Effects Of Multinational Enterprises Research Articles

The Influence of South Korea’s OFDI under the Effects of Multinational Enterprises’ Investment Motivations and Host Country Institutions

Purpose - This study aims to analyze the influence of South Korea’s outward foreign direct investment(OFDI) under the effect of both multinational enterprises’ (MNEs) investment motivation and host country institutions. Some suggestions are put forward with regard to South Korean MNEs participating in and integrating into the fierce and changeable world of international market competition.
 Design/methodology - The basic hypotheses are that MNEs’ investment motivations and the host country’s superior institutions both boost South Korea’s OFDI in those host countries. South Korea’s OFDI is divided into investment choice stage and investment scale stage. A Heckman two-stage selection model is established for empirical analysis, using the panel data of South Korea’s OFDI and related variables, from 2002 to 2019.
 Findings - (1) The influence on the investment scale of South Korea’s OFDI is more regular and noteworthy than the influence on investment choice. (2) In the investment scale stage, there are obvious motivations to seek markets, labor force and superior technology, but not natural resources. (3) In the investment scale stage, the South Korea’s OFDI is more obviously attracted by the host country’s superior political institutions, economic institutions and legal institutions, but not cultural institutions.
 Originality/value - The choices of variables and uses of model expand the theoretical basis and empirical method of OFDI research. The results of the empirical study also provide some reference for the transnational investment of South Korean MNEs and the investment policy formulation of the South Korean government.

The long-term energy transition: Drivers, outcomes, and the role of the multinational enterprise

The pre-eminence of the production and consumption of nonrenewable fossil fuels is waning with the growth of renewable energy solutions. This long-term energy (LTE) transition is one of the global grand challenges, characterized by uncertain and evolving markets. Although this is a global issue, there are regional differences and non-linear trajectories that suggest that the LTE transition is a complex challenge for firms and countries. For international business scholars, questions related to the role and effect of multinational enterprises in the context of the LTE transition have opened new avenues for advancing theoretical, managerial, and policy understanding. Thus, we advance this body of research by presenting a framework that delineates important drivers and outcomes of the transition. In this way, we emphasize how MNEs both influence and are being influenced by the LTE transition. We identify theoretical perspectives that may be useful to address LTE transition challenges, and suggest avenues for future research on this global grand challenge.

Multinational enterprises and strategic actions in emerging economy contexts: From conformity to institutional entrepreneurship

AbstractThis research explores the broader set of strategic actions of multinational enterprises (MNEs) in emerging markets in response to institutional forces. We re‐examine the effect of MNEs on changing institutions in host countries and conceptualize a theoretical model of institutionalization and institutional change initiated by MNEs in emerging economy contexts. In our two‐stage approach, we build on an inductive study to explore MNEs' strategic actions and their institutional settings. We then conduct repertory grid analysis to analyze face‐to‐face interviews with mid‐level and senior managers of subsidiaries of eight major MNEs. We identify distinctive categories of strategic action taken by MNEs to respond to facets of their institutional environment, depending on the restrictiveness/openness of their institutional environment, and their self‐perceived organizational strength.

Multinational enterprises and economic inequality

PurposeThis paper contributes to laying a foundation for a research agenda in international business (IB) on multinational enterprises (MNEs) and economic inequality, through an extensive literature review and development of a conceptual framework.Design/methodology/approachThe author conduct a systematic review of studies on economic inequality in IB literature, complemented by a broader selective review of studies in general management, economics, political science, sociology and other disciplines.FindingsThe review confirms that economic inequality has received little attention in IB research. Most contributions are recent conceptual studies, while empirical studies are scarce. Studies in economics and other disciplines provide further insights on the effects of MNEs on inequality, although specific findings are somewhat mixed.Research limitations/implicationsThe author develop a simple framework outlining channels of effects from MNEs activities on different forms of inequality, discuss challenges and opportunities for IB in addressing this topic and identify some avenues for future IB research on economic inequality.Originality/valueThis paper is the first comprehensive review of literature in IB on economic inequality. It also presents relevant literature on MNEs and economic inequality from various other disciplines and outlines the contributions that the IB discipline can make to the study of this topic.

Which boats are lifted by a foreign tide? Direct and indirect wage effects of foreign ownership

The attraction of foreign direct investment (FDI) is considered to be of particular importance for emerging economies because it represents a channel through which international convergence in standards of living may be achieved. One important effect of FDI is its impact on wages, both within the targeted firm (direct) and the local firms within the same geographic region and sector (indirect). In this paper, we investigate the question whether multinational enterprises (MNEs) raise or lower wages directly and indirectly, both theoretically and empirically. Importantly, the magnitude of these changes may depend on how many firms in the sector are already foreign-owned. Generally, the effect of MNEs on wages has not been studied as intensively in the international business (IB) literature as other aspects of FDI, and ours is the first article to specifically investigate the moderating effect of variation in foreign employment shares across industry–province cells (clusters). Using Chinese data on 146,199 firms, we estimate the direct wage effect of foreign ownership to be positive and to increase with the employment share of foreign-owned firms. We also find that the indirect effect on domestic wages varies with the foreign share and may even turn negative.

Spatial determinants of U.S. FDI and exports in OECD countries

World foreign direct investment (FDI) flows have been characterized by an unprecedented growth over the last four decades, with an uneven distribution across countries. This paper analyzes the spatial interdependence/third-country effects of multinational enterprises (MNE) for affiliate location choice and spillover effects of foreign direct investment (FDI). We specify a simultaneous equations model estimated using the generalized spatial two-stage least squares method on a sample of 25 OECD recipient countries of U.S. FDI during the period spanning the years 1999–2009. Our results lend support to the existence of complex vertical FDI and the significance of third-country effects, which is indicative of agglomeration economies.

Vertical Spillover Effects of Multinationals on Chinese Domestic Firms via Supplier–Customer Relationships

AbstractForeign direct investment (FDI) can benefit domestic firms in the host country. Using firm‐level data for China, we find statistically positive vertical spillover effects of multinational enterprises on the performance of domestic firms through backward and forward supplier–customer relationships. The spillover effects are mainly from large multinational enterprises and are greater for state‐owned firms and in poor regions. Our results are robust for both parametric regression and nonparametric matching techniques. Our findings have strong policy implications: while regulations relating to building business relationships with domestic firms when seeking foreign direct investment should be established, such policies should be aimed at private firms, big multinationals and less developed regions.