Host Country Business Research Articles

See who I know! Addressing the liabilities of outsidership through status signaling

Status is an important intangible asset, yet when firms enter new countries, they lack standing in new social hierarchies as outsiders. Conventional wisdom suggests embeddedness in host-country networks can alleviate newcomers’ liability of outsidership. We complement this with insights from status signaling theory: Newcomers in host countries can address their liability of outsidership through the visual display of social affiliations. We utilize a novel visual qualitative research approach that analyzes annual report photographs of an emerging-market family business, depicting the firm’s leaders with high-status alters. Complementing the international business literature, which emphasizes strong ties to host-country business partners, we identify three signaling mechanisms that are more circuitous: bypass (host-country affiliations beyond the firm’s industry), allusion (global affiliations beyond the host country and industry, often celebrities), and aspiration (global industry affiliations). We also suggest that such diffuse status signaling mechanisms may be especially salient in emerging-market family firms investing in developed markets, which are accorded low status in many developed markets. These firms feature firm/owner identity overlaps, long leader tenures, and a tendency to build reputation through prosocial behavior, facilitating the activation of status signaling tactics through ephemeral affiliations with high-status actors situated in world society.

Impact of host country's business environment on China's OFDI in Belt and Road countries: Based on the perspective of investment motives

Impact of host country's business environment on China's OFDI in Belt and Road countries: Based on the perspective of investment motives

Do emerging market multinational corporations headquarter-subsidiary relationships foster subsidiary innovation and performance in developed markets?

This study investigates sources of innovation and performance for emerging market multinational corporations (EMNCs). We develop a contingency framework that examines how internal administrative embeddedness (IAE) and internal knowledge embeddedness (IKE) shape EMNC overseas subsidiary innovation capabilities, and how these relationships are contingent on EMNC headquarter host country experience and subsidiary embeddedness with host-country business partners. Data were collected from a survey of 242 dyads composed of Chinese EMNC headquarters and overseas subsidiaries located in 30 developed countries. Secondary data were also collected for EMNC host country experience and subsidiary performance. The empirical results show that IAE negatively influences EMNC subsidiary innovation capability, and this negative relationship is stronger when subsidiary host-country embeddedness increases. The findings further reveal that IKE positively influences subsidiary innovation capability. This relationship becomes stronger as subsidiary host-country embeddedness and headquarter host country experience increase. We also find that subsidiary innovation capability mediates the relationship between HQ-subsidiary embeddedness and subsidiary performance. Theoretical and managerial implications are discussed.

Employee Relations at Asian Subsidiaries in Hungary

Asian foreign direct investment is substantial in Hungary in regional comparison. Multinationals from China, India, Japan, and Korea are important investors in the Hungarian economy. The main aim of this article is to describe how home and host country institutions and business and management culture influence the operation of the companies in question, first of all in the various areas of human resource management. In the analysis, we rely mainly on the Varieties-of-Capitalism approach, given its emphasis on the organizational and related cultural differences that result in different types of capitalisms in the world economy. The article is based on company interviews conducted with the representatives of seven Asian subsidiaries in Hungary (1–10 interviews per company) that are operational in the automotive and/or electronics industry. Our conclusion is that management and labor relations in these companies evolve under the influence and through the interaction of related home and host country business culture, thus they contain elements of both. However, we found the clear dominance of host country impacts, which has become more pronounced over time.

The Embedding of Transnational Entrepreneurs in Diaspora Networks: Leveraging the Assets of Foreignness

In this paper we examine how foreign actors capitalize on their ethnic identity to gain skills and capabilities that enable them to operate in a new and strange environment. We explore the mechanisms by which Bulgarian entrepreneurs in London use their ethnic identity to develop competitive advantage and business contacts. We find that the entrepreneurs studied gain access to a diaspora network, which enables them to develop essential business capabilities and integrate knowledge from both home and host country environments. The diaspora community possesses a collective asset (transactive memory) that allows its members to remove competition from the interfirm level to the network level (i.e., diaspora networks vs. networks of native businesspeople). Additionally, the cultural identity and networks to which community members have access provide bridging capabilities that allow diaspora businesspeople to make links to host country business partners and thus embed themselves in the host country environment. Thus, this paper adds to the growing body of work showing how foreignness can serve as an asset in addition to its better-known role as a liability.

Leveraging the Assets of Foreignness in the Transnational Domain

In this paper, we examine how foreign actors capitalize on their ethnic identity to gain skills and capabilities that enable them to operate in a new and strange environment. We explore the mechanisms by which Bulgarian entrepreneurs in London use their ethnic identity to develop competitive advantage and business contacts. We find that the entrepreneurs studied gain access to a diaspora network, which enables them to develop essential business capabilities and integrate knowledge from both home and host country environments. The diaspora community possesses a collective asset (transactive memory) that allows its members to remove competition from the interfirm level to the network level (i.e., diaspora networks vs. networks of native businesspeople). Additionally, the cultural identity and networks to which community members have access provide bridging capabilities that allow diaspora businesspeople to make links to host country business partners and thus embed themselves in the host country environment...

