Host Country Environment Research Articles

Strategic motives, institutional environments, and firm’s FDI ownership

Purpose The study conceptualizes how firms’ strategic motives interact with the heterogeneity of host country institutional environments in determining the subsidiary ownership. The author hypothesizes and tests two interaction effects. The study found that firms with market-seeking motives are more affected by the heterogeneity of host country institutional environments, while firms with resource-seeking motives are less affected by the heterogeneity. The empirical findings are based on a sample of overseas subsidiaries reported in the annual reports of listed firms in China. Design/methodology/approach In this study, an empirical investigation was conducted using a sample of subsidiaries of listed firms in China. The data were compiled from 2012 annual reports of listed firms in China. The sample consists of 2,270 subsidiaries of these firms. Findings The study conceptualizes that firms with market-seeking motives and resource-seeking motives are influenced differently by the heterogeneity of host country institutional environments in determining their subsidiary ownership. We hypothesize two interaction effects. Firms with market-seeking motives are more subject to the heterogeneity of host country institutional environments in determining their FDI ownership level. In contrast, firms with resource-seeking motives are less subject to this heterogeneity. The findings largely supported the study’s hypotheses. Originality/value This study fills an important gap in the literature by incorporating the interaction between strategic motives and host country environments in the analysis of subsidiary ownership. The findings of the study suggest that firms with a market-seeking motive are more particular about the host country institutional environments. They will acquire a high level of ownership in host countries with attractive institutional environments. In contrast, firms with resource-seeking motive are less concerned with the host country institutional environments. Their decision on subsidiary ownership is less affected by the variance in host country institutional environments. This study adds to the stream of studies that have examined outward investments of firms from emerging economies, particularly the outward expansion of Chinese firms with different strategic motives.

The Embedding of Transnational Entrepreneurs in Diaspora Networks: Leveraging the Assets of Foreignness

In this paper we examine how foreign actors capitalize on their ethnic identity to gain skills and capabilities that enable them to operate in a new and strange environment. We explore the mechanisms by which Bulgarian entrepreneurs in London use their ethnic identity to develop competitive advantage and business contacts. We find that the entrepreneurs studied gain access to a diaspora network, which enables them to develop essential business capabilities and integrate knowledge from both home and host country environments. The diaspora community possesses a collective asset (transactive memory) that allows its members to remove competition from the interfirm level to the network level (i.e., diaspora networks vs. networks of native businesspeople). Additionally, the cultural identity and networks to which community members have access provide bridging capabilities that allow diaspora businesspeople to make links to host country business partners and thus embed themselves in the host country environment. Thus, this paper adds to the growing body of work showing how foreignness can serve as an asset in addition to its better-known role as a liability.

Subsidiary responses to the institutional characteristics of the host country

PurposeThe purpose of this paper is to examine the strategic responses of multinational enterprise (MNE) subsidiaries in China toward a unique institutional characteristic – the structural discrimination against rural migrant workers.Design/methodology/approachBased on surveys of 181 firms and 669 rural migrant workers, as well as a case study of eight firms in Jiangsu and Shanghai, the authors examined and compared the human resource management (HRM) policies of MNE subsidiaries and domestic Chinese firms toward rural Chinese migrant workers.FindingsThis study found that MNE subsidiaries are more likely to accept local discriminatory HRM practices when managing migrant workers. In response to the institutional environments of host countries, MNE subsidiaries tend to share similar behavioral characteristics with local firms and are reluctant to show leadership in initiating institutional change in host countries.Originality/valueThis study is important since it enables investigation of some prevailing assumptions in the literature. Contrary to common wisdom that MNEs are change agents that proactively engage in institutional entrepreneurship in host countries, this study found that MNEs’ responses to the institutional environment of host countries are shaped by their entry modes and the institutional environment in their home countries. MNEs are as diverse as their home countries and far from forming a unified organizational field with similar behavioral characteristics.

