Implications For Multinational Corporations Research Articles

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.

Exchange Rate Risk Management in Natural Rubber Industry: Implications for Multinational Corporations in China

With the development of big data and information technology, the possibility of enhance the control of exchange rate risk in Chinese multinational corporations is increasing. A large of papers have already discussed exchange rate risk management, however the methodology used in accounting remain to be elucidated. This thesis focuses on China Hainan Rubber Industry Group Co. Ltd, analyzes problems of exchange rate management in its financial statements from 2015 to 2019, calculates the impact of exchange gains and losses with different accounting methods, and then discusses the policy implication. We set up a model to explain the details of exchange gains and loss, then subdivide (A) actual exchange gains and losses and (B) financial accounting exchange gains and losses to reflect the enterprise’s business status, and verify the feasibility of this model for practical use. Finally, we provide new policy implications, such as suggestions for accounting entries with classified exchange gains and losses, strengthen enterprise communication management by using IT, and pay attention to the development trend of CNY’s internationalization.

Cultural diplomacy as corporate strategy: an analysis of Pasona Group’s “New Tohoku” program in Japan

Corporate diplomacy research suggests US executives display little interest in supporting government diplomacy and promoting national culture; rather, corporate strategy focuses on profit. The corporate diplomacy phenomenon, however, needs additional examination in the more collectivistic East Asia context. This study investigates a public–private partnership in which a corporation sponsors a cultural exchange project in Japan, specifically how Japanese business leaders perceive and integrate promoting national interests and country image into corporate strategy. This research analyzes the New Tohoku program that brings foreign students, businesspersons, and social media influencers to Tohoku, a region undergoing reconstruction since the 2011 tsunami, to learn about Japan’s economy, history, climate, and culture. Interviews with executives and managers and documentary information from corporate webpages, news releases, and promotional brochures reveal motivations for engaging to (1) promote Japan’s culture, (2) stimulate economic growth, and (3) generate awareness about Pasona through publicity. While unrelated to Pasona’s business model, New Tohoku reflects the “Japanese mindset” of helping Japan; the founder, employees, and shareholders ensure this remains a strategic objective regardless of profits. This research has implications for multinational corporations’ role in cultural diplomacy as a component of public diplomacy.

Product market competition and efficiency of corporate tax management

PurposeThe purpose of this paper is to test the economic theory that product market competition should enhance firm performance in the US corporate tax management setting. It identifies one mechanism through which corporate management can improve firm performance. The paper also identifies business conditions that may facility or impede effective corporate tax management.Design/methodology/approachThe paper tests the relationship between product market competition and corporate tax efficiency using large archival data. The primary data source is COMPUSTAT, which contains annual and quarterly accounting data for US public firms. Other data sources include accounting comparability data generously shared by Professor Vedi.FindingsThe paper finds that firms in competitive industries are more efficient in managing taxes. Specifically, the paper documents that firms in competitive industries exhibit lower effective tax rates than their non-competitive counterparts. Furthermore, the paper finds that the positive link between competition and the efficiency of tax management is much stronger for firms with lower cash flow volatility and for firms with fewer industry investment opportunities. The lack of financial statement comparability may weaken this link.Research limitations/implicationsTax laws vary greatly from country to country. Readers should interpret the results within the US tax environments.Practical implicationsResults in this paper have implications for multinational corporations that are interested in investing and doing business in the USA.Originality/valueThis paper sheds light on how competition influences firm performance through efficient tax management, a specific mechanism through which competition improves firm performance. To the best of the author’s knowledge, this study provides the first documentation of how product market competition affects tax planning for US publicly traded companies.

Institutions and emerging markets: effects and implications for multinational corporations

Purpose– The purpose of this paper is to discuss the role of institutions in emerging markets by sketching out the unique institutional features of these markets and their implications for multinational corporations (MNCs).Design/methodology/approach– The study is conceptual in nature and provides an examination and interrelation of some of the key developments of institution-based research in the context of emerging market studies.Findings– This paper examines several idiosyncratic institutional features of emerging markets, including institutional voids, the relative importance of informal compared to formal institutions, institutional pressures by local governments, as well as institutional change and transitions.Practical implications– The paper discusses key effects and implications of the unique institutional environments of emerging markets for managers of MNCs, such as the relevance and importance of context, political, economic and social adaptability, as well as institutional arbitrage.Social implications– The paper discusses institutional legitimacy pressures in emerging markets for MNCs’ social performance, the relevance and importance of social institutions in these markets, as well as the need for social adaptation in order to successfully do business in emerging markets.Originality/value– This paper provides a current and relevant discussion of the key formal and informal institutional idiosyncrasies of emerging markets compared to developed markets and forwards a number or practical prescriptions for how to navigate these different and unique institutional environments.

