European Multinational Corporations Research Articles

Exploring tax-related sustainability reporting by electric utilities

This study examines tax-related sustainability reporting among electric utilities. Our sample consists of the 32 electric utilities included in the S&P Global Sustainability Yearbook 2022. A content analysis was conducted to examine their level of tax-related sustainability reporting. The concepts of isomorphism and diffusion underpin the interpretation of the findings. Two sources of coercive isomorphism are identified: the State, via Directive 2014/95/EU, making sustainability reporting mandatory in the EU, and the laws transposing it; and European multinational corporations’ influence on Latin American subsidiaries. We also identified normative and mimetic isomorphism related to awards and responsible tax initiatives in Spain.

The role of local news in constructing media legitimacy: how news media frames the sociopolitical efforts of multinational corporations in host countries

PurposeFor corporate communications, it is crucial to know how news media outlets report and frame the sociopolitical activities of multinational corporations (MNCs), including their corporate diplomacy, that affect perceptions of their legitimacy. Therefore, this study aims to identify how local news media frame corporate diplomacy in a host country and, in turn, benefit the media legitimacy of MNCs.Design/methodology/approachTo identify media frames in the host country, a quantitative content analysis involving factor and cluster analyses of 385 articles published in newspapers in the United Arab Emirates from 2014 to 2019 addressing the corporate diplomacy of large European MNCs operating in the country was conducted.FindingsThis study identified three media frames, two of which establish moral and pragmatic media legitimacy. Results suggest that media legitimacy grows when news media emphasise institutional relationships between MNCs and local, established organisations and corporate diplomacy's benefits for society.Practical implicationsFindings provide insights into how corporate communications can contribute to legitimacy building by emphasising corporations' relationships with institutional actors in host countries and the benefits of corporate activities for local communities.Originality/valueTo the best of the authors’ knowledge, this study was the first in corporate communications to empirically investigate news media's role in corporate diplomacy and how media frames contribute to the media legitimacy of MNCs at the moral, pragmatic, regulative and cognitive levels.

The Effects of the Stakeholders Relationship Management during Pandemic

Partner management, partner relationship management examines have a significant spot in writing. We looked for their effect on organization performance through the Employee and Social parts of Company Evaluation interceding factors in Covid-19. Laborers were chosen to accomplish the objectives of the examination. Employees hold and as they are the internal stakeholders. Thus, it becomes necessary to explore their effect in stakeholder relationship management on organizational efficiency, which is highly competitive. The staff was essential to cover the organization’s accomplishments. If they functioned as a gathering, the impact might be exceptional. The organization’s management would comprehend the workers’ prerequisites and aspirations, and a management style of advanced organization systems was resolved. It was found from the investigation that inside partner relationship management framework is organizational performance. Via the eyes of European multinational organizations, the thesis examines the relationship between corporate social responsibility (CSR) and organizational success. Furthermore, the study investigates the role of corporate reputation as a moderator in the CSR-organizational performance linkages. The final data set included 340 responses from senior executives/managers at European multinational corporations.

Making the Elite: Top Jobs, Disparities, and Solutions

How do socioeconomically unequal screening practices impact access to elite firms and what policies might reduce inequality? Using personnel data from elite U.S. and European multinational corporations recruiting from an elite Indian college, I show that caste disparities in hiring do not arise in many job search stages, including: applications, application reading, written aptitude tests, large group debates that assess socio-emotional skills, and job choices. Rather, disparities arise in the final round, comprising non-technical personal interviews that screen on family background, neighborhood, and "cultural fit." These characteristics are plausibly weakly correlated with productivity (at the interview round) but strongly correlated with caste. Employer willingness to pay for an advantaged caste is as large as that for a full standard deviation increase in college GPA. A hiring subsidy that eliminates the caste penalty would be more cost-effective in diversifying elite hiring than equalizing the caste distribution of pre-college test scores or enforcing hiring quotas.

Making the Elite: Top Jobs, Disparities, and Solutions

How do socioeconomically unequal screening practices impact access to elite firms and what policies might reduce inequality? Using personnel data from elite U.S. and European multinational corporations recruiting from an elite Indian college, I show that caste disparities in hiring do not arise in many job search stages, including: applications, application reading, written aptitude tests, large group debates that assess socio-emotional skills, and job choices. Rather, disparities arise in the final round, comprising non-technical personal interviews that screen on family background, neighborhood, and "cultural fit." These characteristics are plausibly weakly correlated with productivity (at the interview round) but strongly correlated with caste. Employer willingness to pay for an advantaged caste is as large as that for a full standard deviation increase in college GPA. A hiring subsidy that eliminates the caste penalty would be more cost-effective in diversifying elite hiring than equalizing the caste distribution of pre-college test scores or enforcing hiring quotas.

