Global Firms Research Articles

Networks in Born Global Firms (BGs): An Integrated Theory of Inventive Problem Solving Approach

Networks in Born Global Firms (BGs): An Integrated Theory of Inventive Problem Solving Approach

Integrating Activity-based Costing with Continuous Enhancement: A Strategic Approach to Operational Efficiency and Cost Management

The main objective of this research is to show how integrating activity-based costing (ABC) with continuous improvement processes can enhance cost management and operational efficiency. The development of automated firms and global firms has necessitated a shift in principles and measurement accuracy. The principles and concepts have been modified based on economic theory, moving from stable continuous improvement to continuous enhancement, or Kaizen enhancement. The accuracy of the proposed costing system has improved by using modified activity-based costing. The current research has focused on multi-variation in explanatory variables, including the costing system and the degree of enhancement. The suggested costing system should include the modified version of activity-based costing and the new form of continuous enhancement system. The concept of an intelligent supply chain has led to the idea of a cooperative game between all parties in the firm/chain. Intelligent automated systems are closed-loop systems where all members are partners, aiming to maximize global benefits. Resilient considerations indicate different attempts to measure and estimate the multi-effects of externalities and other external effects. This work has closed-to-open excess quantitative models, achieving the cooperative state between different partners. Findings show that ABC helps manufacturing and service sectors identify non-value-adding activities, optimize resource allocation, and reduce costs by providing detailed insights into the true cost of operations. Its integration with continuous improvement strategies amplifies these benefits, enabling businesses to streamline processes, improve efficiency, and enhance profitability. ABC is a valuable tool for identifying non-value-adding activities and optimizing resource allocation. By providing a more accurate understanding of how resources are consumed, ABC can help organizations improve their efficiency, reduce costs, and enhance customer satisfaction.

Subsidiary strategy and importance of standards: An institutional development of the integration-responsiveness framework

According to the integration–responsiveness framework, subsidiaries of multinational enterprises (MNEs) are assigned different strategic roles depending on the business environments they operate in. MNEs are classified as multinational, international, transnational, and global firms. Although standards are crucial for both export performance and Foreign Direct Investment, there is no scientific knowledge on how different types of standards interrelate with MNE strategies. Derived from the review of the limited literature on the role of different types of standards for different MNEs subsidiary strategies, we take an institutional theory perspective and position different types of standards within the integration–responsiveness framework. Based on data collected within the German Standardization Panel, cluster analysis is performed confirming that MNEs’ subsidiary strategies can be grouped according to the importance of formal and company standards. While conformity with national formal standards is necessary to meet pressure for local responsiveness, the application of international standards provides firms with access to global markets. Company standards and management system standards are important to transnational firms to achieve efficiency gains and improve bargaining positions. We compare the export intensity of MNEs with different subsidiary strategies to validate our clustering. In addition, different motives for applying different types of standards confirm our conceptual positioning.

Do oil market shocks affect financial distress? Evidence from firm-level global data

This study investigates the impact of three oil price shocks on financial distress of global firms using a dataset of 8130 firms across 48 countries from 2002 to 2022. It also analyses the role of energy diversification in the relationship between oil shocks and firm distress. The findings reveal that aggregate demand and specific demand shocks increase firm distress risk, while supply shocks reduce it. Furthermore, the results suggest that energy diversification mitigates the impact of specific demand shocks on firm distress. The study also implements several robustness checks, and the results remain consistent. Potential policy implications are also discussed.

The effect of standardized advertising, managerial ties and born global orientation on export performance

PurposeGiven the contradictory findings of standardization/adaptation of marketing strategy in explaining export performance in the extant research, this study aims to examine the contingent effects of managerial ties and born global orientation in the standardized advertising-export performance conceptualization.Design/methodology/approachThe study used two-respondent method in the survey research by a sample of 155 exporting firms operating in the industrial marketing based in Australia and New Zealand and applied hierarchical regression analysis to test the hypotheses.FindingsThe findings demonstrate that standardized advertising has a significant effect on export performance and this relationship is positively moderated by business ties. Such effect is particularly enhanced for born global firms (than nonborn global firms). However, political ties negatively influence the impact of standardized advertising on performance and such effect is stronger for born global firms.Research limitations/implicationsA broader perspective of contingent variables should be included to examine the underlying relationship between standardized advertising and export performance in capturing the dynamism in international marketing contexts, such as institutional frameworks or sociocultural environments in host countries.Practical implicationsStandardized advertising is critical for born global firms’ export performance as it can increase efficiency and speed up internationalization processes. Such positive impact of standardized advertising on export performance is further enhanced if born global firms allocate resources to develop strong business ties with host country partners instead of building political ties with host country governments, because smooth business networking can facilitate standardized advertising on industrial marketing, yet justifiable political relations require intricate negotiations that often prolong internationalization progress.Originality/valueThis study incorporates managerial ties and born global orientation as contingent factors in fixing the theoretic interlock between standardization advertising strategy and export firm performance.

