Multinational Enterprises In Developing Countries Research Articles

A power-dependence perspective of the pollution haven hypothesis

The pollution haven hypothesis has suggested that developed-country multinational enterprises (DMNEs) offshore their polluting activities to developing countries in an attempt to circumvent the stringent environmental protection regulations in their home markets. What remains unclear is why the host developing-country governments permit the above-average pollution caused by foreign subsidiaries. From a power-dependence perspective, we hypothesize that when the host developing-country governments exhibit dependence on advanced resources from developed countries, DMNE subsidiaries exert power (or influence) over the governments in regulatory discretion within the legal boundary. The unbalanced power relation grants DMNE subsidiaries the leeway to pollute more than their peers. By combining the pollution haven hypothesis with the power-dependence theory, this study highlights the heterogeneity within the local developing countries in environmental arbitrage in international business.

The art of rhetoric: Host country political hostility and the rhetorical strategies of foreign subsidiaries in developing economies

Multinational enterprises (MNEs) often pay close attention to host country environments and prudently manage relationships with host country stakeholders. However, little attention has been paid to how the foreign subsidiaries of developed country multinational enterprises (DMNEs) communicate with host country stakeholders in developing economies. This paper investigates how host country political hostility influences DMNE subsidiaries’ rhetorical strategies. Using 485,496 Sina Weibo posts by subsidiaries of 71 DMNEs between 2010 and 2018, this paper demonstrates that political hostility has a negative influence on subsidiaries’ rhetorical emotionality and corporate social responsibility (CSR) rhetorical intensity, and has a positive effect on rhetorical clarity. Both bilateral trade and local subsidiary top executive strengthen the influence of political hostility on rhetorical emotionality and rhetorical clarity. The findings shed new light on how DMNE subsidiaries gain and maintain legitimacy in developing economies and how subsidiaries deploy post-entry rhetorical strategies as a response to host country political hostility.

International projects and political risk management by multinational enterprises: insights from multiple emerging markets

PurposeThis study investigates an under-researched yet fundamental question of how a developed country multinational enterprises (DMNE) perceives and manages political risks when undertaking infrastructure projects in the emerging markets (EMs).Design/methodology/approachThe authors use an abduction-based qualitative research approach to analyze six international project operations of a multinational enterprise originating from Finland in five EMs.FindingsThe findings suggest that the overall nature of political risks in EMs is not the same, except few political risk factors that are visible in most EMs. Consequently, the applied risk management mechanisms vary between EMs, except with few common mechanisms. The authors develop an integrative analytical framework of political risk management based on the findings.Originality/valueThis paper is one of the first studies to identify political risk factors for western MNEs while undertaking international project operations and link them to reduction mechanisms used by them. The authors go beyond the notion of risk being conceptualized at a general level and evaluate 20 specific political risk factors referred to in extant literature. The authors further link these political risk factors with both social exchange and transaction cost theories conceptually as well as empirically. Finally, the authors develop a relatively comprehensive analytical framework of political risk management based on the case projects' findings that combine several strands of literature, including the social exchange theory, transaction cost theory, international market entry, project management and finance literature streams.

Globalization Impact on Multinational Enterprises

The impact of globalization on multinational enterprises was examined from the years 1980 to 2020. A scoping literature review was conducted for a total of 141 articles. Qualitative, quantitative, and mixed typologies were categorized and conclusions were drawn regarding the influence and performance (i.e., positive or negative effects) of globalization. Developed countries show more saturated markets than developing countries that favor developing country multinational enterprises to rely heavily on foreign sales for revenue growth. Developed country multinationals are likely to use more advanced factors of production to create revenue, whereas developing country multinationals are more likely to use less advanced forms. A number of common trends and issues showed corporate social responsibility, emerging markets, political issues, and economic matters as key to global market production. Recommendations signal a strong need for more research that addresses contributive effects in the different economies, starting with the emerging to the developed. Limitations of data availability and inconsistency posed a challenge for this review, yet the use of operationalization, techniques, and analyses from the business literature enabled this study to be an excellent starting point for additional work in the field.

