International Business Theory Research Articles

International business theory and the criminal multinational enterprise

Criminal syndicates have been around for millennia. While some were founded to undertake cross-border activities, others have expanded internationally, evolving into sophisticated organizations that mimic multinational enterprises. The growing prevalence of criminal multinational enterprises (CMNEs) provides an opportunity to revisit international business theory, particularly internalization theory. We start by defining the CMNE, explaining its rise and interface with legitimate multinationals, and establishing similarities and differences with legitimate multinational enterprises. Then, we use the CMNE to “stress-test” the internalization theory of the multinational enterprise, set its boundaries, and offer theoretical development by way of extension, qualification, and refinement.

Unlocking subsidiary performance: exploring the impact of subsidiary TMT composition, PCN tenure and subsidiary age

PurposeThe purpose of this paper is to study the relationship between subsidiary manager’s demographic characteristics and performance, while incorporating the subsidiary context. We draw upon upper echelon theories and International Business theories to understand this relationship.Design/methodology/approachUsing a dataset based on listed Multinational subsidiaries in India we use linear regression to establish the relationship between subsidiary external performance (host market performance), subsidiary internal performance and subsidiary manager’s demographic characteristics.FindingsWith our data set we find a positive relationship between percentage of host country nationals (HCN) in the Top Management Team (TMT) and subsidiary host market performance and that subsidiary age moderates this relationship. We also find an inverted U-shaped relationship between parent country nationals (PCN) tenure and subsidiary performance.Research limitations/implicationsOne of the limitations is that our study views the strategy process through the Upper Echelons (UE) theory lens, as a clearly specified planning process that associates strategy with intentionality. The opportunity that emanates at lower levels can turn an intended strategy into something different than what was started.Practical implicationsThe findings in this paper can be the basis for decision making on the constitution of leadership teams.Originality/valueThere is a dearth of empirical evidence and studies on TMTs in the subsidiary, particularly from the non-North American context. Using a unique data set of listed multinational subsidiaries in India, the paper explores the impact of TMT demographics such as tenure of the TMT and age of the subsidiary operations on the performance of the subsidiary.

Critical perspectives on GVC theory: uncovering GVC resilience through non-lead power

Critical perspectives on GVC theory: uncovering GVC resilience through non-lead power

Advancing Theory Development in Emerging and Frontier Markets: Embracing Indigenous and Historical Perspectives in International Business Scholarship

Existing international business theories primarily focus on developed markets, prompting calls to use emerging and frontier markets as laboratories for theory development. These markets’ distinct cultural and institutional settings offer opportunities for novel theories. However, there has been limited theory development in these contexts. The purpose of this paper is to discuss the challenges associated with theory development in emerging and frontier markets and provide guidance on effectively building theories using these contexts. It proposes embracing indigenous and historical theorizing to gain profound insights specific to each context and offers practical guidance for developing novel theories.

Not gone away: how domestic terrorism impacts multinationals in foreign markets

Purpose The paper aims to understand how state and non-state domestic terrorism impacts MNEs in foreign markets. Despite the burgeoning literature on terrorism within international business (IB), most research has focused on international terrorism, or terrorism generally. Consequently, there has been limited research examining how domestic or local based terrorism impacts foreign firms. Design/methodology/approach This is a conceptual paper. Findings Domestic terrorism is the most common form of terrorism in the world today and involves the state and non-state actors. Non-state domestic terrorism can be low intensity or high intensity. High intensity non-state-domestic terrorism typically involves regular and protracted political violence, along with inter-communal violence. This can expose MNEs to considerable operational, governance and legitimacy pressures. Originality/value The paper contributes to the gap in IB terrorism research with regards domestic or local based terrorism. Drawing on IB theory and critical terrorism research, the paper addresses the nature and impact of domestic terrorism within IB. The authors’ paper shows the operational, governance and legitimacy pressures of both state and non-state domestic terrorism for MNEs in host markets. While most IB scholars consider the threat of non-state terrorism for international firms, this study shows how domestic state terrorism benefits and constrains foreign firms.

