Foreign Business Activities Research Articles

Sanctions, Exit of Foreign Companies and Business Activity in the Russian Regions

Sanctions, Exit of Foreign Companies and Business Activity in the Russian Regions

An Equity-Based, Multilateral Approach for Sourcing Income Among Nations

The source of income rules used in the United States and elsewhere in large part establish the contours of income tax jurisdiction that is exercised by countries. Source rules do this by allocating a taxpayer's income for purposes of assigning countries their rights to tax such income. Thus, source rules are of critical importance in the functioning of the income tax rules that apply to cross-border business and investment activities.The source rules play a vital role in the foreign tax credit system applicable to U.S. persons with foreign investment or business activities. This is because a U.S. taxpayer is subject to an annual foreign tax credit limitation, which is generally equal to the taxpayer's average U.S. tax rate multiplied by the taxpayer's foreign source income as determined under the source rules. The source rules also play a central role in the United States' exercise of taxation over foreign persons with U.S. businesses or investments. For the most part, only U.S. source income is subject to tax under the U.S. tax regimes that apply to foreign persons. Moreover, if the United States were to move to a full or partial territorial system for taxing U.S. persons, the source rules would assume even greater importance given that they would determine whether the United States would impose any tax (as opposed to a residual tax) on the income of U.S. persons from crossborder activities. Other countries likewise use source rules or their equivalent in applying foreign tax credit or territorial systems to their residents and exercising source taxation over nonresidents.

Exit bans when doing business in China

AbstractThis article investigates and measures the frequency, fairness, and efficacy of exit bans in China. We limit our definition of “exit bans” to civil business disputes between a foreign businessperson and his or her local Chinese counterpart, where the foreigner is prevented from leaving China. A traveler typically learns of an exit ban at the airport when he or she is not allowed to board a flight; accordingly, an exit ban is distinct from a debt hostage situation in which the foreigner's freedom of movement within the country is restricted. To conduct our study, we submitted Freedom of Information Act (FOIA) requests (or their equivalents) to six Western governments of countries that engage in significant trade with China and whose citizens were subjected to an exit ban preventing them from leaving China. We also conducted a separate content search and analysis of English and Mandarin media articles that discuss exit ban situations in China. Our analysis yields four primary findings. First, the data reveal at least 128 total cases, and approximately one‐third of the cases were driven by business disputes. It is likely that many more of the 128 cases were caused by business disputes, but because much of the data we received from government agencies was provided in aggregate form, we were unable to verify the driving force behind such cases. Second, in the business‐related cases, Chinese authorities generally appeared to follow applicable exit ban laws and application processes, thereby pushing back on the narrative that local norms and a culture of ignoring the law trump the legal mandates issued from Beijing. Third, most exit bans took place in Tier 1 cities or coastal regions (where more foreign business activity is concentrated), although scattered cases occurred in more remote locations, thus indicating that foreign business interests may be at risk in cities of diverse sizes throughout China. Last, the concern within the international business community that the term “responsible person” under Chinese exit ban law would be abused by authorities to also restrict the movement of non‐senior level businesspeople finds some limited confirmation in our data, although most exit ban cases we located were brought against senior‐level executives. Relying on these findings, the article concludes with four practical recommendations that business leaders can use to better evaluate and manage exit ban risks in China.

The bottled drinking water market in China: features of sustainable development

This article briefly presents the results of a market research study of the bottled drinking water market in China. The purpose of this study is to describe the overall situation in the Chinese bottled drinking water market, identify sustainable growth and expansion trends, as well as potential opportunities for export of Baikal drinking water through the introduction of domestic (regional) business to the Chinese market. The results of the study can be used to guide foreign business activities in the bottled drinking market and to make effective management decisions.