Who wins the race for knowledge-based competitiveness? Comparing European and North American FDI patterns

The geographical dispersion of value-added activities triggered by the ‘great unbundling’ of production has made the race for competitiveness increasingly shaped by the capability of multinational corporations (MNCs) to orchestrate global innovation networks at world scale. However, major differences in the distribution of foreign investments across value chain functions undertaken by MNCs based in different economic areas have drawn little attention in the empirical literature. This work attempts to fill this gap by focusing on the FDI patterns of European and North American MNCs, which have historically played a key role in the internationalization of production and innovation. To this aim, we compare outward FDI flows of European and North American MNCs in manufacturing and knowledge-intensive activities over the period 2003–2017. We show that while European MNCs are key players in global networks of production, they do not reach the heights of North American investors in the dispersion of knowledge-based activities. Most importantly, European MNCs rely on emerging economies more to offshore production than to set up R&D labs in these countries; by contrast, US-based MNCs are more prone to engage in knowledge-intensive FDIs towards the most dynamic emerging countries (especially China and India, as well as the Four Asian Tigers). Further, we account for the growing role of new entrants in global FDI markets by comparing the advanced economies’ foreign investment decisions with those from Chinese MNCs. Drawing from the literature on the globalization of R&D and cross-border knowledge transmission, a discussion is finally offered on the potential implications of the detected differences in internationalization patterns, together with possible directions for future research.

‘It's so fake’: Identity performances and cynicism within a people analytics team

AbstractThis article reports on a participant ethnography of a people analytics (PA) team operating within the human resources (HR) function of a European multinational corporation at the cutting edge of PA development. Despite their analytical expertise, this team experienced significant dissonance between their desired image of PA work and the actualities of PA practice. Our analysis explains this dissonance through two prevalent identity performance scripts: ‘customerization’ and ‘action‐orientation’. Taken together these scripts were identified as having a restrictive impact on the production of more scientifically rigorous PA work. Further, both of these scripts were found to be imbued with cynicism, whereby PA practitioners distance themselves from the commercial presentation of their work outputs. The article reveals how management preferencing of presentational and commercial considerations over those of scientific rigour may result in a failure to generate the level of organisational benefits promoted by the optimistic accounts in current literature, with negative implications for the reputational profile of PA.

The Effects of the Stakeholders Relationship Management on Organization Performance

Partner management, partner relationship management examines have a significant spot in writing. We looked for their effect on organization performance through the Employee and Social parts of Company Evaluation interceding factors. Laborers were chosen to accomplish the objectives of the examination. Employees hold and as they are the internal stakeholders. Thus, it becomes necessary to explore their effect in stakeholder relationship management on organizational efficiency, which is highly competitive. The staff was essential to cover the organization's accomplishments. If they functioned as a gathering, the impact might be exceptional. The organization's management would comprehend the workers' prerequisites and aspirations, and a management style of advanced organization systems was resolved. It was found from the investigation that inside partner relationship management framework is organizational performance. Via the eyes of European multinational organizations, the thesis examines the relationship between corporate social responsibility (CSR) and organizational success. Furthermore, the study investigates the role of corporate reputation as a moderator in the CSR-organizational performance linkages. The final data set included 340 responses from senior executives/managers at European multinational corporations.

The impact of international interorganizational relationships on creativity: the local partner perspective in an emerging country

