Economy Multinational Enterprises Research Articles

The Effect of Cross-border Acquisition Experience on Subsequent Cross-border Acquisitions: A Test of the S-shape Hypothesis

The literature generally supports the linear effect of cross-border acquisition (CBA) experience on subsequent CBA behaviour. We draw from the extended organisational learning perspective to propose an S-shaped relationship between CBA experience and subsequent CBAs. We hypothesise that the number of CBAs decreases at a low level of CBA experience, increases at a moderate level of CBA experience, and decreases again at a high level of CBA experience. Based on a sample of 1675 observations from 205 Indian MNEs, we find support for our hypothesis. Our findings contribute to the CBA literature, specifically in the context of emerging economy multinational enterprises.

Strategic asset-seeking acquisitions and marketing capabilities of Chinese multinationals: An ability, motivation, and opportunity perspective

This study explores the drivers of marketing capabilities of Chinese multinationals in the context of strategic asset-seeking acquisitions, which remain largely unexplored. Drawing on the integrative framework of the ability-motivation-opportunity (AMO) framework and the knowledge-based view, we argue that the decline in cost leadership capabilities before the acquisitions increases the motivation of Chinese multinationals to leverage the acquired strategic assets to enhance their marketing capabilities. Stronger managerial ability and higher regional international openness represent the ability component and favorable environmental conditions required to realize improvements in marketing capabilities. In contrast, industry dynamism, as an opportunity element, can constrain the achievement of this goal. We conduct an empirical analysis using the Heckman two-stage model, based on a sample of Chinese listed firms spanning the period from 2009 to 2021, and find support for our arguments in the results. Our findings contribute to the marketing literature by identifying a potential avenue for enhancing marketing capabilities and to the international business literature by investigating a new approach for emerging economy multinational enterprises (EMNEs) utilizing international M&As as a springboard to build competitive advantages of EMNEs in addition to improving innovation capabilities.

Dealing with Trust Deficit and Liabilities of Foreignness in Host Countries: Chinese Multinational Enterprises in Australia

In the face of growing global tendencies of anti-globalization and de-globalization, emerging economy multinational enterprises (EMNEs) are suffering from a trust deficit and multiple liabilities of foreignness in leading economies. The purpose of this study is to empirically examine the coping strategies of EMNEs towards the challenging institutional environment in host countries. It adopts a qualitative approach, conducting longitudinal multiple cases studies among MNE subsidiaries and employing interviews as the main method of data collection. The findings reveal that EMNEs are not passive recipients of the adverse institutional environment and adopt institutional adaptation as the only response strategy. Given that a single strategy cannot be effective, they have developed both proactive and protective strategies to handle the multiple liabilities of foreignness and trust deficit. This study can help EMNEs gain a better understanding of the dominance effect and develop more effective measures to manage challenging institutional environments in host countries. Given that interactions between institutional environments and firm-level strategies of MNEs remain under-researched, this study advances understanding of strategies and behaviours of MNEs in host countries.

Reverse innovations bridging the gap between entrepreneurial orientation and international performance

PurposeThis paper aims to elucidate the relationship between entrepreneurial orientation, reverse innovation and international performance of emerging economy multinational enterprises (EMNEs).Design/methodology/approachThe authors analyze archival data of Chinese limited companies between 2010 and 2016, including 11,230 firm-year observations about 1708 firms. In order to test the study’s mediation hypotheses, the authors apply an ordinary least square (OLS) regression.FindingsThe authors find evidence that the entrepreneurial orientation of EMNEs has a positive effect on reverse innovations. Furthermore, the authors find positive effects of reverse innovation on the international performance of EMNEs. This pattern of results suggests that the relationship between entrepreneurial orientation and international performance is partially mediated by reverse innovation.Practical implicationsThe study’s findings help managers in EMNEs to promote reverse innovation by building and using their entrepreneurial orientation. It also helps them to set out and gauge the chances of success of their internationalization strategies. The findings also hold relevance for firms in developed economies as well, as they may understand which emerging economy competitors stand to threaten their positions.Originality/valueThe strategic role of reverse innovations – i.e. clean slate, super value and technologically advanced products originating from emerging markets – has generated considerable research attention. It is clear that reverse innovations impact the international performance of EMNEs. Yet how entrepreneurial orientation influences international performance is still underexplored. Thus, the current study clarifies the mechanism by examining and testing the mediating role of reverse innovation among the entrepreneurial orientation–international performance link.