China’s Crackdown on Corruption and Its Legal Implications for Multinational Corporations in China

Considering its importance as a hub for international trade and business, China is probably considered as the most attractive market for various forms...

Analysis Of Bankruptcy Law Provisions In New Member EU Countries: Global Competitive Strategy Implications For Multinational Corporations

Globalization has been responsible for a number of ongoing interrelated trends including an accelerated worldwide movement toward economic integration, an ongoing proliferation of new multinational corporations, a widening search for new economic opportunities by multinational corporations, and an increasing concern for and attention to bankruptcy as a contingency strategy for multinational corporations when primary strategies catastrophically fail. The economic benefits associated with the removal of trade barriers is also attracting new member countries to the EU and other trading blocks but these new member countries bankruptcy law provisions may have uncertain contingency strategy implications for MNCs.This paper comprises (1) a brief summary of the general trends associated with globalization; (2) a discussion of why international bankruptcy law is becoming increasingly important in the formulation of contingency strategy in multinational corporations; (3) a discussion and analysis of bankruptcy law provisions in new EU member states; (4) a discussion of the strategic implications associated with new member states bankruptcy laws; and (5) general conclusions regarding the attractiveness of new member states bankruptcy laws to multinational corporation strategists.

The emerging transnational dimension of organisational and individual identity: transnational technical communities as economic actors

An important feature of globalisation is the formation of ‘transnational technical communities’, groups of immigrants active in both home and host country technical networks. Viewed through the lens of identity, such communities demonstrate the intriguing interpenetration of individual identities and organisational identity. Further, building on the insight that such communities may be emerging as economic actors in their own right, we conceptualise them as a new type of knowledge conduit between nations. As such, their emergence has important implications for multinational corporations (MNCs), which have hitherto been viewed as the primary knowledge conduit between nations, suggesting the need for MNC managers to pay attention to the evolving identities of their own enterprises.

Risk Management for Multinational Corporations: Sentencing Guidelines Proposals Reflect Evolving Compliance Norms

In recent years, the U.S. government has become increasingly aggressive in enforcing U.S. laws designed to regulate international conduct of multinational corporations. As a result, multinational corporations face multiplying compliance concerns as they seek to comply with U.S. sanctions and antimoney laundering requirements, export control rules, and the Foreign Corrupt Practices Act (FCPA). In this article, the author develops the proposed amendments and their implications for multinational corporations attempting to manage the risks posed by these complicated and nuanced laws.

Segmenting China's Consumer Market

SUMMARY China as one of the Big Emerging Markets (BEMs) has attracted increasing trade and foreign investment in the past two decades. The emergence of China as a viable consumer market has created tremendous opportunities for multinational corporations (MNCs). Meanwhile, continuous evolution of the economy and increasing heterogeneity of Chinese consumers challenge foreign marketers to accurately assess market demand and to enact effective marketing strategies. This research proposes to segment China's consumer market using a hybrid approach including demographics, psychographics and geographics. It also examines several other notable characteristics of the Chinese consumer market and draws marketing strategy implications for MNCs.

Three cultures of international marketing

Three considerations of the idea of ‘culture’ interact to question the inevitability of ‘global’ brands: consumer culture, marketing culture, and the national cultural values that underpin decision making and have significant implications for multinational corporations. This leads to the conclusion that although all major companies will be marketing internationally and that there will be some genuinely global brands, the majority will not be. The model of the centralised transnational company is founded on a fundamental contradiction which is the need for global cost rationalisation. Local needs in terms of both consumer tastes and of sensitivity to changes in distribution, new competition and other local activities will require a much stronger local presence than the prototypical transnational corporation allows for. Companies need to develop structures that can identify and manage their profitable but few in number brands at the same time responding quickly and sensitively to activities at the local level. The world has not become ‘homogenised’ as predicted, but rather personalised and customised.