German Multinational Enterprises Research Articles

An outsider’s insights from the inside: implications of emic concepts on qualitative international management research

PurposeRecent calls in international management (IM) research ask scholars to conduct more context-sensitive research, however; little attention has been paid to the methodological particularities that inform such context sensitivity. This paper aims to addresses this shortcoming by exploring how emic concepts implicate IM research processes during qualitative field studies.Design/methodology/approachWe carried out ethnographic fieldwork in Brazilian subsidiaries of three German multinational enterprises. We relied on the researchers’ experiences and data from a larger research project including 63 semi-structured interviews, 7 focus groups, documents and field notes. Adopting a culturally sensitive and self-reflexive lens, we reflect on the researchers’ experiences in the Brazilian sociocultural context from an interpretive paradigm.FindingsOur findings reveal how seven identified emic concepts affect four prototypical phases of the research process: securing access, collecting data, analyzing data and presenting findings. We discuss how these seven emic concepts influenced the research process and impacted research outcomes, as experienced by the researchers.Research limitations/implicationsFindings are limited by our self-reflexive capabilities as foreign researchers, the limited explanatory power of emic categories, our paradigmatic positioning and the research context.Practical implicationsWe contribute to research practice by providing eight suggestions for conducting international fieldwork and proposing avenues for future research.Originality/valueThis research contributes to the epistemological and methodological debate on context-sensitive research by arguing that intercultural sensitivity needs to be managed as an integral dimension for any form of international fieldwork. Findings contribute to interpretive approaches showing how emic concepts affect research practices, with implications for critical management perspectives.

Foreign direct investment and onshore employment dynamics: Evidence from German firms with affiliates in the Czech Republic

AbstractIn this paper, we revisit questions about the onshore employment effects of firms that conduct foreign direct investment (FDI) in countries with substantially lower average wages. Our results derive from the use of rich administrative records on the universe of employees in German multinational enterprises (MNEs) that were active in the Czech Republic in 2010. Compared with former studies, the unique data set in this study includes a much higher fraction of small‐ and medium‐sized firms and leads to strikingly different results for service MNEs. Applying coarsened exact matching for firms and an event‐study design, we show that the domestic employment growth of MNEs decreases relative to that of non‐MNEs and that the affected workers are those with low or medium educational attainment in the manufacturing sector and with medium or high educational attainment in the service sector. Regarding workers’ tasks, our results do not show that FDI affects routine jobs beyond a worker's skill level.

German‐style dual apprenticeship training in the Greater Shanghai Area‐ Spatial Agglomeration Dynamics

AbstractA considerable number of German multinational enterprises (MNE) are located in the Greater Shanghai Area. German MNE in the industrial sector show an inclination to export German forms of technical training—more specifically German‐style dual apprenticeship training—to their worldwide subsidiaries. Within China, this is especially the case for the Greater Shanghai Area, which has established itself as a ‘hotspot’ for dual apprenticeship training in the last 15 years. This paper explores what makes the Greater Shanghai Area such a ‘hotspot’ for dual apprenticeship training—in international comparison—by focusing on factors influencing the spatial agglomeration of dual apprenticeship training activities in this region. The paper finds unevenly distributed institutional resources regarding the attraction of German Foreign Direct Investment as well as unevenly distributed resources at the skill formation system level as important influencing factors. Both factors show ‘self‐reinforcing’ dynamics strengthening already existing spatial agglomeration of dual apprenticeship training activities.

Filling a colonial void? German business strategies and development assistance in India, 1947–1974

Decolonisation after World War II posed a threat to foreign businesses, when newly independent governments sought more national control over the economy. This article analyses cases of German multinational enterprises (MNE) in India. Focusing on companies from different sectors it analyses how these MNEs dealt with risks associated with tighter regulation of the economy and economic nationalism. German corporate nationality quickly became an asset that was used to position subsidiaries in India against foreign competitors. In the following years ‘Indianisation’ strategies for management and networks of German and Indian employees added security to long-term business interests. Carefully created Indo-German nationality of the companies reduced liabilities of foreignness. Furthermore, aligning with West German development assistance helped to strengthen the position of German private companies. These findings support the existing argument for a multi-faceted view on liabilities of foreignness and their quickly changing nature.