Seeking Capital Abroad: Motivations, Process, and Suggestions for Success

Until fairly recently, the ownership of companies has remained largely with investors in home countries with stocks listed only on domestic exchanges. But a growing number of firms are now raising equity capital on foreign stock exchanges in response to opportunities created by the increasing integration of global capital markets. The authors identify several reasons why seeking capital abroad is an attractive strategy for companies, including greater access to capital, a more liquid share price, easier means of offering employees equity interests in the firm, greater opportunities to make acquisitions, and at least the potential for a stronger reputation and higher valuation, stemming in part from better governance law and greater protection for minority investors in certain jurisdictions. But along with such potential benefits, companies that raise capital abroad also inevitably face liabilities of foreignness (LOF) in their dealings with foreign investors and capital markets. The authors propose a number of ways of minimizing such liabilities, that including signalling the firm's commitment to strengthening its internal governance system, adopting host country business practices, and enlisting the help of reputational intermediaries.

Paradox of MNE Overseas Subsidiary CEO Nationality and Relational Ties Strength on Performance

We examine whether deploying host-country nationals (HCNs) as subsidiary CEOs in multinational enterprises (MNEs) overseas subsidiaries may lead to stronger relational ties to key host-country business contacts and government officials. Furthermore, drawing on an agency perspective of MNE-subsidiary relationship, we examine how strong relational ties may hurt subsidiary performance and how incentive compensation and monitoring may influence this relationship. We combined archival and survey data for 272 MNE subsidiaries operating in South Korea. Our results reveal a paradox in which appointing HCNs subsidiary CEO enhances relational ties to host- country business contacts but such strong relational ties also hurts subsidiary performance, while incentive compensation and monitoring can mitigate such agency costs. Our theory and findings provide unique insights to MNE overseas subsidiary staffing, social embeddedness, and subsidiary performance.

Developing international executives: the capacity‐building approach

PurposeThe purpose of this paper is to outline the development steps that should be undertaken by any executives who are to be sent on an expatriate assignment to take the lead in a foreign subsidiary location. It highlights the need to develop an understanding of the host country's business practices, cultural preferences and operational methods.Design/methodology/approachThis article explores contemporary thinking and practice and is based on work carried out over the past two years. It also uses arguments from organizational development and learning literature.FindingsThe paper explains that programs need to impart skills and knowledge in the area of cross cultural empathy, cross cultural communication and leadership, and, finally, the individual's self efficacy and level of adaptability.Practical implicationsThe paper provides insights and practical tools to assist in the development of a successful international executive.Originality/valueThe short paper is designed for executives and researchers with demanding lifestyles and assists in getting an in‐depth overview by selecting the most relevant information and presenting it in a condensed and easy‐to‐digest format.

The dynamic value of MNE political embeddedness: The case of the Chinese automobile industry

This paper examines the complex relationship between the embeddedness of multinational enterprises (MNEs) in host-country political networks and their long-run competitive positions in host emerging markets. We report the findings of a longitudinal study of the Chinese automobile sector from the early 1980s to the mid 2000s. Using data from 142 interviews over 11 years, and a wide range of secondary sources, we explore the process through which the value of political embeddedness changed over time in the face of profound and rapid changes in host-country business environments. On the basis of this longitudinal study, the paper unravels the underlying mechanisms that lead to the declining, and even negative, value of deep political embeddedness by MNEs in a politically stable emerging economy.

Unleashing ethnic entrepreneurship: proactive policy-making in a changing Europe

Amid mounting concerns in post-2004 Europe about economic growth and competitiveness in global markets, immigrant/ethnic entrepreneurs successfully incorporate and manage new businesses that satisfy ethnic needs, create new jobs, buttress other businesses, stimulate competition and contribute to national coffers. Instituting appropriate immigrant/ethnic entrepreneur-centred policies and initiatives that encourage greater use of co-ethnic, multi-ethnic and host-country business networks could nurture this entrepreneurial activity. This study, incorporating literature and publications within several countries in Europe and elsewhere, reviews entrepreneur interdependence from the networking perspective since, traditionally, immigrant/ethnic entrepreneurs have been self- and mutually reliant. It recommends appropriate policies and initiatives be developed and implemented to promote this mutual reliance to ensure ethnic/immigrant enterprises are (a) increased in number, (b) aided to survive and thrive, (c) accelerated in their growth and (d) facilitated to become more competitive nationally and internationally. Six action areas are proposed.