Learning through exploitative and exploratory overseas R&D: impacts on EMNEs' innovation performance

PurposeThis study aims to examine whether exploitative and exploratory overseas R&D have independent and significant effects on emerging economy multinational enterprises' (EMNEs’) innovation performance and whether top management team (TMT) nationality diversity and openness have a moderating effect on these relationships.Design/methodology/approachThis study analyzes data collected from Chinese-listed manufacturing enterprises for 2007 to 2018.FindingsEmpirical results show that both exploitative and exploratory overseas R&D can help improve EMNEs' innovation performance. The authors further find that TMT nationality diversity and TMT openness strengthen the aforementioned relationships.Originality/valueThis study presents the first empirical evidence showing whether and when exploitative and exploratory overseas R&D have independent and heterogeneous effects on EMNEs' innovation performance.

OFDI performance of EMNEs: A review and recommendations for future research

Outward foreign direct investment (OFDI) by emerging economy multinational enterprises (EMNEs) is an increasingly significant global economic phenomenon. A growing and extensive body of research has examined the OFDI performance outcomes of EMNEs. Our systematic review seeks to capture the diverse theoretical lenses adopted and advanced in this stream of research, synthesize empirical findings, identify methodological challenges, and recommend directions for future research. Following a comprehensive and rigorous literature review, we identified 175 relevant studies published from 2001 to 2020. Our review suggests that a wide range of theories across disciplinary boundaries have been applied, and in some cases extended, to understand the performance outcomes of the OFDI of EMNEs. Empirically, previous studies have focused on different performance dimensions when assessing the OFDI outcomes of EMNEs, and investigated antecedents and contingencies across micro, meso, and macro levels. Based on our review findings, we propose a number of future research directions to move this research stream forward.

IPR Regime Incongruence and R&D Internationalization Speed of EMNEs: An Institution-Based View

Emerging economy multinational enterprises (EMNEs), as latecomers to catch-up, start to internationalize their research and development (R&D) activities urgently in recent years. However, IB researchers have paid much attention to advanced economy multinational enterprises’ (AMNE) R&D investment to emerging economies, but relatively little attention to EMNEs’ R&D investment to advanced economies. Building on institution-based view, we study how the incongruence of intellectual property right (IPR) regime between home and host countries affect EMNEs’ R&D internationalization. Further, we explore the moderating effects of EMNEs’ social networks on the relationship between IPR regime incongruence and R&D internationalization. We test these ideas using 372 foreign R&D subsidiary establishment from 199 EMNEs in China during 2007-2017. Our research sheds new light on MNE’s R&D internationalization.

Race for market share gains: How emerging market and advanced economy MNEs perform in each other’s turf

The international business literature, while extensive by now, has given scant attention to the direct comparison of the performance of advanced economy multinational enterprises (AMNEs) and emerging market multinational enterprises (EMNEs) in international markets. In particular, the question of how well these firms perform in each other’s home markets is an intriguing one. In this study, we examine “market share” performance of AMNEs and EMNEs in each other’s countries using a comprehensive, longitudinal dataset. Drawing from the eclectic paradigm, we contend that, in comparison, EMNEs perform better as they: i) develop non-traditional ownership advantages based on their learnings in their home markets, and ii) expand into advanced economy markets relying on non-traditional ownership advantages. Our findings show a declining performance of AMNEs operating in emerging markets over time, while EMNEs generally appear to benefit from increased market shares in advanced economy markets for the same period.

Transforming the liability of outsidership into assets of outsidership: a comparative study of Japanese automotive subsidiaries in Russia

ABSTRACTThis study investigates the mechanisms that transform the liability of outsidership into assets of outsidership. Debates on transforming the liability of foreignness into assets of foreignness have been emerging, but transforming the liability of outsidership into assets of outsidership remains unclear. Drawing on organizational learning perspectives, we provide a comparative study of Japanese automotive subsidiaries in Russia. We suggest that advanced economy multinational enterprises in emerging markets benefit from local networks with a local partner but not from non-experience-based firm-specific advantages. Our study contributes to current debates in the literature by presenting the novel concept of ‘assets of outsidership’ and discussing the mechanisms of this transformation.

Strategic Configurations and International Performance of Emerging Economy Multinationals

ABSTRACTThis study examines the international performance of emerging economy multinational enterprises (EMNEs) from a strategic configuration perspective. We propose that the strategic patterns of EMNEs that deliver growth and/or profitability are characterized by different configurations of environment, strategy, and managerial resource factors. Therefore, identifying and assessing strategic configurations is key to understanding EMNEs’ international performance. Employing fuzzy-set qualitative comparative analysis, we analyze a multi-sourced dataset of Chinese firms’ outward investment and identify multiple equifinal strategic configurations that are associated with superior international performance in terms of sales growth and/or profitability. These findings inform the development of a taxonomy of EMNEs’ strategic configurations corresponding with three performance groups, namely profitable growth, profitable niche, and poor performers.