Boosting Corporate Value through ESG Excellence in Oil and Gas Sector

The research investigates the impact of Environmental, Social, and Governance (ESG) excellence on the corporate valuation in the oil and gas sector, addressing the problem of quantifying ESG's influence on market worth. The study utilized a comprehensive dataset from the Thomson Reuters database, covering 960 global firms over the period 2011-2022. Through empirical analysis, the study revealed that while ESG excellence directly correlates negatively with corporate valuation, its indirect benefits through enhanced profitability and operational efficiency are significant. Specifically, ESG excellence improves operational efficiency, which in turn positively impacts market value. The study found no direct significant impact of ESG excellence on profitability, but enhanced operational efficiency mediated by ESG leads to increased corporate valuation. These findings highlight the importance of converting ESG efforts into tangible financial benefits, emphasizing profitability and operational efficiency as key mediators. The study concludes that ESG practices, when effectively integrated into business strategies, significantly enhance a firm's market value and operational efficiency. This research provides actionable insights for policymakers, corporate strategists, and investors, promoting the adoption of robust ESG practices to achieve sustainable growth and long-term financial success in the oil and gas sector. Future research should focus on industry-specific analyses, longitudinal studies, and the development of sophisticated ESG metrics to further elucidate these relationships.

An investigation of the impact of intellectual capital on entrepreneurial performance: A moderated mediation analysis on global firms

The stability of multinational corporations is under threat due to the intensifying turbulence of global competition, which prevents intellectual capital from actively promoting performance. To meet the challenges brought by diverse and tumultuous environmental contexts, multinationals urgently need to develop new approaches that will resolve risks at headquarters and mitigate the adverse effects of the crisis on cross-border business operations. Building on the resource-based theory and dynamic capabilities theory, this research aims to seek possible solutions that would optimize the structure of intellectual capital in various subsidiary regions so as to maximize their effectiveness in sustaining parent company performance in the presence of turmoil. Taking listed multinational corporations (MNCs) as the research subject, this paper explored the impact of intellectual capital of foreign subsidiaries on their parent company performance through the mediating and moderating dynamics of slack resources and institutional distance respectively. Furthermore, we explored the above mechanism by comparing a developed-economy MNC and a developing-economy MNC contexts. Through investigating a dataset of 1237 listed foreign subsidiaries during the period 2012 to 2021, we found that foreign subsidiaries' intellectual capital behaved in largely different mechanisms comparing developed and developing economies such that, subsidiaries' intellectual capital in developed economies was found to be contributing to parent company performance, whereas, subsidiaries' intellectual capital in developing economies fail to play a positive role on parent company performance. Meanwhile, the results showed that, absorbed slack played an indirect-only mediating role on the relationship between subsidiaries' intellectual capital and parent company performance in developing countries, and unabsorbed slack resources played a competitive mediating role for the full sample. Whereas, institutional distance fails to play moderate role in the effect of foreign subsidiaries' intellectual capital on parent company performance. Our study has implications for MNCs in the post-COVID era. It can help them minimize external threat and develop strategies and measures to maximize the structure of intellectual capital in different host locations, thereby enhancing their multinational performance.

International retailers as a main force for sustainability

PurposeThis study investigates how global retailers develop sustainability through network interactions that influence institutionalized sustainability perceptions. The findings enable retailers to drive sustainability systematically and understand the critical internal and external issues.Design/methodology/approachThe study investigates how retailers can work to increase support for sustainability through the normative, cognitive, and regulative institutional pillars. The network perspective suggests the need to offer relevant resources, involve influential actors and perform supporting activities to mobilise stakeholders. Empirically, qualitative case studies of IKEA and Hennes & Mauritz were conducted.FindingsBased on the network and institutional perspectives, the study identified nine fields that retailers can use to develop sustainability internally and in their networks. The study shows that they can mobilise actors, resources, and activities to change institutionalised values and practices.Originality/valueThe developed model provides guidelines on how to systematically work with sustainability. The broad view developed is particularly relevant considering that most of the existing research on global firms and sustainability focuses on a narrow research problem without relating it to sustainability as a complex and overarching phenomenon.