PurposeThis paper aims to understand how international interorganizational relationships (IORs) impact the organizational creativity of a local partner in an emerging country, and how the creative capacities of emerging countries firms are developing.Design/methodology/approachThe study is exploratory and qualitative, based on five IORs between European multinational corporations (MNCs) and Tunisian firms operating in the consumer goods sector analyzed using the Gioia method.FindingsThe results show that it seems necessary for firms in emerging countries first to be legitimate, then to have dynamic capacities (learning capacities in particular), and that they know how to develop an innovation strategy and implement it concretely. The authors highlight three different organizational mechanisms. The first concerns analyzing the legitimacy of the local partner to engage in an innovation process based on its distinctive capacities and formalization of procedures. The second involves building dynamic capabilities, especially technological and managerial skills, in order to meet the challenges of the growing collaboration between the partners and to expand their mandate. The third deals with implementing an innovation strategy on two fronts: trust between partners and sustainable innovation.Research limitations/implicationsThe contributions focus on the international dimension of the IORs' impact on creativity and the role of the local partner's creative capacities. The work highlights to what extent “techno-centric” creativity plays a role in the absorption capacity of local partners, as well as the level of assistance provided by MNCs for developing innovation in emerging countries' firms. Moreover, our results show that increasing awareness of ecological and responsible consumption is reorienting production patterns on both local and global scales and offers many benefits for local and multinational firms. The limitations concern the sample size, the narrow diversity of the sector and the lack of information regarding multinational firms.Originality/valueThe originality of this paper is to show the construction of the creative process at the level of the local partner, from the execution of a specification to the implementation of a sustainable innovation strategy.

European Oil & Gas and Energy MNCs in Russia: Innovation Factor

Multinational corporations (MNCs) are an important object of research. One of the aspects, which is studied, is their role and influence on the development of innovations in recipient countries. Direct investments from the European countries have the largest percentage in the overall stock of foreign investments in the Russian economy and energy sector, in particular. European oil&gas and energy MNCs, including BP, Total, Equinor, Shell, OMV, Eni, Enel, Fortum, Uniper have a long-term history of working in Russia, but mostly through bilateral partnerships with leading Russian players. European companies have provided their international experience and innovative approaches while working on joint ventures, as well as support several Russian universities and research centers through corporate social responsibility projects, which are, nevertheless, quite limited. In order to increase the in-novational effect of European MNCs’ activity in Russia it seems reasonable to develop “open” approach based on innovation and production clusters, which include small and medium enterprises, instead of developing relations in “closed” communication networks. One of the examples of “open” approach is the activity of the Italian Enel. Transition of the European economy to low carbon state (including the energy transition), changes in the strategic priorities of the European oil&gas and energy MNCs may have risks for the Russian energy sector (including the transborder carbon tax) as well as provide new opportunities for technological cooperation in the segments of alternative, hydrogen energy and others. Development of clusters may become one of the ways to reconfigure foreign investments, but the specifics of certain locations are to consider. Russian MNCs may also seize the moment to increase and diversify their presence in Europe.

How do MNCs translate corporate talent management strategies into their subsidiaries? Evidence from MNCs in Thailand

How do MNCs translate corporate talent management strategies into their subsidiaries? Evidence from MNCs in Thailand

Contemporary restructuring trends in European multinational corporations: rationale and impact on labour and workers’ participation

PurposeThis paper addresses the so far hardly understood contemporary restructuring trends in European Multinational corporations (MNCs), their rationales and their labour-related implications.Design/methodology/approachThe paper is based on a systematic evaluation of academic and non-academic literature, as well as on more than 30 in-depth interviews with academic experts, management consultants, trade union consultants and workers’ representatives.FindingsEuropean MNCs continue to grow bigger, mostly through debt financed mergers and acquisitions. This triggers intensive cross-border standardization and reorganization activities that most prominently materialize as a sustained move towards global factories; a new wave of cross-border standardization in Human Resource Management, information technology and Big Data-driven, as well as compliance-induced reorganization measures.Originality/valueThis paper is the first to empirically map contemporary restructuring trends in European MNCs in a comprehensive way. Moreover, it addresses the managerial rationale underlying these restructuring trends. Based on these insights the paper assesses labour related implications that are both positive and negative.

Patent Concentration, Asymmetric Information, and Tax-Motivated Income Shifting

We study the relation between patent concentration and tax-motivated income shifting. Using affiliate-level data for European multinational corporations (MNCs) and employing the relative share of patents held by an MNC as a measure for patent concentration, we predict and find that tax-motivated income shifting is increasing in the degree of patent concentration. This effect is economically meaningful: A one standard deviation higher patent concentration increases the extent to which affiliate-level profits are sensitive to income-shifting incentives by 25.6 percent. Additional tests exploiting variation in the information set of the local tax authority suggest that patent concentration facilitates tax-motivated income shifting by reducing comparable information available to the local tax authority. Overall, our results suggest that patent concentration shapes an MNC’s incentives to shift income via patents. Our findings also indicate that the effectiveness of tax-policy measures in curtailing this form of income shifting critically depends on their ability to improve the information set of the local tax authority.