Leveraging the Assets of Foreignness in the Transnational Domain

In this paper, we examine how foreign actors capitalize on their ethnic identity to gain skills and capabilities that enable them to operate in a new and strange environment. We explore the mechanisms by which Bulgarian entrepreneurs in London use their ethnic identity to develop competitive advantage and business contacts. We find that the entrepreneurs studied gain access to a diaspora network, which enables them to develop essential business capabilities and integrate knowledge from both home and host country environments. The diaspora community possesses a collective asset (transactive memory) that allows its members to remove competition from the interfirm level to the network level (i.e., diaspora networks vs. networks of native businesspeople). Additionally, the cultural identity and networks to which community members have access provide bridging capabilities that allow diaspora businesspeople to make links to host country business partners and thus embed themselves in the host country environment...

Antecedents and Outcomes of Political Tie Intensity: Institutional and Strategic Fit Perspectives

Although international nonmarket strategy research has highlighted the importance of political ties, it is still unclear why some foreign subsidiaries are more politically active than others and what conditions may render political practices beneficial in a host country. We argue that foreign subsidiary political tie intensity—the extent to which senior managers provide time and resources in informally dealing with government officials for nonmarket purposes—will be influenced by political institutions in their parent's home country, especially when the MNE parent attempts to protect foreign subsidiary resources. Additionally, we assert that fit between a parent's home country political institutions and foreign subsidiary political tie intensity will positively affect subsidiary performance. We employ primary data collected from 181 foreign subsidiaries in the Philippines and find support for our hypotheses. This study advances international nonmarket strategy research by highlighting how an MNE's home country political institutions shape subsidiary political networking and strategic performance outcomes in host country environments.

Alternative Tourism Development: A Theoretical Background

This paper presents the development of tourism market through the alternative forms of tourism. Origins and main definitions are presented followed by an analysis of the complexity of classifying the alternative forms of tourism. It is about developing new forms of sustainable tourism that integrate local populations and both natural and human environments of host countries. Ecotourism, cultural tourism and creative tourism support a different philosophy of tourism. Ecotourism in recent years encloses many tourism forms focused on natural environment. In the concept of alternative tourism, the dynamic growth of cultural tourism can be explained by the fast growth of demand for trips to various cultural attractions and amenities. Τhe increase of educated population around the world, the globalization and technology supported this growth. Cultural tourist, from consumer is transforming to producer of the cultural products and experiences. Since this type of tourist becomes more interactive and creative, cultural tourism needs to be repositioned and become more “creative” too. In this way, the present article provides a simplified approach of the new “alternative” tourism development and distinguishes the current trends in tourism market.

INTERNATIONALIZATION OF INNOVATION ACTIVITY BY TNCS

The article analyses main stages in the internationalization of innovation activity undertaken by transnational companies and offers a generalization of approaches to its various forms. The analysis of the process of R&D internationalization was carried out based on the roles of subsidiaries in the general structure (network) of TNCs. The study of the evolution of innovation processes was performed in the context of behavioral types and roles of subsidiaries within the TNC networks and the host country environments. The analysis was focused on the main types of local and global linkages in the context of scientific and technical cooperation, with particular attention paid to TNC subsidiaries with a global role in research and development. The findings exposed the impact of TNCs’ internationalization of innovations upon host countries, revealed major tendencies in global knowledge spillovers, and corroborated the significance of linkages between structural units of TNCs and their partners in the host countries.

