Home Country Institutions Research Articles

Home country institutions and exports of emerging economy small firms: the role of internal R&D and acquisition of external knowledge

Home country institutions and exports of emerging economy small firms: the role of internal R&D and acquisition of external knowledge

Home Country Institutions and Accelerator Outcomes

Home Country Institutions and Accelerator Outcomes

Exploring host and home country effects on industrial relations in Chinese multinational enterprises – Evidence from Ireland

This paper explores the industrial relations (IR) experiences of Chinese multinational enterprises (MNE) in Ireland, with particular focus on the impact of host and home country institutions on IR policies and practices. The study adopted a qualitative methodology of semi-structured interviews with managerial respondents from eight Chinese MNEs located in Ireland and personnel in other relevant public and private organisations. Our results indicate that host country IR institutions (e.g. trade unions, employment legislation and government support) largely explain the IR practices of Chinese MNEs in Ireland. This study also identifies home country effects mostly relating to a hierarchical managerial approach and the development of a culture of harmony and collaboration. Finally, our results also call attention to some emerging ‘convergence’ and ‘divergence’ between Chinese MNEs and other MNEs in Ireland in terms of their IR experiences and responses.

The impact factors of China’s outward foreign direct investment in Singapore

The sudden outbreak of COVID-19 pandemic led to a global recession, but China's OFDI remained on a steady rise, attracting global attention. By the end of 2020, Singapore was the second most developed country after the US in terms of receiving outward foreign direct investment (OFDI) flows from China. The investment cooperation between China and Singapore played an important role in promoting the high-quality development of the Belt and Road Initiative and enhancing the economic cooperation between China and ASEAN after the COVID-19 pandemic. This study delves into the influencing factors of Chinese OFDI to Singapore: home country institutions, host country institutions, and investment motives. This study takes Singapore as the research object and uses the data of China’s OFDI to Singapore from 2001 to 2020 to conduct an empirical analysis through a modified regression model to analyze the development of China’s OFDI to Singapore, so as to make contributions to: (1) providing empirical evidence for studying OFDI from developing to developed countries; (2) providing reference for investment cooperation in the post COVID period between China and Singapore.

Bulls and bears: inscribing SOEs’ roles into the global climate agenda

Purpose This study aims to explore when and under what conditions state-owned enterprises (SOEs) become important players in orchestrating the global climate action and what their roles are as domestic or international (de)carbonizers. Design/methodology/approach This is a conceptual paper that aims to advance understanding of the role of SOEs in addressing the global climate challenge. The authors build on the institutional theory to capture the importance of home-country climate regulation mechanisms and advance knowledge on the internationalization of SOEs. The authors review the literature on the institutional boundaries that shape the environmental activities of firms at home and abroad and develop the argument on the influence of home country institutions and internationalization on the role of SOEs in the global climate agenda. Findings In this study, the authors elaborate the SOEs’ climate action matrix and offer three propositions based on the fact that SOEs’ environmental strategies are driven by the interests of the state as owner and the scope of SOEs’ internationalization. First, the authors propose that the level of home country’s climate policy ambition explains SOEs’ stance on climate action. Second, scope of internationalization explains SOEs’ stance on climate action. Third, the progressive/increasing involvement of SOEs in climate action enhances the country’s climate stance. Originality/value The authors incorporate the climate argument into international business (IB) studies of SOEs’ internationalization, a novel approach that helps us to advance the knowledge on the complex issue of corporate climate action. The authors argue for a dynamic and reciprocal relationship between home/host countries and SOEs’ climate engagement. In doing this, the authors contribute to the IB research and policy agenda by exploring SOEs’ engagement in advancing the global climate agenda.

Examining the influence of entrepreneurial skills, human capital, and home country institutions on firm internationalization

AbstractIn an increasingly interconnected world, understanding the factors that influence firm internationalization is crucial for businesses and policymakers alike. This study examines the complex interplay between entrepreneurial skills, human capital, institutional environments and firm internationalization. Specifically, it investigates the mediating role of home country institutional environments in the relationship between entrepreneurial skills, human capital and firm internationalization. Based on a theoretical framework that integrates resource‐based and institutional theories, this study employs a quantitative research design, using cross‐sectional international data from the Global Entrepreneurship Development Institute (GEDI) and Global Competitiveness Index 2018 reports for 137 countries. The findings of this reveal compelling insights into the factors driving firm internationalization. Both direct and indirect effects of entrepreneurial skills and human capital on firm internationalization emerge as positive and statistically significant. Moreover, the study underscores the nuanced influence of institutional environments, indicating their partial mediation of the relationship between entrepreneurial skills, human capital and firm internationalization. This sheds light on the pivotal role of the dynamic interplay between resources and institutional frameworks in shaping firms’ strategic decisions to venture into foreign markets. The implications of these results extend beyond academia, with actionable insights for both businesses and policymakers alike. This study not only contributes to our theoretical understanding of internationalization processes but also provides practical guidance for firms seeking to navigate and optimize their global expansion strategies.