Formalizing the HRM and firm performance link: the S-curve hypothesis

This study incorporates theory from economics to formalize the HRM–firm performance relationship. We propose and test a new theoretical model that predicts optimal points of investment in the HRM system where greater benefits are returned. The model also identifies investment levels that lead to negative and diminishing returns. In developing the intersection of HRM and economics we realize an opportunity to challenge the consistent adoption in the literature of what we call “linear logic”, or the assumption that continuous investment in HRM yields benefits at the same rate. Hypotheses were tested using data collected over two years from subsidiary leaders of a large European multinational corporation (MNC) operating in 27 countries. Financial performance data were gathered over three years, as well as economic data pertaining to industry, country, and regional effects. The results reveal that the relationship between investing in the HRM system and firm marginal benefit is nonlinear in the shape of an S-curve. Our findings provide insights on investment levels where the HRM system can have a positive influence on firm performance. Implications for theory and practice are provided.

THE ROLE OF INFORMAL INSTITUTIONS IN SHAPING RECRUITMENT PRACTICES IN WESTERN SUBSIDIARIES IN LEBANON

ABSTRACT Purpose– With the international expansion of the multinational corporations come many challenges among which whether to adapt their human resources management practices to the host country’‘s cultural norms or to standardize these practices internationally based on the parent country practices. This article underlines precisely the adaptation of Human Resource Management policies and mainly the selection and recruitment practices to the host country cultural norms and informal institutions. Thus, the aim of this article is to study the particularities of the Lebanese culture and informal institutions by showing how and why human resources practices are being adapted. Methodology– A multiple case study approach is used for the purpose of this research where ten case studies were explored concerning recruitment and selection practices in Lebanese subsidiaries of US and European Multinational Corporations. Results– Human resources practices are mainly being adapted to the Lebanese subsidiaries. The recruitment and selection practices are heavily affected by the Lebanese informal institutions. Originality– This research highlights the host-country specificities explaining the transfer of recruitment and selection to Lebanese subsidiaries. Keywords Lebanon, Culture, Informal institutions, recruitment, selection, Multinational Company

Between Business Interests and Ideological Marketing: The USSR and the Cold War in Fiat Corporate Strategy, 1957–1972

Abstract This article analyzes the landmark deal between the Italian automobile corporation Fiat and the Soviet government to build and operate the Volga Automobile Factory (VAZ). Drawing on formerly closed corporate records and declassified Soviet documents, the article traces how the Cold War helped shape the strategy of a West European multinational corporation in its attempts to manipulate the national and international political context in which it was acting. In Fiat's strategy toward the uncertain Soviet market, car production represented more of a bridgehead than an ultimate objective. Fiat's Ostpolitik was carefully planned and coordinated with the U.S. government and with other large Italian businesses. Italian-Soviet cooperation in building VAZ, the symbol of material well-being and peaceful industrial reconstruction, facilitated the requests of Soviet officials and Western corporations to lift East-West trade restrictions on non-strategic goods, thus conferring political legitimacy on trade with the Soviet Union.

Cross-Border Standardisation and Reorganisation in European Multinational Companies

Multi-national corporations (MNCs) are constantly undergoing a process of standardisation and reorganisation (S&R), which is fuelled by the rapid development of information technology (IT). These developments require an in-depth and systematic inquiry as they have serious ramifications for labour and workers’ participation across Europe. Moreover, there is a lack of systematic research into the effects of these new, and especially IT based, S&R measures on the quality of labour and labour relations in European MNCs. This report provides a comprehensive overview of new (and renewed) SR 2) the critical role of outsourcing for standardisation processes; 3) new developments in HRM process standardisation; 4) IT-based standardisation; 5) standardisation by Big Data and Industry 4.0; and 6) compliance-induced measures of process standardisation. In practice, all six trends often interconnect to exert a strong impact on labour and labour relations in contemporary MNCs. Hence, the report explores the critical impact of the six trends on labour and workers’ participation across Europe, and also addresses their interconnectedness in relation to the powerful managerial rationales which trigger the observed new (and renewed) S&R moves.