Varieties and variability of employee relations approaches in US subsidiaries: country-of-origin effects and the level and type of industry internationalisation

This article investigates the relative importance and variability of the country-of-origin effect in employee relations approaches of US subsidiaries within the context of diversity of employee relations patterns in home- and host-country business systems and the influence of important industry forces. It is based on a representative survey of US subsidiaries and indigenous firms in the UK. The cross-sectional comparison with indigenous UK firms confirmed a distinct US country-of-origin imprint in employee relations patterns in US subsidiaries. However, the magnitude of such an effect cautions against assumptions of popular stereotypes and reflects, inter alia, the diversity of employee relations approaches among US parent companies as well as developments in the UK industrial relations landscape over the last decades. The intra-US analysis revealed the importance of both the level and type of industry internationalisation in shaping the strength and nature of the country-of-origin influence. On the basis of the findings, the article highlights lessons to be learned for the study of cross-border policy-transfer issues in MNCs.

Managing the Transnational Law Firm: A Relational Analysis of Professional Systems, Embedded Actors, and Time—Space-Sensitive Governance

This article argues that the relational approach can be particularly effective for addressing debates about the varieties of capitalism and the dynamics of institutional contexts. Using the case study of transnational law firms and data gathered through interviews with partners in London and New York, it makes two arguments. First, it suggests that the relational approach’s focus on the behavior of key agents when new or different work practices are encountered helps explain the management of institutional heterogeneity by transnational corporations (TNCs). Such an approach reveals the peculiarities of professionals and professional service managers and how they affect the response of globalizing law firms when home- and host-country business practices diverge. Second, the article shows how relational approaches can help disaggregate descriptions of national institutional systems to reveal the importance of studying their constitutive practices. Understanding these microlevel variations, which is missed by macrolevel categories like Anglo-American, is essential for explaining how firms cope with institutional heterogeneity. The author therefore argues that a better understanding of the effects of TNCs on national business systems can be facilitated by further developing the actor- and practice-focused analyses promoted by relational approaches.

Institutional Influences on Manufacturing Organization in Multinational Corporations: The ‘Cherrypicking’ Approach

Research on the multinational corporation (MNC) is increasingly concerned with the alleged evolution of companies towards a more standardized and rationalized global organization. Only recently, this field has been informed by alternative approaches which generate a more differentiated picture and consider the influence of divergent national institutional contexts on the multinational organization. This paper makes a contribution to this debate from a comparative institutionalist perspective by focusing on manufacturing organization within MNCs. It argues that organization structures and processes in MNCs are sector specific and influenced by national institutional features of the home and host countries. Drawing on data from a specific industrial sector, it identifies the crucial role of home country and host country embeddedness in the (re)organization of manufacturing tasks and work systems. The key question is how actors shape the interaction of these institutional pressures and, hence, manufacturing approaches, location choices and work system designs. Research in British and German subsidiaries of three MNCs suggests that, particularly at subsidiary level, MNCs apply a ‘cherrypicking’ strategy of selected use of work system elements, shaped by the host country business system. It is shown that manufacturing strategies of MNCs originating from highly coordinated business systems are highly context specific and difficult (if not impossible) to transfer elsewhere. Moreover, ‘cherrypicking’ strategies in subsidiaries embedded in such contexts turned out to be highly problematic, especially when managers attempt to combine them with group-wide standardizing work systems.

Harnessing foreign direct investment for economic development and poverty reduction: Lessons from Vietnam

Vietnam has been successful in attracting substantial foreign direct investment (FDI) inflows. The foreign-invested sector is an important engine of economic growth for Vietnam. The first part of the article profiles Vietnam’s experience in attracting FDI since the late 1980s, and identifies the factors that lay behind a subsequent contraction in FDI inflows during the latter half of the 1990s. The second part identifies areas where Vietnam might improve its attractiveness to foreign investors, and thereby better harness overseas capital for sustained economic development and poverty reduction. This necessitates moving away from incremental adjustments to the FDI regime itself, and adopting a more holistic approach to the design and implementation of a conducive host country business environment, which benefits both local and overseas investors alike. Many of the lessons learnt by Vietnam are pertinent to other developing and transitional economies seeking to harness FDI for economic development and poverty reduction.

A framework for selecting and introducing appropriate production technology in developing countries

The challenges of managing production facilities in developing countries are illustrated, and a holistic model that conceptualizes the technology transfer process as proceeding in distinct phases and adapting to the host country business and cultural environment is proposed. The major activities of each phase are identified and the transitions between them discussed. The goal of this analytical framework is to assist the firm in selecting technology that is appropriate in the context of a host country's environment. Recommendations are made to effectively transfer organizational forms and relationships between the parent firm and local personnel. The impact of the design and implementation of the management system and technology transfer on the firm's productivity and quality performance is discussed and suggestions offered for operation of world-class manufacturing facilities in developing countries.