Institutional theory and multinational corporation internationalization strategy: a systematic review and future research agenda

PurposeThis study reviews the literature on institutional theory in international business and examines the institutional factors behind the success or failure of multinational corporations (MNCs) in emerging markets.Design/methodology/approachThis systematic literature review analysed 116 peer-reviewed articles published in leading journals between 2005 and 2022. The R package Bibliometrix and VOSviewer visualization software were used for analysis. A hybrid methodology combining bibliometric and content analyses was utilized to obtain a descriptive evaluation of the publication impact along with a keyword co-occurrence map, context-specific institutional effects and subsidiary strategies.FindingsThe Journal of International Business Studies, along with influential authors such as Mike W. Peng, Klaus Meyer, and Mehmet Demirbag, have taken the lead in advancing institutional theories for MNC internationalization in emerging markets. The clusters from the co-word analysis revealed dominant MNC entry modes, institutional distances and MNC localization strategies. The content analysis highlights how the institutional environment is operationalized across the macro-, micro- and meso-institutional contexts and how the MNC subsidiary responds in emerging markets. Meso-level interactions emphasize the relational aspects of business strategies in emerging markets.Practical implicationsContextualizing subsidiary strategies and institutional forms can help managers align their strategic responses to the dynamic relationship between subsidiaries and the institutional environment. The review findings will enable policymakers to simplify regulatory policies and encourage MNC subsidiary networks with local stakeholders in emerging markets.Social implicationsLegitimacy strategies such as corporate community involvement in emerging markets are crucial for enhancing societal support and removing stakeholders' scepticism for MNC business operations in emerging markets. Moral legitimacy should be implemented by managers, such as lending support to disaster management efforts and humanitarian crises, as they expand to new business environments of emerging markets.Originality/valueThis study is the first to explore institutional diversity and subsidiary strategic responses in a three-layered institutional context. The findings highlight the relevance of contextualizing institutional perspectives for international business scholars and practitioners as they help build context-specific theoretical frameworks and business strategies. Future research recommendations are suggested in the macro-, micro- and meso-institutional contexts.

INTERNATIONALIZATION OF EMERGING MARKET MULTINATIONALS: A CONVERSATION BETWEEN THE UPPSALA MODEL AND THE SPRINGBOARD PERSPECTIVE

Objective: This study focuses on the internationalization process of an important emerging markets multinational (EMM), aiming to understand how such companies manage to achieve relevant positions in the global economy. In seeking to understand its strategy and internationalization process, we tackle the debate on whether traditional behavioral international business theories are adequate to explain EMM internationalization processes. Method: An in-depth case study was performed with one of the largest global players in the beauty industry, Natura & Co. The case study method was selected given that an in-depth data collection involving multiple sources of information was needed to investigate the phenomenon. Primary and secondary data were collected, analyzed, and triangulated. Main Results: This study brings the construct of organizational psychic distance to the discussion and how can it impact internationalization choices. Moreover, it illustrates how some EMMs are successfully applying concepts described by both traditional and EMM theories in their internationalization strategies Relevance / Originality: The study illustrates an empirical case from Latin America, a region poorly explored academically. Additionally, the case explains how a Brazilian company has managed to compete globally and become one of the biggest global players in the beauty industry. Theoretical / Methodological Contributions: The case discusses, for the first time, the construct of organizational psychic distance and its impact on internationalization choices. It also defies the boundaries of the existing theories and enriches the literature by portraying the springboard perspective as complementary to the Uppsala model so that both theories can dialogue and be extended.

Global Value Chain Governance Dynamics: A Co-Evolutionary Perspective on the Transition from Relational to Modular Governance in Construction

Global value chain (GVC) governance theory explains how GVCs are controlled and organised. A large body of research examines how GVC governance varies across industries, however, GVC governance dynamics within industries receive less attention. This study bridges the gap between GVC and international business theories to focus on GVC governance heterogeneity as a source of competitive advantage. Through mixed-methods including grounded theory, structural equation modelling, and comparative case studies, the research reveals the interplay between network-orchestration and network-dependence as lead firms shape GVC governance transitions. Insights can help managers optimise complex GVC governance structures, particularly in the context of digitalisation.