Do we really know the predictors of competence-creating R&D subsidiaries? Uncovering the mediation of dual network embeddedness

Many changes have been recorded in the R&D role played by the foreign subsidiaries of multinational corporations (MNCs), to the extent that today many are recognised as key players in the development of firm innovation-related competences. Given this trend, we examine the predictors of a subsidiary's R&D role as a competence-creating contributor to the MNC's long-term success. Traditionally, the predictors of subsidiaries' R&D roles have been sought in the specific features of the internal corporate and external host-country environments. However, we find that favourable corporate- and country-level conditions may not necessarily lead to the enhancement of a subsidiary's R&D role unless dual embeddedness – that is, the subsidiary's embeddedness in the knowledge networks of the MNC (internal embeddedness) and in those of the host country (external embeddedness) – is well established. The main contribution of this paper is the development of a multiple mediation model that disentangles the way in which corporate and host-country environments interrelate with a subsidiary's dual embeddedness in the expected configuration of its competence-creating R&D role. In developing the model, we use the PLS-SEM method to estimate the relationship between these elements and, eventually, to forecast the subsidiary's competence-creating R&D role. The proposed model should help managers shape the fate of the subsidiary's R&D strategic role.

Deciphering the ‘Ethnic Penalty’ of Immigrants in Western Europe: A Cross-Classified Multilevel Analysis

While most previous research on immigrants’ assimilation refers to the residual disadvantage that remains in empirical analyses of economic outcomes as a general ‘ethnic penalty’, this current paper disentangles the ‘ethnic penalty’ by dividing it into four components: individual characteristics, country characteristics, the social environment in host country, and the policy environment in host country. This study tests the effects of these four components on three economic outcomes: employment, labor force participation, and household income. Data from the European Social Survey, the Migrant Integration Policy Index, the UN, and the World Bank are integrated here. Findings show that the main reasons for immigrants’ disadvantage in terms of labor force participation and household income are both origin and host country characteristics, while the effects of ethnic origins, social exclusion, and policies are weaker. However, ethnic origins and social exclusion actually play a central role in determining unemployment of immigrants.

I am going to make the most out of it! Italian university Credit Mobility Students' social representations of alcohol use during study abroad experiences.

The aim was to explore shared representations of alcohol use in students who were to travel abroad to study. Focus group data from Italian students ( N = 69) were collected. Analyses used Grounded Theory Methodology and were informed by the four key components of Social Representation Theory (cognition, emotion, attitude and behavioural intentions). The study abroad experience was described as one that would involve an increase in alcohol consumption compared to pre-departure levels. Reasons given included greater social and leisure opportunities involving alcohol, reduced social control and features of the host country environment. Opportunities to intervene and address risky alcohol use in this group are discussed.

The Role of Cultural Factors on Intra-Firm Technology Transfer Performance and Corporate Sustainability: A Conceptual Study

<p>Technological innovations have emerged as crucially significant factor for sustaining market competition and achieving sustainable competitive advantage in the 21st century. The Multinational Corporations (MNCs) as celebrities of innovation play significant role in diffusing technological knowledge throughout firms both nationally and internationally. Although numerous studies exist on technology transfer the majority of existing literature addresses the issues related to inter-firm transfer of technology only while the area related to intra-firm transfer of technology has been largely underexposed; study of which is believed to be ideal for fruitful exploration of profitability in technology transfer projects. By exploring the existing relevant literature, the current study would attempt to posit a new model in regards to the effect of host-country cultural environment on the performance of technology transferred by the MNCs to their subsidiaries in Malaysia and its subsequent impact on the corporate sustainability of the firm. In the present study the relative influence of two cultural environment factors, namely national cultural distance and organizational cultural distance have been addressed and the study is expected to contribute both theoretically in the body of knowledge and also in terms of practical implication for policy makers of the host-country and the involved MNCs and hence enriching the existing intra-firm technology transfer literature simultaneously.</p>

Foreign Unit Strategic Decision Making Process

A foreign subsidiary unit of a multinational corporation (MNC) goes through evolutionary stages as it grows in its host country environment. For each stage of its evolutionary process, there are specific challenges and expectations of which its top management must be fully aware in order to succeed in its decision making and action. The foreign subsidiary unit’s top management must analyze its performance expectations and performance criteria, as set by the MNC’s corporate headquarters, home and host countries’ stakeholders, in order to be effective in managing the foreign subsidiary unit.