Home country and firm-specific advantage influences on HRM replication versus adaptation in EMNEs operating in advanced economies: A qualitative comparative analysis

This article examines a variety of home and host-country factors and explains how they influence the global integration versus local adaptation of human resource management (HRM) in subsidiaries of emerging multinational enterprises (EMNEs) in advanced economies. The study draws on data collected from 15 multiple case studies using semi-structured interviews with senior directors and managers working in Australian subsidiaries of Indian multinational enterprises (MNEs) operating in the information technology (IT) services industry. The findings reveal that despite originating from weak institutions, Indian IT service MNEs do not face hurdles in replicating their home-country HRM model to their subsidiaries in Australia. International staffing of expatriates was a key industry-specific resource and capability enabling reverse country-of-origin effect to allow the Australian subsidiaries to be managed ethnocentrically. This article challenges the notion that EMNEs struggle to adapt their indigenous HRM systems and model due to weak institutions as it sheds light on the reverse relationship that exists between management practices and country-of-origin in leveraging home-country institutions. It also demonstrates that EMNEs derive competitive advantages mainly from their traditional firm and industry-specific resources and capabilities which allow them to achieve global integration of HRM.

The Home Country Institutional Environment as an Internationalization Driver for the Large Brazilian Pharmaceutical Companies

This study analyses the internationalization characteristics of Large Brazilian Pharmaceutical Companies. It contributes to the international business and evolutionary literature by showing how the home country institutional environment affects the firms’ internationalization at a country- and industry-level. The methodology is a multiple case study with eight companies, exploring their competitive advantages, strategies, and obstacles to international expansion. Findings reveal that home country institutional environment constraints pushed companies to build capabilities to survive and compete in the domestic market, which served as advantages when going international. Companies’ internationalization is driven by the exploitation and exploration of assets and capabilities.

The spillover effects of outward FDI on environmental sustainability in developing countries: exploring the channels of home country institutions and human capital

The spillover effects of outward FDI on environmental sustainability in developing countries: exploring the channels of home country institutions and human capital

Impact Factors of China’s Outward Foreign Direct Investment in Singapore

The sudden outbreak of COVID-19 pandemic led to a global recession, but China's OFDI remained on a steady rise, attracting global attention. By the end of 2020, Singapore was the second most developed country after the US in terms of receiving outward foreign direct investment (OFDI) flows from China. The investment cooperation between China and Singapore played an important role in promoting the high-quality development of the Belt and Road Initiative and enhancing the economic cooperation between China and ASEAN after the COVID-19 pandemic. This study delves into the influencing factors of Chinese OFDI to Singapore: home country institutions, host country institutions, and investment motives. This study takes Singapore as the research object and uses the data of China’s OFDI to Singapore from 2001 to 2020 to conduct an empirical analysis through a modified regression model to analyze the development of China’s OFDI to Singapore, so as to make contributions to: (1) providing empirical evidence for studying OFDI from developing to developed countries; (2) providing reference for investment cooperation in the post COVID period between China and Singapore.

Technology investments from China into other emerging economies: a push and pull perspective on the Eurasia region

PurposeDrawn from the push–pull perspective, this research aims to identify the determinants of Chinese technology's outward foreign direct investments (OFDI) into the Eurasian region.Design/methodology/approachThe authors argue that contrary to the extant literature, technology-driven OFDI from emerging-market multinationals (EMNEs) do not always seek developed countries, and EMNEs' technology investments in emerging economies are rising indicating that there are factors in these economies that can prove attractive. The authors recognize the influence of the macroeconomic environment and the interaction of home and host-country institutional contexts that influence the location choice of EMNEs technology-driven OFDI into other emerging economies, mediated by the industry sector and firm's ownership structure. The authors test our hypotheses using a sample of 1,656 observations of Chinese MNEs' tech-investments in the Eurasian region from 2005 to 2019.Findings The study results indicate that bilateral diplomatic relations pave the way of the host-country institutional environment for Chinese MNEs uncovering the role of the Chinese government as an OFDI facilitator. This study also unveils a lower technology level of the Chinese MNEs' investments in the Eurasian region connoting an interest in market opportunities exploitation through their existing technologies – through its comparative advantage in the global markets – rather than strategic assets acquisition aiming at augmenting their technological capabilities. This trend is similar to that of other major foreign direct investment (FDI) source countries.Originality/valueThis research contributes to a better understanding of the characteristics and the location choice of technology investments from EMNEs into other emerging economies that have received scant attention in the literature. In addition, it extends the institutional theory by analyzing how home-country institutions, through bilateral diplomatic relations, may smooth the host country institutional environment for home-country MNEs' foreign investments and contributes as well to the debate on the applicability of the existing theoretical framework in the case of emerging-market MNEs.