Assessing the Role of Host Country Human Rights Protection on Multinational Enterprises’ Choice of Investment Strategy

Although international business studies have examined the role of non-market factors in multinational enterprises’ (MNEs) foreign ownership, there is a limited focus on the role of host country human rights records on MNEs’ ownership decisions. Further, there is little understanding of the differences in ownership decisions between the developed country multinational enterprises (DMNEs) and emerging-market multinational enterprises (EMNEs) as influenced by the non-market context of their host countries. This study, therefore, explores the links between the host country’s human rights governance and MNEs’ ownership strategy in cross-border acquisitions. We argue that clarity in human rights governance in the host country will encourage MNEs to establish higher stakes in local targets and that this relationship will be stronger for DMNEs than for EMNEs. Our findings, which support these hypotheses, offer insights into the relationship between MNE investment strategy and human rights governance, and inform the debate on the differences between internationalization strategies of EMNEs and DMNEs.

Developed country MNEs investing in developing economies: Progress and prospect

This study reviews research from 1970 through 2016 on developed country multinational enterprises (DMNEs) entering and competing in developing economies. To identify the current state of knowledge of this research and push it further, we review the literature using bibliometric and qualitative content analyses covering leading journals and books. We articulate frontier issues that are understudied yet critical to both theorization and practice of DMNEs in developing economies. We discuss the findings and conclusions from prior research along five key areas: (1) entering developing economies, (2) organizing local activities, (3) managing alliances and joint ventures, (4) competing in dynamic environments, and (5) dealing with institutions, governments and society. We offer prospective insights into future agenda that have important implications for MNE strategies and decisions, and propose frontier directions that encompass strategic localization, reverse transfer and adaptation, co-evolution with local business ecosystems, reorganizing and restructuring, and strategic responses to institutional and market complexity.

Family businesses from emerging markets and choice of entry mode abroad: insights from Indian firms

Internationalization of family businesses (FBs) is an interesting topic that has received extensive attention in the literature during the last decades. Prior studies emphasized the conservative attitude toward risk of FBs. However, studies addressing international decisions of emerging-market FBs (EMFBs) are still scarce. We investigate whether home and host countries matter when EMFBs choose the entry mode abroad. By doing so, we discern whether they follow the same behavioral pattern as developed-country multinational enterprises (MNEs) or they show a distinctive strategic behavior. Drawing on a sample of 298 foreign market entries carried out by Indian MNEs, our results show that Indian FBs prefer acquisitions instead of greenfield investments. Moreover, host country factors matter, since outward foreign direct investment (OFDI) of Indian FBs in developed markets is associated with a preference for acquisitions, whereas OFDI in developing countries is associated with greenfield investments.

Sources of Capabilities for Asian Multinational Enterprises’ Accelerated Internationalization

Multinational enterprises (MNEs) from the Asia-Pacific region have become significant participants in the world economy. Compared with developed-country MNEs that follow the stages model of interna...

Cultural distance, political risk and location decisions of emerging-market multinationals: a comparison between Chinese and Indian firms

ABSTRACTThe international expansion of emerging-market multinational enterprises (MNEs) is becoming a research topic of increasing interest among international business scholars. One of the specific research questions arising is whether conventional theoretical arguments originated in studies on developed-country MNEs are still valid for explaining the international behavior of emerging-market MNEs. Drawing on the institutional theory, this paper argues that the influence of host country institutional factors on location decisions differs between Chinese and Indian MNEs. We hypothesize that the negative impact of both cultural distance and political risk on location decisions is lower for Chinese MNEs as compared to Indian MNEs. From a sample of 832 outward foreign direct investments (OFDIs) we obtain empirical support for these hypotheses.

Corporate Social Responsibility in Developing Country Multinationals: Identifying Company and Country-Level Influences

ABSTRACT:The extant literature on cross-national differences in approaches to corporate social responsibility (CSR) has mostly focused on developed countries. Instead, we offer two inter-related studies into corporate codes of conduct issued by developing country multinational enterprises (DMNEs). First, we analyse code adoption rates and code content through a mixed methods design. Second, we use multilevel analyses to examine country-level drivers of differences in code content—specifically, elements of a country’s National Business System (NBS). We find that DMNEs are much more likely to adopt a code of conduct than their domestic counterparts; however, this does not translate into greater code comprehensiveness. We also find support for the ‘substitute view’ of CSR in developing countries, i.e. that MNEs from poorer countries and from countries with lower governance effectiveness tend to express more comprehensive commitments. However, this dynamic does not extend to a country’s labour system; instead, CSR appears here to match the efficiency of a country’s labour market, thus reflecting the ‘mirror view’ of CSR.