The Influences of Multinational Corporation’s Headquarters and Host Country Cultures on Foreign Subsidiaries’ Management Styles

The approach of the traditional top down total directives from an international (or, multinational, global or transnational) corporation’s corporate headquarters to its foreign subsidiary units about the choice of the unit's management styles and organizational culture and internal practices is not effective. Instead, international firms must allow the units to develop their own management styles and organizational culture to suit their respective host country environments, religion, social, work and operating cultures. Please see Notes 1 and 2 for definitional issues. Host country cultures have strong influences on a foreign subsidiary unit’s organizational culture in as much as the headquarters’ influence can be somewhat blended and tempered. Host country nationals employed in the foreign subsidiary unit, while they are loyal to the generalized, core global corporate philosophy and values from the headquarters, they can be expected to be more intense in their feelings of their national patriotism and values. The foreign subsidiary’s management styles and organizational culture are more likely to closely adhere to the host country’s values and temperament. The moral of the issue is that the headquarters must delegate to the foreign subsidiary the choices of management style, method of management and the internal organizational culture and processes that pervade its internal workings. The corporate headquarters’ influences are likely to hold stronger for the specific values, processes and norms of industry, technical, commercial, and administrative so long as they do not conflict with the host country’s core cultural values, norms and tradition and practices.

Financing the internationalisation of Indian MNEs

In the wake of increasing outward foreign direct investment (OFDI) from India, their financing in the form of intra-company loans and equity is an interesting area of research. This paper examines the determinants of OFDI financing by Indian parent firm to its affiliates abroad. Using disaggregated analysis of 66 countries where Indian parent firms have invested over the period of March 2009 to March 2014, the paper analyses the impact of economic, political, legal and financial environment including stock market development on the financing decision of Indian parent firms. By applying random effects probit model, we find that the financial and legal environment have a significant bearing on their financing decision. This paper is first of its kind to explore the relatively unexplored link between host country’s characteristics on the nature of funds invested by parent firm in its foreign affiliate. By focusing on parent debt, we move into the realm of internal capital market of the parent firm investing abroad. The results indicate that parent debt is provided to foreign affiliates as a measure to contain risks posed by legal environment and political instability in host country. This contributes to the brighter side of internal capital market. Lesser parent debt provided in response to high tax regime and exchange depreciation in the host country highpoints to the dark side of internal capital market. The paper in a way also contributes to the scant literature on supply-side macroeconomic determinants of capital structure in a multinational setting.

The relationship between family adjustment and expatriate performance

Following the global economic collapse, executives are significantly more demanding in understanding the Return on Investment of employee-related programmes including expatriate programmes. Expatriates are defined as employees who are recruited to provide a service in a country which is not the country of residence, typically for at least three years. Expatriate programmes carry high risk; even more so when the family accompanies the employee. The cost of an expatriate assignment is, on average, three times higher than that of a local; yet the failure rate is estimated to be up to 40%. Despite the cost, expatriate resources are critical to embed culture, policies and transfer of skills to a host country environment. The objective of this study was to identify the relationship between the adjustments of the expatriate’s family in the hostcountry on the performance of expatriates. The study was conducted using a quantitative research approach. A convenience sample was used and 81 expatriates completed the questionnaire. The results confirmed home to work spillover and that expatriates would value more organisational support for families in the new location. The length of stay in the host location was linked to higher levels of performance – the longer the assignment, the better the performance levels of the expatriate. Human Resources Practitioners can develop support programmes to ensure that expatriates and families are equipped to enhance their adjustment period and consequently positively impact the expatriate’s performance whilst on assignment.