Socially conscious investment funds and home country institutions

We delve into performance and riskiness of socially conscious (SC) investment funds while considering the salient role of home country institutions as proxied by freedom indicators – namely, economic freedom with its five underlying component areas – in addition to the personal and overall human freedom of countries/regions as related to the home base currency of those funds. From a global perspective and including nonlinear considerations, evidence shows that advances in economic freedom and its constituent areas, as well as differences in personal freedom, have a consistent sizeable positive impact on the performance of SC funds but also a slight positive effect on their riskiness, attested to by various robustness tests. We articulate the added financial benefits to be gained when both socially responsible features and freedom infrastructure are present, confirming that freedom indicators matter. There is subtle evidence that changes in legal structure and security of property rights, as well as sound money, show a statistically and economically significant positive effect on performance across various specifications. In accord with widespread support for the importance of private property and the rule of law, this study shows that without sound money, a functioning legal system, and entrenched property rights, the performance of SC funds is stalled.

Global Outward Foreign Direct Investment and Economic Growth Across Income Groups: The Mediating Effect of Home Country Institutions

Although some empirical studies have examined the direct impact of outward foreign direct investment (outward FDI) on economic growth, but the indirect role play by home country institutions in outward FDI-induced economic growth remain unexplored. To cover this research gap, this study examines the impact of outward FDI on economic growth mediated by home country institutions in global panel of 161 economies, divided into World Bank income clusters such as high, upper-middle, lower-middle, and low-income economies for the period 1998 to 2019. For empirical analysis, this study utilized the Cross-Sectionally Augmented ARDL (CS-ARDL) and the Common Correlated Effect Mean Group (CCEMG) techniques robust to numerous econometric problems. In low-income countries, results indicate that outward FDI internationalization activities have adverse effect on economic growth, and the impact of home country institutions in stimulating outward FDI-induced growth appears weak both in the short term and long-term. In the case of high income, upper-middle income and lower-middle income countries, finding highlights that the joint impact of outward FDI and home country institutions stimulate higher economic growth and accelerate economic integration into the global economy. These impacts were found to diminish moving from high to low-income countries, which suggests that home country institutional development and income economy level matters for outward FDI-induced growth effects. The study also discusses key implications for policy.

Home Country Institutions and Legitimacy on Chinese High-Tech MNEs’ Entry Mode Choices: A Conceptual Framework

The institutional factors of the home country play an increasingly important role in the process of the rise of MNEs in developing countries. A Through studies in literature, this paper finds that domestic institutional support and institutional restrictions can effect the entry mode of Chinese high-tech enterprises into the target country's market, and the legitimacy of enterprises in the target country plays an intermediary role between the two. The hypothesized effect of variables and entry mode choice of Chinese high-tech MNEs needs to be tested in future research based on survey data drawn from official sources and questionnaires. This study expanded the theoretical tools that determine the decisions of the FDI entry mode.

Tax havens and emerging market multinationals: The role of property rights protection and economic freedom

This paper presents an investigation of the relationship between home country institutional quality and EMNE investments in tax havens. We develop a conceptual framework that adapts the institutional escapism framework, whereby EMNEs expand globally to escape any home country institutional hazards, together with the institutional leverage framework, whereby EMNEs can leverage their home country institutions as a competitive advantage. This enabled us to conceptually derive and explain the curvilinear (U-shaped) relationship that develops between institutional differences and reforms over time and how this affects EMNE strategy towards tax havens. Based on a large cross-country firm-level dataset, our empirical results confirm the curvilinear relationship, such that EMNEs from weaker institutional environments are more likely to own tax haven subsidiaries. However, as emerging countries improve their institutional environment, the likelihood of investing in tax havens declines before increasing again at a time when said emerging countries have achieved developmental stages similar to those of developed countries. Based on our results, we draw several managerial and policy related implications.

A meta-analytic synthesis of how market and entrepreneurial orientation contribute to export performance: Do home country institutions matter?