The impact of digitalization on internationalization from an internalization theory lens

Digitalization is challenging traditional international business theories, shifting emphasis from the flows of goods and services to the flows of data, information, and knowledge, changing the distribution of international activity. From the internalization theory lens, we suggest that digitalization is reducing market imperfections, but this effect varies across industries, positing a linkage between industry digital intensity and internationalization. Digitalization effects can also influence the location-bound constraints of FSAs. Examining one non location-bound FSA, innovation, and one location-bound FSA, brand, we argue that it is the moderating effects, or interaction, of these FSAs and industry digital intensity that drive internationalization. Furthermore, we highlight that these interaction effects change over time, as digital innovations have diffused. We test these arguments on a sample of 2370 U.S. firms over an 18-year period. The findings support our arguments that the conditions under which MNEs increase internationalization is dependent upon the combination of industry digital intensity and innovation and brand. In addition, these interaction effects appear to change over time as digitalization has evolved and become more widespread. Our findings indicate a more nuanced set of relationships within internalization theory in a digital world.

Structural Modifications of International Business Theory and Policy in the Time of Covid-19

The main aim of this work is the presentation of the structural modifications of contemporary international business. International trade in the XXI century has been strongly affected by the force of the economic crisis and COVID-19. The changes are evident in the growing importance of international trade to national economies and to domestic groups within those economies, in the closer linkages between trade and other international issues. Despite the undeniable benefits of the multilateral WTO forum for trade liberalization, the rapid increase of North-South bilateral and multilateral Free Trade Areas (FTAs) begs a systematic explanation for why some forums are prioritized relative to others. This work presents the mercantilist tendencies in the international trade policy, the theory of public choice in foreign trade policy, protectionist pressures in different political systems, the level of protectionist pressures, food producers’ pressure, and conflicts between the tendencies to sustainable international trade liberalization and environmental protection, the increasing importance bilateral agreements in the foreign trade policy and international economy in the time of COVID-19.

A growth pattern of foreign investment motivations by individuals

PurposeThis paper aims to introduce a growth comprehensive pattern to explain the phenomenon of individual foreign investment, first at the global level and then at the regional level. The patterns are developed based on a number of main theories with grounded theory (GT) as the foundation, distributed on the two pull and push forces of international business theory and migration theory; simultaneously, it is classified on the three levels (attribute–consequence–value [ACV]) of means-end theory.Design/methodology/approachAn embedded method is applied to generate two complementary datasets from two approaches: in-depth interviews and secondary data analysis.FindingsIn this structure, the investor plays a central role as the decision-maker based on the entrepreneur's motives for internationalization (economics-driven and psychology-driven factors) and the householders' motives for emigration (aspiration and access capabilities). The external forces considered are a push from the home country (structures) and pull from the host country (immigrant investment programs [IIPs]), in which the factor of (dis)trust/misconception as a moderator has an additional impact on this mobility. Demographic factors such as gender, region, generation/age, level of education, religion and occupation generally describe the characteristics of each specific target group.Research limitations/implicationsThis paper is to develop a conceptual framework.Originality/valueThe results of this study, in addition to fulfilling its own objectives, will also serve as the foundation for further research in several scientific fields such as economics, sociology and politics.Peer reviewThe peer review history for this article is available at https://publons.com/publon/10.1108/IJSE-12-2022-0786

Subsidiary performance measurement in international business research: A systematic review and future directions

Subsidiary Performance (SP) remains central to International Business (IB) research. Yet, exactly how to measure SP is a matter of some confusion in the academic literature. Indeed, to date, no review has offered a systematic overview of the variety of SP measures deployed in the IB literature. Based on a bibliometric study of 193 quantitative research articles published in top-tier journals from 1982 to 2022, this review provides a science mapping overview of SP measurements. By use of bibliographic coupling analyses, the review finds high variability of measurements within thematic clusters of research, for example within studies of knowledge transfer. This variation hampers the ability to both build and test IB theory. Furthermore, it is highly problematic in view of recent debates about replication within the social sciences. Therefore, the review proposes a range of questions to guide researchers in selecting the most appropriate SP measure(s) for future studies.

