International Strategic Decisions Research Articles

Governmental goals and the international strategies of state-owned multinational enterprises: a conceptual discussion

State owned multinational enterprises (SOMNEs) have received extensive attention in recent research in international business and corporate governance, which demonstrates effects of state ownership on a range of international strategic decisions such as the degree of internationalization, foreign entry modes, and host country location choices. Such effects are explained by factors such as SOMNEs’ non-financial goals, corporate governance, and institutional pressures. However, results are mixed and context-dependent, and overall we still have an incomplete understanding of what governments aim to achieve through SOMNEs, and how these goals in turn lead to different international strategies. This conceptual article aims to explore how specific government goals may affect international strategies. We provide a more fine-grained view on SOMNE financial and non-financial goals and link them to key international strategic decisions such as the degree of internationalization, entry and establishment modes, and host country location choice. We review and extend previous literature and identify novel theoretical arguments, leading to an extensive set of propositions. We also sketch ideas for empirical studies of SOMNE objectives.

Global Strategy and MNC Capabilities

Strategy in a global setting involves competition in industries that extend across national boundaries and among firms with different national home bases that may tap into strategic resources in more than one location. The resources that the firm accesses from its home country provide it with international competitive advantage only if they are relevant in other markets, if they are transferable in those markets, and if the value created from international expansion is appropriable. These resources include tangible assets and factors of production, but importantly also the capabilities the firm develops. Similarly, the resources that it taps from other contexts provide it with further competitive adnate only if these resource are more complementary to the firms exiting resources, transferable to the locations where it can exploit them, and appropriable. The resulting RAT and CAT tests provide a framework for international strategic decisions with an emphasis on developing, acquiring, and transferring capabilities.

The strategic decision-making process for the internationalization of family businesses

Purpose of the paper: The principal aim of this study is to contribute to the literature on family businesses by providing some new insights about international strategic decisions of born global. Methodology: An explorative, qualitative research has been employed. In-depth interviews with four main decision-makers of family businesses, involved in international activities, were conducted to examine the main factors influencing their strategic decisions. Results: The research allowed to verify whether the factors identified by previous studies were correctly defined, by assessing their influence on international development decisions, and whether any other factors of influence emerged. Limits: The main limitation of this paper is the sample’s characteristics, which do not allow a complete generalization of the results. Implications: This study mainly permits to analyze the interactions within the family group involved in the management of companies, enriching the field of analysis that in previous studies was mainly focused on the characteristics of the entrepreneur or the managers. Originality of the paper: This paper is one of the few contributions examining, on one hand, born global family firms and, on the other hand, which factors influence the main strategic decisions in the international context.

A Home Country Institutional Perspective Towards the Internationalization-Performance Relationship

Despite the widespread attention on the rise of emerging market multinational enterprises (EMNEs) in recent decades, the relationship between internationalization and performance for EMNEs remains an under-addressed issue in International Business (IB) research field. Drawing from an institution-based view, we suggest that the international strategic decisions of EMNEs can be regarded as the outcomes of their interactions with home country institutional parameters, including home government characteristics (formal institution), and social norms and ideologies (informal institutions). We utilizes a two-decade Meta-analysis and constructs a three-level (firm-, study-, and country-level) hierarchical linear model to identify the internationalization-performance relationship for EMNEs. Our findings confirm the existence of an overall positive relationship, and indicate that the relationship is affected by the home country government characteristics. We also find that these firm-government interactions are moderated by the ideology-induced informal institutions. To sum, our findings help elucidate the puzzle concerning the internationalization-performance relationship of EMNEs, provides additional value for institution-based view in IB area, and opens several avenues for future research.

Top management team international experience, international information acquisition and international strategic decision rationality

PurposeThe purpose of this paper is to test whether Top Management Team (TMT) international experience is positively associated to international information acquisition from managerial international contacts and whether international information partially mediates the positive relationship between TMT international experience and international strategic decision rationality.Design/methodology/approachData were collected through a survey of small- and medium-sized of international Pakistani software firms.FindingsThis study reports that TMT international experience-international strategic decision rationality relationship to international information acquisition and that this information acquisition partially mediates the TMT international experience, i.e. international strategic decision rationality relationship.Practical implicationsWhen selecting the members of their TMT, international firms should pay careful attention to their international experience.Originality/valuePrevious research demonstrates that TMT international experience has a positive effect on international strategic decision rationality and that this effect is transferred to performance. This study shows that the positive effect of TMT international experience is derived from the personal international knowledge and the international information collected from managers’ international contacts. This ability to make rational international strategic decisions could have a positive effect on decision-making and firm performance.

Cross-national distance impact on FDI strategic decisions into Portugal: Evidence from Eurozone and Ibero-America

Purpose : The purpose of this paper is to assess if MNEs from the Eurozone and Ibero-America have different sensitivities to cross-national distance when investing in Portugal, by comparison with non-Eurozone and non Ibero-American MNEs. Methodology : Using qualitative variables on a panel data analysis, we are able to assess the differentiated effects of cross-national distance on MNEs from members and non-members of both groups of countries. Findings : Results suggest that sensitivities are indeed differentiated, with a notable exception of administrative distance which remains with a negative effect throughout all groups. Originality : This research contributes to international business/management literature in the extent that it explores the relationship between cross-national distance and one of the most important international strategic decisions, FDI. It also addresses Portugal’s monetary integration in the Eurozone and the historic and cultural ties with Ibero-American countries.