Internment as a business challenge: Political risk management and German multinationals in Colonial India (1914–1947)

Internment in so-called ‘enemy countries’ was a frequent occurrence in the twentieth century and created significant obstacles for multinational enterprises (MNEs). This article focuses on German MNEs in India and shows how they addressed the formidable challenge of the internment of their employees in British camps during both the First and the Second World War. It finds that internment impacted business relationships in India well beyond its endpoint and that the First World War internment shaped the subsequent perception of and strategic response to the Second World War experience. It is shown that internment aggravated existing staffing challenges, impacted on the perception of racial lines of distinctions and re-cast the category ‘European business’. While internment was perceived and managed as a political risk, the case also shows that it created unexpected networking opportunities, generating a tight community of German businesspeople in India.

Countering Political Risk in Colonial India: German Multinationals and the Challenge of Internment (1914-1947)

Internment in so-called “enemy countries” was a frequent occurrence in the twentieth century and created significant obstacles for multinational enterprises (MNEs). This article focuses on German MNEs in India and shows how they addressed the formidable challenge of the internment of their employees in British camps during both WWI and WWII. We find that internment impacted business relationships in India well beyond its endpoint and that the WWI internment shaped the subsequent perception of and strategic response to the WWII experience. We show that internment aggravated existing staffing challenges, impacted the perception of racial lines of distinctions and re-casted the category “European business.” While internment was perceived and managed as a political risk, the case also shows that it created unexpected networking opportunities, generating a tight community of German business people in India.

MEASURING THE INTERDEPENDENCE OF MULTINATIONAL FIRMS' FOREIGN INVESTMENTS

Earlier work found evidence for geographic linkages of aggregate foreign direct investment across countries and country‐pairs. From a theoretical point of view, such linkages at the macroeconomic level may root in between‐firm as well as within‐firm linkages and originate from information spillovers across or within firms in exploring unknown markets, and vertical linkages between production plants across different locations within the firm. We use data on the universe of German multinational enterprises (MNEs) to empirically explore how marginal investments at one foreign affiliate depend on investments at other affiliates within the same MNE. The empirical approach employs two channels or modes of cross‐affiliate interdependence: mere geography (capturing horizontal linkages through correlated learning and horizontal competition within the firm) and input–output relationships within or across industries (which capture vertical linkages). Adding to earlier findings at the aggregate level, we find evidence of a significant interdependence of investments within the firm. In the firm‐level data at hand, vertical linkages appear to be more important than horizontal ones. Investments at one location tend to stimulate investments at other locations of the same MNE, particularly if input linkages are strong. The opposite seems to be true for output linkages. Beyond vertical linkages, mere geographic proximity matters only to a minor extent. This suggests that evidence of linkages through geographic closeness at aggregate data levels accrue mainly to reasons of vertical linkages within networks of affiliates. (JEL C31, D22, F21, F23, F68, G31, H32)

Export of German-style vocational education: a case study in the automotive industry in Puebla, Mexico

German multinational enterprises carry out German-style vocational education and training activities at their global branches. This case study on the educational programs of the automotive industry located in the State of Puebla (Central Mexico) aims to generate a deeper understanding of how and why the German apprenticeship model is exported to Mexico and implemented locally. The interaction between the companies and the institutional and organisational environment in which the multinational enterprises operate are analysed. Findings indicate that the three dual apprenticeship programs of Volkswagen, Audi and Schuler - although all located in the same institutional environment - show different degrees and ways of adapting to the local environment.

Expatriates' influence on the affective commitment of host country nationals in China: the moderating effects of individual values and status characteristics

Host country nationals (HCNs) have been identified as an important source for expatriation success. However, empirical research on the effects of expatriates on HCNs is still sparse. Drawing upon social identity theory, our study aims to fill this void by investigating whether having an expatriate supervisor reduces the affective commitment of HCNs and which HCNs are more affected. Survey findings from 188 Chinese white-collar employees working for German multinational enterprises in China provide empirical evidence of the negative effect of expatriate supervisors on HCNs' affective commitment. Moreover, our results indicate that HCNs' individual values (individualism and money orientation) as well as status characteristics (social class and seniority within the firm) moderate the relationship. Theoretical and practical implications are discussed.