The motivation of international entrepreneurship: The case of Chinese transnational entrepreneurs

The ventures of transnational entrepreneurs (TEs) are a new business phenomenon, representing a fluid context in which established arrangements may be expected to change. In terms of one particular relationship, motivation has been found to be a key construct in international entrepreneurship (IE) research, with two established features of motivation comprising entrepreneurial vision and its implementation. At the same time, nationality has been found to be a consistent influence on entrepreneurial orientation through the impact of culture. Employing qualitative case study methods, this paper investigates these relationships in the new context of the internationalization of Chinese TEs socially embedded in their host and home countries. Subtle changes in established patterns of IE motivation are detected, and Chinese cultural influence may also be weakening to meet the environment of host countries.

Effect of Pre-Departure Culture Preparation Courses on Student Learning during International Fieldwork

This paper examined the effect of two pre-departure culture preparation courses on student learning during their International Fieldwork in Asia. These courses are designed to develop Anglo-European origin Australian students’ knowledge, understanding and appreciation of Asian societies, cultures, etiquettes, education and political systems, together with Asian problem solving and living styles. The courses further foster student skills in intercultural communication with people from Asia. A group of students completed the training and travelled to China for fieldwork. Their evaluation and feedback, together with their written assignments, were collated and analyzed. Results indicated that the two courses are effective in assisting students’ cultural adaptation to the host country environment and engaging in higher culture learning during their fieldwork.

Mitigating the Isomorphic Conflicts Faced by EMNEs in Southern Europe: The Case of Chinese Subsidia

Emerging market multinational enterprises (EMNEs) are rapidly increasing their foreign direct investment around the world and, in particular, in the countries of Southern Europe. Although, international business scholars have been quick to put the spotlight on this new phenomenon, the cultural adaptation of EMNE subsidiaries to host-country environments, especially those of Europe, has remained largely unexamined. This question acquires particular relevance owing to the considerable cultural distance between emerging and developed economies and the isomorphic conflicts that can arise at the subsidiary level. Here, we examine this situation by reporting two case studies of Chinese subsidiaries operating in Spain. Our findings suggest that guanxi – the deep-rooted system of personal relations and social connections founded on mutual interests – plays a major role in the search for legitimacy undertaken by Chinese subsidiaries located in Southern Europe. The adoption and adaptation of Chinese cultural values and practices to the local environment allow the subsidiary to align itself with the culture of the parent organization at the same time as it embeds itself in the host environment, thus resolving any isomorphic conflicts.

A Survey of the Influencing Factors for International Academic Mobility of Chinese University Students

AbstractThis research aims to understand the factors influencing international academic mobility within the Chinese higher education context. The inventory of University Students’ Perceptions of Influencing Factors for International Academic Mobility was developed and tested to enquire about Chinese university students’ perceptions of factors influencing their decisions on international academic mobility. The findings reveal that ‘mobility cost’, ‘quality of host institutions’, ‘future career prospects’, ‘financial aid and employment rate and income in host country’ play leading roles in international academic mobility. Important differences were identified in ‘gender’, ‘major‐ and family‐education background’. Hierarchical multiple regression analysis was conducted to predict the interest in mobility from the external factors. The results indicated that ‘future career prospects’, ‘quality of host institutions’, ‘mobility cost’ and ‘climate environment in host country’ emerged as significant favourable pull factors for Chinese university students' interest in mobility. ‘Geographical distance’ emerged as a significant unfavourable pull factor. ‘Impact from parents’ and ‘language and intercultural training of home institutions’ emerged as favourable push factors. ‘Economic situation of home country’ emerged as an unfavorable push factor.

Labour relations policies in multinational companies: A three-country study of power dynamics

It is generally assumed that multinational companies will, to some extent at least, adapt their practices to host country environments. However, recent work suggests that this process of adaptation is yet more complex and uneven. It is our contention that subsidiary policy on labour relations is not simply the product of adaptation from and to home and host institutional environments but is in fact shaped by the multiple power relations that characterize multinational company subsidiaries. This three country comparison between Argentina, Canada, and Mexico shows that a policy of strong engagement with trade unions requires the presence of actors that can mobilize power resources. It is when both management and workers have power resources that subsidiaries are more likely to develop a policy of strong engagement with trade unions.