Cross-national distance impact on FDI strategic decisions into Portugal: Evidence from Eurozone and Ibero-America

Purpose: The purpose of this paper is to assess if MNEs from the Eurozone and Ibero-America have different sensitivities to cross-national distance when investing in Portugal, by comparison with non-Eurozone and non Ibero-American MNEs.Methodology: Using qualitative variables on a panel data analysis, we are able to assess the differentiated effects of cross-national distance on MNEs from members and non-members of both groups of countries.Findings: Results suggest that sensitivities are indeed differentiated, with a notable exception of administrative distance which remains with a negative effect throughout all groups.Originality: This research contributes to international business/management literature in the extent that it explores the relationship between cross-national distance and one of the most important international strategic decisions, FDI. It also addresses Portugal’s monetary integration in the Eurozone and the historic and cultural ties with Ibero-American countries.

Trust and economic performance

Purpose Level of trust among the members is considered to be an important component that contributes towards the economic growth in an economy. The purpose of this paper is to examine the effect of trust level along with income per capita, human capital (education level), investment, labor force and political institutions on the economic performance. Design/methodology/approach In this research, panel data as well as cross-country analysis were applied on a sample of 64 countries from 1980 to 2014. Countries were further divided into developed and developing countries to observe the resultant effect of trust on economic performance. To explain the monotonic relationship between trust and economic performance, a non-linear term of trust is added to the regression model to see the impact of change in trust level on economic performance. Findings Empirical results show that there is a positive relation between social trust and economic performance. The result further describes that investment and human capital are leading determinants of economic performance. To explain the monotonic relationship between trust and economic performance, the study adds non-linear term of trust in regression model. The result explains U-shaped path between trust and economic performance in developing countries and inverse U-shaped path in developed countries. Practical implications The study adds valuable insight to the debate of relationship between trust level and economic performance. Business and managers can use this insight while making international strategic decisions regarding foreign direct investments and international expansions. Originality/value This study highlights the importance of trust in developing and developed countries and shows that trust works as a strong binding in holding societies together and better economic performance is not possible, especially in developing countries where there is a lack of trust.

Family business going abroad: the effect of family ownership on foreign market entry mode decisions

Research on family firms’ internationalization is growing, but empirical findings are mixed. To reconcile prior studies, we focus on strategic decisions related to internationalization, specifically the foreign market entry mode selection process. We suggest that the choice about entry mode is especially significant for family owners because it may either align or conflict with two key family-related goals: maintaining family control and keeping a long-term orientation of the business. We argue that these goals have different weights within family firms according to differences in ownership structure, with significant implications for international strategic decisions. We rely on a sample of medium-sized family-owned Italian firms and show that different types of family ownership structures affect entry mode decisions differently and specifically influence the time horizon of the foreign investment and willingness to cooperate with external actors. We also provide empirical evidence that the presence of a non-family manager moderates the relationship between family ownership and entry mode decisions. Our study expands on prior research by highlighting how family firms enter foreign markets and pointing out the strategic implications of family firm heterogeneity.

Knowledge will set you free

Purpose– The purpose of this paper is to combine notions from the POST Model of Economic Geography and Learning Theory from International Business to study how firms may enhance their responsiveness to institutional processes and changes through different forms of international learning. Focussing on one form of institutional changes, namely pro-market reforms, the paper analyzes how firms may boost the potential benefits from such changes through international strategies that increase their access to knowledge spillovers and absorptive capacity. These strategies include international product diversification, enhancing innovation capabilities, informal institutional exposure, accumulated internationalization knowledge, and overall experiential knowledge.Design/methodology/approach– The hypotheses are tested using generalized least squares models with AR(1) panel-specific autocorrelation and heteroskedasticity correction. Based on the preliminary analyses performed in these studies, the author also executes a Hausman test, Bartlett’s test, and James/Alexander’s test. The results of these analyses indicate that the use of random effects is appropriate; that moderating effects are present; and that multivariate analyses using these moderators are suitable, respectively.Findings– The results indicate that pro-market reforms have a positive and significant effect on the profitability of firms from developing countries. Furthermore, they provide support for the positive moderating effects of international product diversification, innovation capabilities, informal institutional exposure, accumulated internationalization knowledge, and overall experiential knowledge. Together, these findings suggest that through their international strategic decisions, MNEs can enhance their access to knowledge and become more responsive to institutional changes in their home market.Research limitations/implications– This paper contributes to the economic geography literature by linking the POST Model with the classification of types of knowledge from Learning Theory. The paper analyzes how characteristics of place, organization, space, and time play a different role for each of the three basic types of knowledge that is relevant for international firms: institutional, business, and internationalization. Furthermore, the paper contributes to the literature on reforms and firm profitability by delving deeper into the moderating effect of strategic decisions on the relationship between reforms and firm performance. This allows us to have a deeper comprehension of how various sources of international learning may enhance the responsiveness of firms to institutional changes.Originality/value– The paper provides several important contributions to the international strategy literature. First, it contributes to Learning Theory by combining it with the POST Model of Economic Geography to study how each of the three sources of knowledge (and their subcomponents) can be further broken down into factors of place, organization, space, and time. Second, it contributes to the literature of institutional change by studying how knowledge acquired through vastly different means can provide firms with sources of competitive advantage over other local competitors when responding to institutional changes in their home market. Third, it contributes to the literature on reforms and profitability by studying five novel moderators of this relationship.