The effect of EMNE internationalization on innovation: the role of board diversity

There is a consensus among researchers that the internationalization of emerging economy multinational enterprises (EMNEs) was motivated by their intention to acquire strategic assets such as innovative technologies, broaden their expertise, and enhance their skills. However, surprisingly, the amount of research on the outcomes of EMNE internationalization and the role of strategic leaders in capturing the advantages of internationalization is scarce. To address this gap, we study the relationship between EMNE internationalization and innovation performance and the impact of two types of board-level diversity on this relationship. We empirically test these relationships on a 21-year panel data of 244 firms comprising the Indian biopharmaceutical industry. We find that EMNE internationalization has an inverted U-shaped relationship with innovation performance, and this relationship is contingent on board functional and gender diversity. Our study contributes to EMNE internationalization and upper echelons literature in several ways.

How Does Cross-national Knowledge Distance Influence Host Innovation?

How do advanced economy multinational enterprises (AEMNEs) leverage cross-national knowledge distance for their emerging market innovation? Drawing on an embeddedness perspective, we examine and extend the ‘learning-by-hiring’ and ‘learning-by-exporting’ logics for a better understanding of AEMNEs’ innovation activities in a dissimilar knowledge context where strong cross-national differences persist. We predict that the recruitment of local talents and third-country exporting as two mediators that shape and filter AEMNEs’ access and integration of geographically distant knowledge for their emerging market innovation. We further predict an inverted U-shaped effect of third-country exporting on AEMNEs’ innovativeness and a crowding-out effect of the recruitment of local talents on third-country exporting as an innovation mechanism. Our analysis of 534 AEMNEs operating in China offers support for our conjectures. Our study offers important implications on how to manage multiple embeddedness across AEMNEs’ global networks for their innovation to flourish in emerging economies.

Expatriate Management of Emerging Market Multinational Enterprises: A Multiple Case Study Approach

Expatriate management has evolved through the practices of developed economy multinational enterprises (DMNEs), with the aim of improving expatriate adaptability, cross-cultural adjustment, and performance. However, most of these studies focus on expatriates from developed countries and try to help DMNEs instead of emerging market MNEs (EMNEs). In a turbulent global economy, how EMNEs manage their expatriates when conducting business through their outward foreign direct investment (FDI) is understudied. This empirical study aims to address this research gap by utilising a qualitative approach and a multiple case study. It has conducted semi-structured interviews with expatriates, executives, and middle managers of Chinese MNEs in 2014. It contributes as one of the few to systematically examine expatriate related issues in the context of EMNEs with first-hand empirical evidence. The findings show that EMNEs are leapfrogging with their internationalisation and hence their expatriate policies are often ad hoc without systematic planning. Moreover, this study has contributed to practice, especially to EMNEs, regarding the way they need to improve their expatriate policies and practices.

A co-evolution perspective of EMNE internationalization and institutions: An integrative framework of 5Cs

While significant progress has been made on the contextual role of institutions, scholarly research on the dynamic process of emerging economy multinational enterprises’ (EMNEs) international activities interacting with home country and host country institutions still seems to be in its infancy. Therefore, in order to move the current academic debate forward, we examine the intersection between the internationalization of EMNEs and their institutional environments by undertaking a critical review of the existing literature, given that institutional forces not only shape organizational behavior but also affect EMNEs’ internationalization strategies and organizational outcomes. We propose an integrative framework of 5Cs (context, capability, change, concomitance and configuration) underlying the co-evolution of EMNEs’ internationalization and institutions, and position all the papers included in this Special Issue within this framework in order to point towards a number of directions for future scholarship.

Co-evolution of emerging economy MNEs and institutions: A literature review

This paper provides a review of the existing literature about the co-evolution of emerging economy multinational enterprises (EMNEs) and institutions and proposes directions for future study. We find that many existing studies involving the institution-EMNE relationship focus on the impact of institutions on EMNEs, and the research on their co-evolution is very limited in terms of emerging economies involved and theories and research methods applied. Given varieties of the institution-EMNE relationship we call for more studies by applying more contextualized theoretical perspectives and innovative and multiple research methods to advance our knowledge about the topic.