Tax attractiveness and the location of German-controlled subsidiaries

This paper analyzes whether taxation has an influence on the location decisions of multinational enterprises. We employ a novel set of 22 tax variables, such as the taxation of dividends and capital gains, withholding taxes, the existence of a group taxation regime, and thin capitalization rules. Furthermore, we use the Tax Attractiveness Index, a new aggregate measure containing the 22 tax variables. Our count data regression analysis is based on a novel hand-collected dataset consisting of the subsidiaries of German DAX30 companies in 97 countries. Controlling for non-tax effects, we find that a country’s tax environment has a significantly positive effect on the number of German-controlled subsidiaries and, therefore, on the location decisions of German multinational enterprises. Specifically, our analysis reveals that German multinational firms place affiliates in countries that offer favorable statutory tax rates, withholding taxes, double tax treaty networks, and holding incentives. Additionally, we find that the Tax Attractiveness Index has explanatory power in subsidiary location decisions and, therefore, it can be used as alternative composite measure, for example, when 22 single tax variables are not at disposal.

Can Multinational Enterprises Introduce New Institutions to Host Countries?

Multinational enterprises (MNEs) have promoted vocational training concepts from their home countries as part of their social responsibility in order to acquire better skilled workers, while contributing toward an upgrading of Vietnam’s education system. Thus, they potentially become ‘Institutional Entrepreneurs’, an idea that has been marginally discussed in economic geography up to now. This article examines to what extent MNEs can implement home-country institutions, by carrying out cooperation projects with local schools. Based on 19 in-depth interviews with Japanese and German MNEs and other involved stakeholders, we conducted a qualitative content analysis. Using the skill formation system (SFS) concept and Boschma’s proximity approach, we find out that MNEs can influence regional education systems by introducing institutional elements of their home country’s SFSs. All four proximity dimensions - cognitive, social, institutional and spatial - play an important role for MNEs to select local schools as cooperation partners.

Corporate social responsibility mandates within German multinational enterprises in Sub-Saharan Africa

Multinational enterprises operating in Sub-Saharan Africa (SSA) exist within an environment marked by complexity, inequality and socio-economic challenges, yet also sustained economic growth. This research focuses on how German multinationals define a Corporate Social Responsibility (CSR) mandate that is relevant to the local context and responds to the demands of stakeholders in their host countries within SSA. We find that the broad CSR mandate is defined at headquarters but that it contains a discretionary and a non-discretionary component. This is to ensure that, while global standards are adhered to, the local CSR engagements remain relevant and impactful. CSR in SSA tends to focus on activities that aim for long-term development which indicates a high level of local embeddedness and recognition of the meaningful impact that CSR can have in developing countries. We find that, organisationally, subsidiaries can extend their autonomy in pursuing CSR by building capacities that can be leveraged in the corporations globally. The study contributes to our understanding of multinationals operating in emerging markets and adapting to unique environments, and more specifically to CSR engagement in developing countries.

Corporate social responsibility mandates within German multinational enterprises in Sub-Saharan Africa

Multinational enterprises operating in Sub-Saharan Africa (SSA) exist within an environment marked by complexity, inequality and socio-economic challenges, yet also sustained economic growth. This research focuses on how German multinationals define a Corporate Social Responsibility (CSR) mandate that is relevant to the local context and responds to the demands of stakeholders in their host countries within SSA. We find that the broad CSR mandate is defined at headquarters but that it contains a discretionary and a non-discretionary component. This is to ensure that, while global standards are adhered to, the local CSR engagements remain relevant and impactful. CSR in SSA tends to focus on activities that aim for long-term development which indicates a high level of local embeddedness and recognition of the meaningful impact that CSR can have in developing countries. We find that, organisationally, subsidiaries can extend their autonomy in pursuing CSR by building capacities that can be leveraged in the corporations globally. The study contributes to our understanding of multinationals operating in emerging markets and adapting to unique environments, and more specifically to CSR engagement in developing countries.

Liability of Foreignness in Historical Context: German Business in Preindependence India (1880–1940)

Much of international business literature has dealt with the costs of engaging in business abroad. Recently, several authors have called into question the basic assumptions of the “liability of foreignness” argument. They plead for a more nuanced look at nationality beyond the dichotomy of foreign vis-à-vis local firms and raise doubts about the assumption that more distance necessarily translates into higher costs. This article adds to this criticism with a historical analysis of German multinational enterprises in preindependence India. The case proves (1) the relevance of specific nationalities, (2) the importance of conflicting host and home country attitudes for understanding multinationals’ strategy, and (3) the possibility of spillover effects across national borders. Expanding on existing theory, the article makes a point in showing how malleable and contextual associations with nationality are, thus making a thorough historical analysis of commercial, political, and cultural links between host and home country indispensable.