Towards a Synergistic Multi‐stakeholder Approach to CSR in Crisis: Learning from Large Global Firms’ Responses to COVID‐19

AbstractFirms are increasingly expected to engage in corporate social responsibility (CSR) in reaction to external crises. Yet, we still know little about how they do it. This study discusses what we can learn from how large global firms responded to the COVID‐19 pandemic. Employing a cluster analysis on Fortune Global 500 firms, our findings reveal that to meet both institutional and economic pressures posed by the crisis, global firms adopted what we call a synergistic multi‐stakeholder approach by addressing the needs of multiple stakeholder groups simultaneously through transferable response strategies. These strategies varied by firm, ranging from donations and educational initiatives to collaboration and minimal support. We discuss the characteristics and potential drivers of each strategy. Our findings suggest that synergistic CSR strategies combine (social) value creation with operational efficiencies across stakeholder groups, with critical implications for how firms may respond to future disasters and crises.

Footloose and fancy-free in FinTech? Internationalization strategies of born regional and born global firms in the European financial service sector

AbstractDue to economic globalization and technological advancements, businesses are increasingly required to navigate complex international markets. One type of firm that has emerged in response to these trends is the born global, which initiates foreign activities almost from the very start. While these startups expand their reach by pursuing pro-active internationalization strategies, it is unclear whether startups creating the FinTech revolution also belong to this category. This study investigates five key components of the internationalization strategies of European FinTech startups: the speed and scope of internationalization, the drivers of internationalization, international market selection, the mode of market entry, and the challenges involved in internationalization. While born globals use a systematic approach to international market selection and entry, European FinTechs use a quasi-systematic and opportunistic approach to searching and seizing their geographical markets. Their common approach includes quickly going beyond their home base to adjacent markets, followed by gradual experimentation and substantive growth in their home region, and becoming born-regional firms (with some evolving into born-global firms later).

A perspective on three trade‐offs of blockchain technology for the global strategy of the MNC

AbstractResearch SummaryNew technology plays a key role in shaping the global strategy of the MNC. We propose a perspective on how and why a novel technological development—blockchain technology—and its relevant applications affect the global strategy of the MNC. We focus on the trade‐offs associated with cryptocurrencies, smart contracts, and blockchain data, and provide several real‐world examples. While cryptocurrencies could lower financial costs and broaden consumers' payment options, they require new investments in cybersecurity and payment infrastructure. Smart contracts could increase trust in collaboration due to their automated, transparent, and inflexible rules, but their rigidity can harm collaboration. Finally, while blockchain data can enhance the MNC's analytics capabilities, it can also jeopardize consumer privacy.Managerial SummaryIs blockchain technology all hype or a useful advancement for global firms? We propose that this technology has merits and drawbacks for financial transactions, collaboration, and data analytics. Cryptocurrencies have stolen the headlines and several leading organizations have already added them as payment methods. Their merits include lower transaction fees, better security, and higher speed, but they require expensive infrastructure and carry a stigma. Smart contracts can streamline agreements between parties but lack the flexibility that global firms need when interacting with suppliers and partners. Novel blockchain data can be plugged into marketing dashboards but can also threaten consumer privacy. Overall, the jury is still out on the role of blockchain technology for global firms.

Cultivating entrepreneurial human capital in multinational corporations: An intercultural paradox mindset lens

The development of an entrepreneurial strategic orientation is of growing concern for global corporations. Through a human capital lens, we probe how and when firms can develop and cultivate managerial entrepreneurial resources; by explicitly encouraging cross-cultural experiences that stimulate systematic shifts in mindset and behavior. Drawing on paradox theory and intercultural psychology, we put forth a model positing that cross-cultural experience (an endowment firms can either hire for or facilitate themselves) develops managerial entrepreneurialism—consisting of (a) venture ideation, (b) opportunity recognition, and (c) entrepreneurial behavior—through the intervening mechanism of a paradox mindset. As a boundary condition we uncover that paradox mindset formation partially hinges on home cultural tightness-looseness. We employ three distinct experiments on multinational samples of individual professionals (n = 506), active entrepreneurs (n = 370), and current managers in global firms (n = 288) to test our theorizing. Finding general support for our model, with analyses yielding important theoretical and practical implications from non-findings too, we conclude that a paradox mindset is a necessary, but not de facto, mediating step between cross-cultural experience and the cultivation of entrepreneurial managers. We also find that paradox mindset formation is conditional and related to home cultural tightness-looseness.

GLOBALIZATION: CHOICE OR NECESSITY

Globalization is multidimensional process, where political, economic, military, cultural, environmental and social sides are widely involved. Since late 1990s knowledge plays a key role in determining the structure and frame of the modern world. Despite the fact that during globalization national borders have less meaning for global firms while they seek for the most advantageous place for economic profit, national countries create unique environment for them and ensure their sound positions on science-based world markets. Technology achievement is a significant factor for development. Participation in contemporary economy means to create appropriate sources for education, adequate infrastructure, political stabilization, market economy and so on.

