SOEs vis-à-vis POEs that seem to show that SOEs had greater support from public entities, leading them to close larger deals and purchase more companies/stakes in cash; acquire firms with greater debt (implying higher interest payments); and purchase smaller stakes than POEs (indicating that there are other objectives than control). This lends support to the assumption that Chinese SOEs are “sitting on piles of cash”, and that the availability of capital acted as a CSA that has been transformed into an FSA by the companies involved, notably by SOEs.Research limitations/implicationsThe comprehensive and large-scale data set used includes wholly owned SOEs, leaving out of this research partially owned SOEs. The findings of this paper have implications for the discussion on competitive neutrality and for the academic, managerial and public policy debate.Originality/valueTo the best of the authors’ knowledge, this is the only study, to date, that shows systematic differences in financing patterns of OFDI (notably via IM&As) by Chinese SOEs and POEs, among other behavioral characteristics of both types of companies when conducting FDI abroad, linking that to CSAs and FSAs induced by CSAs.

The competitiveness of emerging country multinational enterprise

PurposeThis paper aims to conduct a theoretical enquiry into the questions as to whether emerging country multinationals’ competitiveness derives from country-specific advantage (CSA) or firm-specific advantages (FSA). The case of China is also examined.Design/methodology/approachCSAs and FSAs are examined both in theory and in the specific case of China as explicators of outward foreign direct investment from emerging countries.FindingsFSAs and CSAs are found to be imprecise explanatory mechanisms to explain the competitiveness of emerging country multinationals. The examination of imperfections in emerging markets and in global markets and the internalisation responses of firms in different contexts is found to be a superior explanation of the financial flows classified as “outward direct investment”.Originality/valueInternalisation theory requires a focus on mechanisms to convert home country attributes into competitive advantages and suggests that FSAs are context dependent, ephemeral and subject to negation by the competitive actions of rival firms.

Internationalization of South African Retail Firms in Selected African Countries

ABSTRACTAfrican markets are complex environments for foreign multinationals. The continent, which has recently attracted significant attention for its rich potential and growth prospects, presents a multitude of challenges for the South African retailers leading the charge of retail expansion. This qualitative study seeks a deeper understanding of the contextual challenges experienced by these firms in other African markets, and how they have managed this process. It further engages how these firms build networks with local stakeholders and how they overcome information deficits. This study confirms the rich variety of capabilities and approaches developed by South African retailers operating across the continent, as opposed to a single standard approach. The research has further confirmed that these firms typically use SA Inc. as a country specific advantage in their expansion, leveraging off their inter-firm networks and personal exchanges to gain a better understanding of African markets and their consumers.

The Participation of CEECs in EU Twinning Projects: Offering Specific Added Value for EU Transgovernmental Cooperation in the Eastern Neighbourhood?

Focusing on European Union (EU) Twinning projects in Azerbaijan and Ukraine, this article explores whether EU member states from Central and Eastern Europe (CEECs) offer specific added value for the implementation of EU Twinning projects in the Eastern neighbourhood compared to the older member states. An added value refers to the combined comparative advantages of a group of member states for the implementation of a Twinning project, as perceived by project stakeholders. The findings largely confirm our hypothesis that CEECs mostly offer country-specific comparative advantages, rooted in their recent transition and accession experience, socio-linguistic proximity, and shared historical legacies with the Eastern neighbourhood. In turn, the older member states are perceived to offer mainly sector-specific comparative advantages owing to their institutional experience, sectoral fit, existing sectoral networks in the Eastern neighbourhood, and prior Twinning experience in other countries.

Firm-specific, national and regional competitive advantages: The case of emerging market MNEs—Thailand

Increasing levels of regional economic integration have created a new source of international competitiveness for MNEs from an emerging economy, Thailand, in the context of ASEAN economic integration. Building on the theoretical framework of firm-specific advantages (FSAs) and country-specific advantages (CSAs) grounded in internalization theory, we introduce region-specific advantages (RSAs) and advance a novel regional dual-double-diamond model to analyse regional competitiveness. Using both primary and secondary data we find that most Thai firms derive their international competitiveness from CSAs rather than FSAs, and will benefit from ASEAN RSAs. Our study significantly advances the literature on international competitiveness of emerging-economy MNEs.

HR strategy – necessity or fad for business sustainability?

Abstract The present paper pleads for the awareness of HR strategy importance, in terms of proper design and implementation, as they definitely could impede or sustain the development of an organization. By making use of G.VALI, the model of organizational culture dynamics, we look for revealing the impact that (non-)existence of HR strategy, its alignment and coherence could have on the organization success. As proven by human experience, all types of strategies could work and be effective in certain conditions. Even more, no one can say that one strategy is better than other. However, in the same way, there is no guarantee of some strategies success. In this light, the difference lays in the handy and clever interlock of the country specific advantages and firm (-tobe) specific advantages. For achieving this specific aim, vertical (alignment) and horizontal (coherence) integration of each functional strategy must be ensured.

Does Gender Matter in the Export Performance of International New Ventures? Mediation Effects of Firm-specific and Country-specific Advantages

Based on a sample of 4240 Korean firms, this study explores the relationship between owner gender and export performance of international new ventures (INVs) by investigating four mediating mechanisms: venture capital financing, upstream firm-specific advantages, downstream firm-specific advantages, and country-specific advantages. Our empirical findings are threefold: (1) female-owned ventures are disadvantageous in obtaining access to venture capital, but venture capital financing is not positively associated with their export performance; (2) male-owned ventures achieve better export performance through superior innovation and marketing capabilities (i.e., mediation effects) than their female-owned counterparts; (3) while gender is not associated with the home-region destination of exports, the country destination of exports within the Asia-Pacific region positively affects INVs' export performance.