The management of Chinese MNEs’ expatriates

Purpose – Expatriate management is a popular topic in international human resource management (IHRM) because expatriates play a critical role in a firm’s international business operations. The purpose of this paper is to discuss the existing studies that often examine the expatriate management of developed country multinational enterprises (MNEs), aiming to help them identify, employ, prepare and retain expatriates and address challenges these MNEs may face, while how MNEs from emerging countries manage their expatriates is understudied. Design/methodology/approach – The knowledge of expatriate management from emerging market MNEs (EMNEs) may help us understand whether there is anything new for IHRM theory and practice. This conceptual paper aims to address this research gap by selecting China, a leading emerging economy, and reviewing the existing literature in both English and Chinese to examine the status quo of the expatriate management in Chinese MNEs to highlight challenges facing these MNEs in managing their expatriates when conducting outward foreign direct investment (FDI). Findings – This paper aims to make theoretical contributions by generating research propositions to address an under-researched area, i.e., how EMNEs manage their expatriates and the role of their expatriates in the outward FDI. Originality/value – No other person’s work has been used in the main text of the paper. This paper has not been submitted for the award of any other degree or diploma in this or any other tertiary institution.

Internationalization Factors of Thai Multinationals and Thailand's Bilateral Trade Policy

This article investigates the impact of Thailand's recent bilateral free-trade agreements (FTAs) on the internationalization of Thai multinational enterprises (MNEs). The results highlight the relative importance of internal and external factors in the internationalization of developing country MNEs. The empirical evidence indicated that Thai MNEs judged bilateral FTAs as a critical facilitator of internationalization success. The FTAs facilitated firms' exports to a certain degree and marginally expedited firms' international purchasing activities. The influence of FTAs on firms' foreign investment was not discernible.

Bilateral FTAs and internationalisation adjustments

This article investigates and analyses internationalisation adjustments of Thai multinational enterprises (MNEs). It is based on 10 case studies of Thai MNEs in the food-processing sector. The results highlight how bilateral FTAs can influence developing-country MNEs, based on a micro-level analysis. The empirical evidence indicates that Thai MNEs, in order to internationalise successfully, responded to FTAs by developing towards hybrid competitive strategies. These findings are integrated into a single conceptual framework for analysing the influence of bilateral FTAs on firms’ internationalisation. This offers a basis for further empirical investigation of the dynamics of internationalisation by firms based in emerging economies.

Transforming disadvantages into advantages: developing-country MNEs in the least developed countries

We analyze the advantages and disadvantages of developing-country multinational enterprises (MNEs) in comparison with developed-country MNEs. Developing-country MNEs tend to be less competitive than their developed-country counterparts, partly because they suffer the disadvantage of operating in home countries with underdeveloped institutions. We argue that this disadvantage can become an advantage when both types of MNE operate in countries with “difficult” governance conditions, because developing-country MNEs are used to operating in such conditions. The empirical analysis shows that, although developing-country MNEs rarely appear among the largest MNEs in the world, they are more prevalent among the largest foreign firms in the least developed countries (LDCs), especially in LDCs with poorer regulatory quality and lower control of corruption.

Accelerated internationalization by emerging markets’ multinationals: The case of the white goods sector

The emergence of a “second wave” of developing country multinational enterprises (MNEs) in a variety of industries is one of the characterizing features of globalization. This paper documents how emerging markets’ MNEs (EM-MNEs) may follow quite different patterns to reach, or at least approach, global competitiveness. In particular, it investigates how three EM-MNEs pursued global growth through accelerated internationalization combined with strategic and organizational innovation. Haier (China), Mabe (Mexico) and Arçelik (Turkey) emerged as multinationals in the large home appliances (so-called “white goods”) industry. The recipe for the success of these firms seems to lie in their ability to treat global competition as an opportunity to build capabilities, move into more profitable industry segments, and adopt strategies that turn latecomer status into a source of competitive advantage. At the same time, their experiences show that there are many strategies and trajectories for going global, consistent with a pluralistic conceptualization of globalization.