The sense of it all: Framing and narratives in sensegiving about a strategic change

Managers leading strategic change processes have to be skilled language users in order to convince others of the necessity of change and to shape the interpretations of their followers in a preferred direction. This paper asks how and why managers employ certain forms of language in their sensegiving during strategic change, and when these managers are effective in their language use to change the sensemaking of others in the organization. On the basis of a longitudinal case study of a European multinational corporation, we find that effective sensegiving is about providing organizational members with a pragmatic form – a way of making sense rather than, as previous research suggests, about providing them with pre-packaged meanings. We extend prior research by distinguishing the effects that the different linguistic forms of managerial sensegiving have on organizational sensemaking. Furthermore, the managers we studied were effective in their sensegiving when they combined framing and narratives. These two forms of language supported each other by amplifying the overall effect on organizational sensemaking. This notion of a combined use of framing and narratives complements previous research, which has largely studied them separately.

Foreign Investment in Iran: Multinational Firms’ Compliance with U.S. Sanctions

When President Donald Trump withdrew from the nuclear deal with Iran, he ushered in a high-stakes competition between the United States and Europe to determine whether unilateral U.S. sanctions could impose overwhelming pressure on Iran, or if European governments could protect the economic gains that accrued to Tehran from the nuclear deal. If European countermeasures defused American sanctions, the incentives for Iran to abide by the deal would remain intact. Perhaps more importantly, Europe would demonstrate that Washington cannot wage economic warfare without its consent and participation. A critical measure of European ability to restrain the United States is the response of European multinational corporations to the return of U.S. sanctions. In addition, it is important to monitor how top Asian multinationals navigate the transatlantic competition. Will leading multinationals withdraw from the Iranian market rather than risk losing access to American markets and the U.S. financial system? Or will firms conclude the U.S. threats are hollow, since punishing European and Asian multinationals would inflict substantial damage on American firms and consumers? This report serves as a scorecard for all those who are tracking sanctions compliance, including the Department of the Treasury, Department of State, and U.S. officials in other government agencies who monitor sanctions compliance. It provides a country-by-country list of firms with investments in Iran, indicating which ones are likely to stay, which to leave, and which have made no announcement. In all, the report covers 232 companies and business associations, of which 67 are part of the Fortune Global 500 list of firms with the highest revenues. In the four months since the U.S. withdrawal from the 2015 nuclear deal, 31 European and Asian firms in the Global 500 announced they would be leaving the Iranian market or hinted their exit was imminent. The list includes France’s Total, Airbus, and PSA/Peugeot; Denmark’s Maersk, Germany’s Allianz, and Siemens; Italy’s Eni; Japan’s Mazda and Mitsubishi UFJ Financial Group; and the UK’s BP. In contrast, Renault is the only European member of the Global 500 that expressed an intention to resist American pressure, yet its COO indicated in July that the company will suspend operations. Since U.S. sanctions do not apply in general to food and medicine, Nestle has announced it will continue operations in Iran. France’s Sanofi, Germany’s Bayer, and Switzerland’s Roche have not yet announced their plans, yet sanctions may not affect their pharmaceutical work, nor Danone’s beverage business. Lufthansa will also continue its flights to Iran, which do not necessarily conflict with sanctions. All together, we assess that 71 companies plan to withdraw from Iran, 19 plan to stay, and 142 have either not decided or not broadcast their decision.

Dual relational embeddedness and knowledge transfer in European multinational corporations and subsidiaries

PurposeThis paper aims to investigate the relationship between the level of subsidiaries’ internal and external relational embeddedness and the degree of subsidiaries’ knowledge transfer. More specifically, the aim is to explore dual embeddedness of subsidiaries involved in the knowledge transfer process within multinational corporations’ (MNCs) network.Design/methodology/approachThe authors empirically analyse 165 European subsidiaries to demonstrate the crucial role of dual relational embeddedness in the transfer of knowledge within MNCs. Data were collected via a close-ended questionnaire and processed through an ordinary least squares regression model.FindingsResults show that internal embeddedness directly and positively influences the degree of subsidiaries’ knowledge transfer, whereas external embeddedness does not. Notwithstanding, a higher level of both types of embeddedness – known as dual embeddedness – generates multiplicative and positive effects on the degree of subsidiaries’ knowledge transfer.Practical implicationsBest practices and relevant knowledge follow a reverse transfer of knowledge from the subsidiaries to the internal MNC network that is facilitated by the relational embeddedness of subsidiaries. This has resulted in developing a dual embeddedness, which introduces new routines and scripts, as well as more relational links.Originality/valueThe research emphasises the relevance of the knowledge transfer process in multiple directions, evoking the central role of dual-embedded subsidiaries.