Taming wicked problems through international business policy: recommendations for addressing modern slavery

Purpose The paper frames modern slavery as a global wicked problem and aims to provide a set of international business (IB) policy recommendations for taming it. The outlined approach can also guide IB policymaking to address other kinds of wicked problems. Design/methodology/approach This is a conceptual paper that reviews existing literature on wicked problems and integrates it with an IB policy double helix framework. The paper focuseses on the role multinational enterprises (MNEs) play in moderl slavery globally, either through global value chains or within global factory modes of operation. Findings As a global wicked problem, modern slavery will never be solved, but it can be re-solved time and time over. Understanding the social reproduction of modern slavery can help shift the focus from labor governance and a narrow supply chain focus toward the role of transnational governance and the need to address institutional, market and organizational failures. Originality/value The paper contributes to the gap in an overarching theory of modern slavery and systematically applies the concept of wicked problems and wickedness theory to modern slavery. Drawing on an IB policy double helix framework, the paper addresses the governance nexus between modern slavery, IB and policymaking which can in turn advance IB policy research and theory.

Reconsidering, refashioning, and reconceptualizing research methodology in international business

We introduce this Journal of World Business special issue on methodological advances in international business (IB) research. Due to technological advances and the availability of bigger, deeper, and multi-level data, there is a need to reconsider, refashion, and reconceptualize IB research methodology. To do so, we discuss ethnography, multilevel modeling, textual analysis and multimodal data, visual methods, machine learning, accommodating multiplicity in qualitative research, and crowdsourcing. The future is bright for the field of IB because there are almost unlimited contributions that it can make to organizations and societies. But, to continue to do so, we must adapt and rethink our “research business model:” The way we think, conduct research, and report results to make meaningful contributions and impact both IB theory and practice.

Striking a balance? Finance perspectives on international business research

PurposeThe purpose of this paper is to bridge the disciplinary divide between international finance and international business (IB) to realign academic research with business reality in which strategy and finance align to determine firms’ success or failures.Design/methodology/approachThe authors discuss theoretical differences between the fields of international finance and IB strategy that caused the fields to develop in isolation with little fertilization across disciplines. The authors review scarce interdisciplinary contributions between the fields. Finally, the authors identify complementarities that suggest fruitful avenues for future research.FindingsThe authors find a persistent disconnect between finance and strategy/IB literature that can be explained by fundamentally different aims and assumptions about the markets. While finance theory seeks to explain typical effects under functioning markets, strategy and IB theories focus inherently on exceptional effects and market inefficiencies.Research limitations/implicationsThe fundamental theoretical differences that isolate finance and strategy/IB create avenues for interdisciplinary research that harness the complementarities of the two disciplines. These include strategic aspects of capital structure, internal capital market inefficiencies, corporate governance, capital market liability of foreignness and institutional aspects of financial management.Practical implicationsWith this paper, the authors not only bring academic researchers in finance and strategy closer to corporate practice. The theoretical discussion also challenges the functional blind spots of practitioners and encourages more holistic decision-making.Social implicationsChallenging market functioning and recognizing market inefficiencies using strategy and IB foundations connects financial economics with non-market topics such as environment, society and governance or impact investing.Originality/valueThe value and originality of the paper come from the qualitative, epistemological approach to study and analyse the divide between international finance and strategy/IB scholarship.

Internationalization of Enterprise Resource Planning Vendors

International business theory suggests that multinational corporations are usually disadvantaged compared to local firms when competing in a host market. However, we find that foreign enterprise resource planning (ERP) vendors in the Chinese high-end ERP market perform significantly better than local vendors. To understand this gap, the authors first analyze the ERP business model and its four characteristics as a service and use Dunning's OLI paradigm to specify the ownership-specific, internalization-incentive, and location-specific advantages (O-, I-, and L-advantages) required for foreign ERP vendors to compete in the host country's high-end market. Then, after conducting case studies of the two foreign vendors with the highest share in the Chinese high-end ERP market, SAP and Oracle, they confirm that the O-advantages from strong brand and reputation, high research and development capabilities, professional partners, I-advantages from wholly owned subsidiaries, and L-advantages from economically developed regions cause SAP and Oracle to excel in the Chinese high-end ERP market.