IMPLEMENTASI KEBIJAKAN SISTEM PENGAWASAN BANK INDONESIA PADA AKTIVITAS USAHA MONEY CHANGER DI KABUPATEN BADUNG

Badung regency is in the first place with the most Money Changer business in Bali, which is 446 units or with a percentage of about 70% of the total money changer business in Bali. Of the many business units of Money Changer, in the implementation of its activities are still encountered problems such as unlicensed Money Changer still found, the existence of fraud related to money changer business, and the lack of public understanding related to Money Changer certified and not. The purpose of this research is to determine the implementation of regulations of Bank Indonesia as an independent institution that has authority in carrying out payment system supervision on rupiah, one of which is non-bank foreign exchange business activities. Data is collected by observation method, semistructure interview and documentation. Based on the research using Implemetation Theory according to Charles o Jones, the results showed that there are several indicators that have been well met as well as indicators of Productivity, Accountability, Service Quality, and Responsibiltas. While the Responsiveness indicator shows good results but is not optimal, the shortcomings are largely due to lack of socialization, onsite or direct supervision, and human resources as well as lack of cooperation activities with basic-level organizations to carry out direct supervision.

Une étude exploratoire des facteurs déterminants de l’innovation produit des petites et moyennes entreprises (PME) exportatrices françaises : le rôle-clé de la capacité d’absorption

L’objectif de notre recherche est d’identifier les déterminants de l’innovation produit au sein des PME exportatrices françaises. L’originalité principale de notre article réside dans la mobilisation de deux cadres théoriques : la capacité d’absorption et les profils institutionnels, combinés afin d’étudier les déterminants de l’innovation produits au sein des PME exportatrices. Les principaux résultats indiquent le rôle-clé des dimensions de la capacité d’absorption des PME pour le développement des innovations. L’acquisition et l’assimilation de la connaissance reposeraient sur la connaissance commerciale, technologique et institutionnelle pour mieux répondre aux changements de l’environnement et aux besoins des clients. Le partage de la connaissance à travers la communication interne et la collaboration entre les équipes contribuent à une meilleure transformation et exploitation de la connaissance pour le développement de nouveaux produits. L’approche par profils institutionnels offre une grille d’analyse pertinente pour notre étude car l’accompagnement public contribue au développement des activités innovantes et internationales des PME françaises. Codes JEL : O32, L25, L23

Foreign Business Activities, Foreignness of the VC Syndicate, and IPO Value

This article examines the role played by foreign venture capital (VC) firms in U.S. initial public offerings (IPOs). We find that U.S. VC–backed IPOs benefit from the foreignness of the VC syndicate. Specifically, jointly with domestic VC firms, foreign VC firms certify the quality of their portfolio companies at the time of the IPO, which increases their IPO premium. Foreign VC firms also play an advisory role, enhancing the foreign business activities of their U.S. investees, thereby increasing the IPO premium. Finally, value added by foreign VC firms is greater through their monitoring role if they originate from countries where the investee has foreign business activities.

'Exchange Rate Risk' within the European Monetary Union? Analyzing the Exchange Rate Exposure of German Firms

In this paper we show that inflation differentials among the countries in the European Monetary Union (EMU) are an economically significant risk to German firms, which make up the largest economy in the EMU. This risk can be interpreted as real “exchange rate exposure” resulting from trade within the euro area. Actually, we find that this EMU exposure is nearly as high as the standard exchange rate exposure caused by trade with non-EMU countries. Moreover, our analysis shows that many of the conventional factors that drive firm-specific exchange rate risk, such as size, debt ratio, asset turnover and foreign business activity, also determine EMU exposure in an economically meaningful way. However, EMU exposure challenges firms’ risk management, particularly as it cannot be reduced by standard financial hedging instruments such as currency derivatives.

Local Embeddedness, Market Focus, and Productivity: Evidence of Taiwanese Manufacturing MNE Subsidiaries in China

AbstractThere has been considerable literature discussing the characteristics and importance of location‐specific factors in the context of Foreign Direct Investment (FDI), but very little literature linking location‐specific factors to productivity. This study explores, for each location‐specific factor, the relationship between the degree of local embeddedness and the labor productivity. We contribute to the body of literature on location‐specific factors by arguing that market focuses play a pivotal role in determining the impact of local embeddedness on productivity. Based on their strategic choices, we categorize Taiwanese manufacturing multinational enterprise (MNE) subsidiaries in China into two groups: the local‐market‐focus group and the export‐market‐focus group. The paper fits the Ordinary Least Squares (OLS) regression models to the export‐market‐focus group and the local‐market‐focus group separately. For these two groups, each local‐embeddedness variable exerts different effect on labor productivity. Results also suggest that local‐market‐focus FDI is more affected by the host country's local business environment than is export‐market‐focus FDI. Although this study cannot represent all foreign companies in China, its dynamism offers a rich context in which to explore a deeper understanding of foreign companies' business activities in China.