Innovation motives, knowledge sourcing and the roles of foreign subsidiaries: An exploratory study of advanced and emerging economy multinational enterprises

Innovation motives, knowledge sourcing and the roles of foreign subsidiaries: An exploratory study of advanced and emerging economy multinational enterprises

Home-country institutions and corporate social responsibility of emerging economy multinational enterprises: The belt and road initiative as an example

This paper examines the impact of home country institutions on corporate social responsibility (CSR) of multinational enterprises from emerging markets (EM-MNEs). Taking the Belt and Road Initiative (BRI) as an example and using a sample with 2052 firm-year observations from China over the period 2008–2018, we find that the BRI exerts a positive and significant effect on overall CSR of Chinese MNEs involved in the BRI and the positive effect is stronger for Chinese state-owned MNEs. In addition, only two dimensions of CSR (Employee Relations and Products) are improved significantly under the pressure of BRI. Finally, we examine the interactive effect of home- and host- country institutions on Chinese MNEs’ CSR and find the positive impact of the BRI on MNEs’ CSR performance is stronger in host countries with a higher level of CSR related institutional pressure. These results provide practical suggestions for the Chinese government and MNEs to further improve CSR under the BRI, and enrich our understanding of the interactive effect between home- and host-country institutions on enhancing Chinese MNEs’ reputation and promoting regional cooperation with countries along the BRI.

Multinational enterprises and the governance of sustainability practices in emerging market supply chains: An agile governance perspective

Advanced economy multinational enterprises (AMNEs) face idiosyncratic challenges related to the governance of their sustainability practices in their emerging market supply chains. One way for AMNEs to address these challenges would be by adopting agile sustainability governance mechanisms. Drawing on the theories of experimentalist governance and deliberation, we propose a processual framework suited to develop agile sustainability governance mechanisms. We explore the challenges to supplier participation and the factors that enable an authentic dialogue in the process. We contribute to the scholarship on transnational governance and strategic agility, and offer practical implications which are also relevant for disruptions like COVID-19.

Critical success factors for integrating artificial intelligence and robotics

Purpose This paper aims to enlighten stakeholders about critical success factors (CSFs) in developing intelligent autonomous systems (IASs) by integrating artificial intelligence (AI) with robotics. It suggests a prioritization hierarchy model for building sustainable ecosystem for developing IASs. Design/methodology/approach This paper is based on the existing literature and on the opinion of 15 experts. All the experts have minimum of eight years of experience in AI and related technologies. The CSF theory is used as a theoretical lens and total interpretative structure modelling (TISM) is used for the prioritization of CSFs. Findings Developing countries like India could leverage IASs and associated technologies for solving different societal problems. Policymakers need to develop basic policies regarding data collection, standardized hardware, skilled manpower, funding and start-up culture that can act as building blocks in undertaking sustainable ecosystem for developing IASs and implementing national AI strategy. Clear-cut regulations need to be in place for the proper functioning of the ecosystem. Any technology that can function properly in India has better chances of working at the global level considering the size of the population. Research limitations/implications This paper had all its experts from India only, and that makes the limitation of this paper, as there is a possibility that some of the factors identified may not hold same significance in other countries. Practical implications Stakeholders will understand the critical factors that are important in developing sustainable ecosystem for IASs and what should be the possible order of activities corresponding to each CSF. Originality/value The paper is the first of its kind that has used the CSF theory and TISM methodology for the identification and prioritization of CSFs in developing IASs. Further, eight significant factors, that is, emerging economy multinational enterprises (EMNEs), governance, utility, manpower, capital, software, data and hardware, have come up as the most important factors in integrating AI with robotics in India.

How EMNEs choose location for strategic asset seeking in internationalization?

PurposeBased on the strategy tripod perspective, this study aims to address how emerging economy multinational enterprises (EMNEs) make a strategic decision of choosing a foreign location for their strategic asset seeking and under what mechanism EMNEs make foreign direct investment (FDI) location choice.Design/methodology/approachThis paper first reviews the literature on strategy tripod and strategic asset seeking strategy of EMNEs. Then, six cases of Chinese multinational enterprises operating in manufacturing industry have been introduced, emphasizing on interactions within three dimensions of strategy tripod framework, namely, resource-based dimension, industry-based dimension and institution-based dimension. By triangulating with multiple sources of archival and interview data, this paper identified a conceptual model presenting location choice mechanisms.FindingsBased on a comparative multi-case study, four mechanisms of EMNEs’ location choice when seek strategic asset by FDI within a strategy tripod framework have been revealed. Specifically, EMNEs make their strategic decision of choosing a foreign location for their strategic asset seeking under mechanisms of seeking complementary resources based on industry characteristics; echoing with institutional dimension of home country when exploitation of resource; matching institutional dimension of host country when consider industry fitness; and institutional leveraging combined with understanding of resource and industry dimensions inside strategy tripod.Originality/valueThe findings shed novel insights into the mechanisms under which EMNEs choose their location for strategic asset-seeking FDI. It also broadens the strategy tripod framework by looking deeper into the characteristics of each dimension within a new research context of EMNEs’ FDI location choice.