Decolonizing international business

PurposeThe purpose of this paper is to encourage scholars of international business (IB) to engage with the “decolonizing the university” project and reflect on what decolonizing might mean for IB research and education. The paper also argues that it is particularly important for IB scholars to join the decolonizing project given that the field’s main object of study – the multinational enterprise – has been central to colonialism.Design/methodology/approachAn essay style is adopted to introduce the decolonizing project to IB and to explain why and how this scholarly field might benefit from engaging with it. As part of that, the paper calls upon IB scholars to work on decolonizing the field and to do so by not only interrogating its knowledge claims but also broadening the scope of its research so it can address the theme of neo-colonialism.FindingsThe paper reveals the conspicuous absence of IB scholars from the decolonizing project and situates such absence within a long-standing indifference within IB to the issue of colonialism.Social implicationsIn learning about and engaging with the decolonizing project, IB scholars will be able to not only enrich IB theory and education but also help to tackle one of the grand challenges facing the modern world society, namely, social inequality and injustice rooted in colonialism.Originality/valueIt is hoped that this paper will stimulate reflection on IB’s absence from the decolonizing project and assist scholars in developing an understanding of the project’s rationale and underlying literature. It is also hoped that the paper will open dialogue within IB about how this field might be decolonized and help scholars engage meaningfully with other disciplines as they do so.

Digital transformation and export performance: a process mechanism of firm digital capabilities

PurposeThis study aims to investigate the logic between digital transformation and export performance by analysing a large sample of Vietnamese exporters. The theoretical model is further extended by investigating the driving role of digital transformational leadership and mediating effects of firm digital capabilities and employee exploration and exploitation innovation.Design/methodology/approachThe study sample comprised 364 middle managers at 107 export firms in Ho Chi Minh City, Vietnam. The data are analysed using a partial least square-structural equation model (PLS-SEM).FindingsDigital transformation may be an indispensable tool for enhancing the export performance of businesses. Moreover, digital transformational leadership may drive digital transformation through the mediating mechanisms of firm digital capabilities and employee exploration and exploitation innovations to achieve high export performance.Originality/valueThis initial study contributes significantly to international business theory through the lens of dynamic capabilities theory, which reveals the role of digital transformation in export performance via mechanisms of digital transformational leadership, firm digital capabilities and employee exploration and exploitation innovation.

Using field and quasi experiments and text-based analysis to advance international business theory

Methodological developments are critical for driving theoretical advancements in international business (IB) due to the field's diversity regarding disciplinary, theoretical, and conceptual bases. We provide an accessible introduction to two methodological approaches—one related to design and one to analysis—that are currently underutilized in IB despite their great potential: (a) field and quasi experiments, and (b) text-based analysis. We describe each method and provide examples of how they can be used to make advancements in several IB domains and theories including internationalization process theory; ownership, location, internalization (OLI) paradigm; knowledge-based view of multinational enterprises; dynamic capability theory; and international entrepreneurship.

Determinants of Foreign Direct Investment and the Advantages Theory

This study reviews three classic international business theories and some related empirical studies to identify the gaps in the literature and suggest future research directions. In international business studies, most analyses on the determinants of FDI are centered on three concepts of firm-specific, internalization, and location advantages according to the monopolistic advantage theory, internalization theory, and OLI paradigm. These three advantages determine whether a firm will internationalize, how it will enter foreign markets, where it will locate in the host country, and how it will perform in a foreign market. However, These theories are set up with the premise of firm-specific advantages and cannot be used to explain the phenomenon of emerging market multinational enterprises, which have emerged in large numbers in recent years. Simultaneously, these theories, which focus on manufacturing, need to be used to explain the internationalization of the service industry in-depth and with greater relevance.