Although the related streams of research have witnessed a burgeoning interest in recent decades, empirical evidence on how strategic orientations are relevant to export performance remains inconclusive. Therefore, this research aims to review and quantitatively synthesize the existing literature on the relationship between strategic orientations and export performance by investigating the moderating effects of home country institutions and measurement factors. Meta-analyzing 42 empirical articles containing 11,518 firms with 185 effect sizes, this study provides strong support for the favorable effects of both market and entrepreneurial orientation on the multiple facets of export performance. Besides, the meta-analysis has uncovered that the magnitude of the correlation between market orientation and export performance is contingent upon the uncertainty avoidance dimension of national culture; but not upon the formal institutions in the home country. Further, the association between entrepreneurial orientation and export performance has been found to be moderated by formal as well as informal institutions of the home country. Significant variations in the influences of market and entrepreneurial orientation on export performance have also been spotted depending on measurement factors, particularly upon objective and subjective measures for assessing export performance and the dimensional nature of the strategic orientation scales.

International competitiveness readiness, home country institutions and early internationalisation

PurposeSynthesising an individual–opportunity nexus model, this research aims to develop a model of early internationalisation by integrating international competitiveness readiness, entrepreneurial motives and home country institutions and empirically assesses this model using a multi-level estimate design.Design/methodology/approachDrawing upon a global context comprising 79,402 entrepreneurs from 87 countries, this research applies a Heckman 2-step model together with a multi-level approach that allows to deal with self-selection bias and to take the hierarchical nature of the data into account.FindingsThe findings show that early internationalisation is significantly affected by entrepreneurs' international competitiveness readiness and this association is moderated by entrepreneurial motives. In addition, the findings demonstrate that the individual-level effects are further modified by the quality of country-level governance.Practical implicationsThe research findings have significant implications and value for policy-makers who are aiming to stimulate the rate of early internationalisation by influencing the quality of governance.Originality/valueThe results contribute to the development of knowledge and theoretical bases in international entrepreneurship (IE). The results provide a multi-level view on the relationships between entrepreneurs and the internationalisation of entrepreneurs' firms from an integrative perspective, thereby complementing the perspective of international competitiveness readiness that primarily focuses on the effects of inherent resources and capabilities.

Role of “Indianness” in International Location choice – The effect of religion and langauge

Unlike other countries’ firms that have undergone the path of liberalization since the 1990s, Indian Multinational Enterprises (MNEs) have registered exceptional cross-border activities. Originating from the institutional void, a large majority of successful Indian MNEs are generally part of a single business family’s portfolio of businesses, commonly known as business groups (BGs). MNEs are embedded in their home country environment before their internationalization. Thus, acknowledging the role of home country institutions in shaping the culture of the organization, we adopt the concept of “Indianness” and unpack it in the form of linguistic and religious diversity which shapes the organizations in their formative years. This study aims to understand the impact of Indianness on the foreign location choice of the most deeply entrenched organizational forms, that is, the Indian BGs. Here we show that Indian firms prefer to internationalize to nations that are least distant linguistically and religiously and have a less diverse set of languages and more diverse religiously. Additionally, as the religious distance seems to dissuade the location choice in high distant nations, international experience gained by the same BGs’ affiliate in the same or psychically similar host nations aids in choosing religiously distant nations. These results are contrary to the belief that high religious or linguistic distance dampens the prospects of foreign location choice. This study also highlights the role of prior experience in the same or psychically similar nations in aiding the reduction of the negative impacts of religious differences. This study brings to fore the importance of home country (informal)institutions or as we term them Indianness in the case of Indian MNEs internationalization.

The Role of FMK and HCI in Entrepreneurial Internationalization-Performance : A Meta Analysis

We study the influence of foreign market knowledge (FMK) and home country institutions on the entrepreneurial internationalization-performance relationship. The sample for the current study comprises peer-reviewed journal articles published between 1996 to 2020. Our sample consists of 115 independent samples having 101,475 firms. We extend the previous meta-analysis (Schwens et al., 2018) on international entrepreneurship, which studied the moderating role of knowledge intensity for the same relationship. As per our results, FMK positively moderates the relationships between degree and scope of internationalization and performance. Whereas home country institutions positively moderate the scope of internationalization and performance relationship.

Activating assets of foreignness in compressed developing markets: evidence from New Zealand SMEs entering the Chinese market

ABSTRACTThe methods Western SMEs can use to activate assets of foreignness in compressed developing markets are not well understood. To fill this gap, this study identifies three main mechanisms for such activation: conforming to home-country institutions, creating distancing narratives and accentuating foreignness. It contributes knowledge about SME internationalization into compressed developing markets through two findings. First, SMEs can benefit from contrasting country practices and norms between home and host countries. Second, SMEs can activate institutional resources of their home country, which requires between-market learning because the value of these resources arises from their use in a different context.