Russian–Chinese agricultural cooperation in the Russian Far East

The study analyzes the role of the Chinese factor in developing the agriculture of the southern regions of the Russian Far East. The role of Chinese labor migrants, business activity with Chinese capital, the state of agriculture, and socioeconomic development of the Jewish Autonomous Oblast are considered in the most detail. Insufficient official statistics and reported data determine the study’s wide use of materials from federal agencies, regional executive authorities, various Internet sites, and interviews and information collected by the author during field research. It is shown that the involvement of Chinese labor migrants in agriculture facilitates the development and use of land; however, it has an insignificant effect on the regional economy, intensifies administrative problems of local agricultural producers, sharpens environmental problems, and indirectly decreases the quality of life of the population in the countryside. The basis for stabilizing the agricultural situation is the clear position of the authorities in achieving long-term branch indices taking into account the support of local agricultural producers and regular monitoring of foreign business activity.

Corporate Inversions and Economic Performance

This paper assesses the economic factors associated with corporate inversions, including the 48 inversions that have occurred since the analysis of Desai and Hines (2002). The analysis presented here is observational, not causal, as it examines how the business activities of firms that chose to invert changed after expatriation. In addition to statistically assessing the equity market’s reaction to inversion announcements, this paper examines how firms alter their patterns of employment and investment after inversion. In particular, the paper follows how the foreign shares of an inverting firm’s employment and investment change following inversion, relative to comparable non-inverting firms. The behavior of inverting firms following expatriation is assessed going back to 1980 as well as only after the 2004 policy change, which made expatriation through merger with a foreign firm with substantive foreign business activities more attractive. The results suggest that inverting firms have higher shares of the employees and capital expenditures located abroad after inversion relative to changes experienced by similar non-inverting firms. Further, these increases are not attributable to one-time changes due to the inclusion of a new foreign partner’s existing workforce and ongoing investments; foreign shares of employment and investment are higher two and more years after inversion relative to the first year just after inversion when any one-time increases would register.

Family Businesses in the Corporate Governance of MNCs

The issue of family businesses is currently a very topical theme in the academic world. The importance of family businesses increases with internationalization and is associated with business success in global market conditions. A fundamental part of business activities abroad is the correct application of the corporate governance of subsidiaries of multinational family businesses. The available findings do not cover this area sufficiently, especially in the context of transformed economies in CEE. In view of the nature of foreign business activities, the degree of centralization of competences transferred between subsidiaries and headquarters and the presence of expatriates from the headquarters of multinational companies represented by the family firm in statutory bodies can be regarded as important variables. The main aim of the present paper is, based on research carried out, to describe and analyze the degree of centralization and presence of expatriates in the corporate governance of subsidiaries of multinational family businesses operating in the Czech Republic. The paper presents the results of an empirical investigation with a description of the presence of expatriates in the statutory bodies of subsidiaries of multinational companies in the Czech Republic. The results obtained present the number of subsidiaries corresponding to the definition of a family business with an emphasis on SMEs of up to 250 employees and the degree of centralization and presence of expatriates in administrative or executive authority, or in other positions. The sample which was used to research the family business comprised 214 subsidiaries of multinational companies from the most important sectors of the Czech economy.

Business as a Means of Foreign Policy or Politics as a Means of Production? The German Government and the Creation of Friedrich Flick’s Upper Silesian Industrial Empire (1921–1935)

In the 1920s, the German government secretly supported private business activities across the German-Polish border due to revisionist political aims. Based on these aims, the (in-) famous industrialist Friedrich Flick was able to attract financial support for otherwise uneconomical activities in Upper Silesia to which the government provided “insurance.” Not even considering the possibility of moral hazard and holdup, the German government was captured in its secret cooperation with Flick, who could effectively exploit this “insurance.” Until 1931, Flick was able to gain high subsidies and to use them efficiently building up an industrial empire that comprehended the German, Polish, and Austrian iron and steel industry. The interplay of German foreign policy and private business activities in the inter-war years is analyzed as an agency problem in a specific “public-private partnership” that allowed for blackmailing the Government.