Global Firms in Large Devaluations

Abstract I investigate the consequences of firms’ joint import and export decisions in the context of large devaluations. I provide empirical evidence that large devaluations are characterized by an increase in the aggregate share of imported inputs in total input spending and by reallocation of resources toward import-intensive firms, contrary to what standard quantitative trade models predict. These facts are explained by the expansion of exporters, which are intense importers. I develop a model where firms globally decide their import and export strategies and discipline it to match salient features of the Mexican micro data. After a devaluation, the model reproduces the pattern of low aggregate substitution and firm reallocation observed in the data. Compared with a benchmark without global firms, the model predicts higher growth of total exports and imports and a smaller reduction in the trade deficit.

Born Global Maturity: Strategic Aspects and Performance Consequences

AbstractBorn global firms (BGs) contribute significantly to economic growth, but few studies have examined the post-internationalization stage of BGs. In addition, studies of the impact of changes in strategic aspects as BGs mature on BG performance and survival have yielded conflicting results. To address this gap in knowledge, the present study examines the relationships between intelligence generation and innovation orientation, and branding strategies as moderated by maturity. The data were received from 133 senior managers of BGs of various ages. The analysis shows that BG maturity negatively moderates the relationship between intelligence generation and functional branding strategy but does not influence the relationships of innovation orientation with branding strategies. Furthermore, emotional branding showed stable association with both financial and market performance indicators. This study demonstrates that maturity affects the orientations and performance of BGs and calls for a reassessment of the competitive international strategy of BGs at the post-entry stage.

Determinants of corporate credit ratings: Does ESG matter?

We perform an empirical evaluation of fourteen multinomial classifiers in the prediction of credit ratings on a large dataset consisting of macroeconomic, firm-level financial, and environmental, social, and governance (ESG) variables. Random forests and extremely randomized trees exhibit the highest predictive power for US and global firms. We show that environmental and social responsibility variables are important determinants for the credit ratings, specifically measures of environmental innovation, resource use, emissions, corporate social responsibility, and workforce determinants. The influence of ESG variables become more pronounced following the financial crisis of 2007–2009, and are important across both investment-grade and speculative-grade classes.

Do ESG and Diversity Scores Predict Global Firms’ Environmental Innovation?

Environmental innovation (EI) is fundamental to sustainable development goal (SDG) number 9. Indirectly, it contributes to the achievement of SDG 7 by laying the groundwork for producing renewable energy. Firms involve environmental, social, and governance (ESG) and diversity practices to achieve sustainable success. ESG and diversity scores on EI need to be predicted, yet EI predictors are few in the research. Our institutional theory-based study examines whether ESG and diversity scores influence EI scores in multinational organizations. The dataset comprises information from the Refinitiv Eikon database, including 430 publicly traded firms worldwide throughout 2021. The results of our study indicate that the environmental pillar score, ESG, and workforce score are the three most significant factors for calculating enterprises’ EI scores. This research provides valuable insights into enhancing sustainability practices and fostering innovation in global firms, offering a practical roadmap for businesses striving to achieve these objectives.

Benchmarking for organisational competitiveness: a resource-based view perspective

PurposeThe paper tries to investigate the impact of applications of the resource-based view (RBV) theory in the management field to improve the firm’s profitability. Global firms are innovating and adopting new technology, paving the way to improve their performance.Design/methodology/approachWe have adopted RBV in management practices such as marketing, strategy, finance, and human resources.FindingsRBV has gained researchers' attention with the growing competitive world and new challenges to retaining customers and achieving their pre-defined targets. We attempt to identify the issues related to the usage of RBV in management.Originality/valueUsing RBV in management may help researchers create a competitive mindset and be prepared for uncertain challenges in the business world.

Too Domestic to Fail: Liquidity Provision and National Champions

Abstract Authorities’ support policies shape the location and continuation of industrial and banking activity on their soil. Firms’ locus of activity depends on their prospect of receiving financial assistance in distress and therefore on factors such as countries’ relative resilience. We predict that global firms are global in life and national in death; and that they become less global when competition is more intense, times are turbulent, and international risk sharing (say, through swap lines) weak. We analyse the competitive benefits of industrial and banking policies as well as their limitations, such as currency appreciation.

기업의 ESG활동이 신용등급에 미치는 영향: 국내 기업 적용사례

ESG management gradually becomes one of major issues in global firms these day, and this phenomenon is not exception for Korean firms and they make use of ESG management in thier decisions in raising capital and investment. Although initially they focused on the improvement of firm image and firm value through ESG management, many studies support the fact that firms gradually recognize that ESG is very essential for the survival and sustainable growth. This study investigates the trend of the increase of ESG bonds in Korea and analyzes the impact of ESG management on the credit ratings and risk management of firms. Then, through the case studies for Korean firms, we draw some useful implications for the investment strategy for the investors, the credit risk management for the firms, and policy makings about credit ratings for the government.