Liability of Foreignness in Historical Context: German Business in Preindependence India (1880–1940)

Much of international business literature has dealt with the costs of engaging in business abroad. Recently, several authors have called into question the basic assumptions of the “liability of foreignness” argument. They plead for a more nuanced look at nationality beyond the dichotomy of foreign vis-à-vis local firms and raise doubts about the assumption that more distance necessarily translates into higher costs. This article adds to this criticism with a historical analysis of German multinational enterprises in preindependence India. The case proves (1) the relevance of specific nationalities, (2) the importance of conflicting host and home country attitudes for understanding multinationals’ strategy, and (3) the possibility of spillover effects across national borders. Expanding on existing theory, the article makes a point in showing how malleable and contextual associations with nationality are, thus making a thorough historical analysis of commercial, political, and cultural links between host and home country indispensable.

Offshoring and the onshore composition of tasks and skills

We analyze the relationship between offshoring and the onshore workforce composition in German multinational enterprises (MNEs), using plant data that allow us to discern tasks, occupations, and workforce skills. Offshoring is associated with a statistically significant shift towards more non-routine and more interactive tasks, and with a shift towards highly educated workers. The shift towards highly educated workers is in excess of what is implied by changes in either the task or the occupational composition. Offshoring to low-income countries—with the exception of Central and Eastern European countries—is associated with stronger onshore responses. We find offshoring to predict between 10 and 15% of observed changes in wage-bill shares of highly educated workers and measures of non-routine and interactive tasks.

Tax Complexity and Foreign Direct Investment

We empirically investigate the impact of tax complexity on FDI at firm level, employing a large database of German multinational enterprises that is administrated by Deutsche Bundesbank. More precisely, we analyze the location choice of 4474 new German FDI projects in OECD countries from 2005 to 2009. The results suggest that tax complexity has a repressive effect on FDI. Moreover, we find that the magnitude of this effect substantially depends on the level of the statutory corporate income tax rate.

The innovative performance of German multinationals abroad: evidence from the European community innovation survey

This article analyzes cross-country differences in innovation behavior of subsidiaries of German multinational enterprises. The analysis is based on data from community innovation survey (CIS4) and covers 16 European countries. We find considerable differences in innovation input intensity and innovation output intensity between German subsidiaries located in different European countries. Multivariate analysis reveals that these differences are largely related to firm characteristics. A significant relationship between firm-level innovation and host country characteristics can only be found for innovation output. Copyright 2011 The Author 2011. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

Making medicine a business in Japan: Shimadzu Co. and the diffusion of radiology (1900–1960)

This contribution focuses on the role of the firm Shimadzu in the marketing of X-ray machines in Japan during the first part of the 20th century, viewed from a business history perspective. It attempts to further understanding of the process of technology diffusion in medicine. In a global market controlled by American and German multinational enterprises, Japan appears to have been a particular country, where a domestic independent firm, Shimadzu, succeeded in establishing itself as a competitive company. This success is the result of a strategy based on both the internalisation of technological capabilities (recruitment of university graduate engineers, subcontracting of research and development activities) and an original communication policy towards the medical world. Finally, the specific structure of the Japanese medical market, composed of numerous and largely privatised small healthcare centres, facilitated the rapid diffusion of X-ray machines, a new technology which conferred a comparative advantage on its holders.

Going Multinational: What are the Effects on Home-Market Performance?

Abstract This paper compares the home-market performance of German multinational enterprises (MNEs) and national firms, both before and after switching from national to multinational activities. Regarding the former case, our results show that future multinationals outperform domestic firms. When assessing the ex post performance of multinationals, selectivity issues must be taken into account. Applying an endogenous treatment model, it turns out that after switching, both productivity and wage growth are higher at newly founded MNEs. While capital intensities increase compared with those of national firms, employment growth rates are negatively related to switching, suggesting that home and foreign employment are substitutes.