Derecho Comparado Aplicado a la Traducción: Aspectos Sucesorios (Reino Unido vs. España)

AbstractIn the last few years, Spanish law firms’ workload and foreign business activity in Spain have increased. The number of English-speaking immigrants in the Peninsula has also substantially risen. These events make the English<>Spanish translation of Family Law documents in general, and succession instruments in particular of utmost importance. That is the reason why we researched and compared the Spanish and British testamentary notions and documents, aiming at facilitating the translation task; both direct (English-Spanish) and reverse (Spanish-English), of the text typology originated from this branch of Family Law.

Credit vs. Exemption: A Comparative Study of Double Tax Relief in the United States and Japan

In the United States and elsewhere, basic principles of international taxation have, in recent years, become the subject of vigorous debate and controversy. Historically, the United States has taxed residents, including domestic corporations, on worldwide income, but has allowed them credit for foreign income taxes in order to alleviate double taxation. Other countries, particularly countries of continental Europe, have long used an exemption system under which income from foreign business activities is exempted from home-country tax, while passive investment income is taxed with a worldwide/credit system similar to that of the United States. Recently, several countries that historically had worldwide/credit systems switched to exemption systems. Some scholars, business representatives, and politicians argue that the United States should do the same. This article examines the law of one such country, Japan, and compares the existing U.S. system with the new Japanese exemption system. A principal conclusion of the article is that a simple switch by the United States, without other corrective changes, would open up tax minimization and avoidance opportunities that are not available to Japanese companies, even after the recent changes in Japanese law.

The Use of Derivatives as a Risk Management Instrument: Evidence from Indonesian Non-Financial Firms

This paper provides empirical evidence of firm-specific factors determining the decision to use derivatives and the level of usage for the case of Indonesia. The findings show that the participation rate in the use of derivatives is 15.8%, much lower compared to those found in developed countries. Using Probit and Tobit regression models, the results indicate that the use of derivatives is positively associated with firm size, market-to-book value, bank-firm relationship, and the involvement of the firm in foreign business activity, but negatively linked to liquidity.

European presence in Indonesia

This paper describes the European Union (EU) presence in Indonesia. It firstly discusses the reorientation of EU relations with Indonesia. It might be argued that the reorientation has been supported dominantly by economic and political motivations as consequences of the EU’s internal dynamics (such as single market; CFSP), the global dynamics and the rise of inter-regionalism. Secondly, current economic relationships show that the EU presence has been very significant for Indonesian economy, in term of international trade, investments, foreign exchange rate, debt, development assistance and business activities.

Variations in the regional distribution of cross-border activity of Swedish transnational corporations during the 20th century

This article outlines variations in the regional distribution of foreign activity of eight of the most important long-standing Swedish industrial corporations during the last century. It focuses on foreign subsidiaries, employment and sales by these companies, to determine what were the principal long-term trends: globalization or Europeanization. A wave of Europeanization occurred around 1900–1929, when the companies began establishing their worldwide reach. Before the Great Depression, almost all had founded subsidiaries in both Europe and USA. During the 1950–79 period, all had established subsidiaries in all parts of the world. I show that geographical spread in Europe and the spread in the rest of the world have both been significant trends. During the latter part of the 2011 century, there was a considerable intensification of business activity outside Europe, which in most cases was accompanied by a relative decline of the share in foreign business activity of the home region.

Foreign Expansion Actions: The Impact of Product and Domestic Expansion and A Firm's Prior Foreign Business Involvement.

This study finds that certain small firms expand abroad in response to business difficulties, namely those with prior foreign business activities. This research also finds that foreign expansion is closely related to other strategic actions such as product and domestic expansions.

How MNCs Choose Entry Modes and Form Alliances: The China Experience

This study examine two dimensions of firms' foreign market entry strategy: mode of entry and formation of alliances. Based on the existing literature, we propose a model that describes how host country-, home country- and industry-specific factors affect foreign firms' decisions on how they enter the market and whether they will enter with a partner firm or not. The model also describes how operation-related factors, i.e., the location and the level of local government, affect these decisions. Seven major hypotheses were tested using a longitudinal sample of 2,998 foreign business activities in China between 1979 and 1993. Our sample consists of foreign investing firms from the U.S., Europe, Japan, and other Asian countries. By choosing China as a host country, the study offers insights into how firms of different regional groups adapted their strategies to a changing host environment.