Integrating the board’s resources to achieve a firm’s internationalisation

PurposeFrom the resource-based view (RBV), the purpose of this paper is to argue that the board has the capability to participate in international strategic decisions and deal with the environmental complexities that internationalisation brings; and moreover, to achieve better performance than its competitors.Design/methodology/approachThis paper highlights the active participation of the board in firm internationalisation using a sample of 78 Spanish firms quoted on Madrid Stock Exchange. The authors used a longitudinal analysis from 2005 through 2010.FindingsThe results show that while the resources provided by the directors through their level of education and international experience, help them learn and process information, and they are a source of expertise representing “board potential”. A board that functions well through the directors’ relationships allow the proper integration and use of these resources, and helps create sustainable competitive advantages in an international context.Originality/valueFrom a RBV, this paper refines and extends the concept of “board capability” as the combination of potential and internal relations that allow boards to undertake their roles competently over time. Additionally, the paper empirically examines the effect of board capability on firm internationalisation.

The Decision-Making Process in International Business Strategies

This paper investigates the relationship between the contextual factors related to the firm’s decision-maker and the process of international strategic decision-making. The analysis has been conducted focusing on small and medium-sized enterprises (SME). Data for the research came from 111 usable responses to a survey on a sample of SME decision-makers in international field. The results of regression analysis indicate that the context variables, both internal and external, exerted more influence on international strategic decision making process than the decision-maker personality characteristics.

The role of executives' formative-years international experience in foreign acquisition decisions

This study examined how top management team’s (TMT) international orientation influences perceptions of environmental uncertainty and how these perceptions impact international strategic decisions,...

Twice as Smart? The Importance of Managers’ Formative‐Years’ International Experience for their International Orientation and Foreign Acquisition Decisions

This study examined how top management team's (TMT) international orientation influences perceptions of environmental uncertainty and how these perceptions impact international strategic decisions, in particular regarding ownership stakes taken in foreign acquisitions. We highlighted the need for the concept of TMT international orientation to encompass executives’ formative‐years’ international experiences along with their international career experiences and nationalities. Empirical tests based on a sample of 2122 international acquisitions completed by 561 UK firms over the period 1999–2008 showed that TMT international orientation positively moderated the negative impact of cultural differences and host country risk on acquisition ownership stakes. The results underscored the importance of considering decision‐makers’ attributes due to their experiences at a young age, beyond their demographic characteristics or professional experience, in the context of international strategic choices. We also discussed some implications of one of the possible consequences of executives’ formative international experience, namely biculturalism, for international business.

Board Influence on a Firm's Internationalization

Manuscript Type: Empirical Research Question/Issues: The resource-based view of the firm may provide the theoretical explanation as to how boards can be a source of firm competitive advantage. Directors' experience, knowledge, expertise are valuable, rare, inimitable and non-substitutable resources that making up the potential. These resources must be integrated with others firm resources in strategic processes through dynamics of relations. Research Findings/Insights: Given the preliminary nature of this work, the empirical section is an exclusive analysis of the board's potential. Our specific aim is to establish whether resources that directors bring to are sources of competence and ability with consequences for international strategic decisions. To do this, we use a sample of 562 members of 45 listed Spanish companies. Our results show that the average tenure is negatively related to the firm's degree of international diversification. Directors with long tenures may operate from the basis of routines that are built up over time and their knowledge of the firm could eventually become a less valuable resource. The empirical findings also indicate that the directors' managerial experience within the specific industry to which the firm belongs and a high level of academic achievement, affects the firm's degree of international diversification. Theoretical/Academic Implications: The contribution of this article is three-fold; it emphasizes the role of directors in the effectiveness, investigating why and how relevant elements of directors' human capital can enhance ability to perform their roles making up the potential. Secondly, it refines and extends the concept of board capability as an adequate configuration of potential and relationship dynamics that allow to undertake their task competently over the time. Third, this article stresses the active participation of in firm internationalization. Practitioner/Policy Implications: One of the important practical implications of these results refers to the selection of members. In order to increase effectiveness, in the context of firm internationalization, the selection process must be guided by the search of intangibles, inimitable and unique resources, which the can capitalize on in order to differentiate its potential over competitors. Keywords: Corporate Governance, Directors' Resources, Board Capability, Board Potential, Internationalization.

Settling for second best?

PurposeThe paper seeks evaluate to the comparative progress of Asda in the UK since its surprise takeover by Wal‐Mart in 1999. Wal‐Mart expected to become the number 1 retailer in the UK and many commentators saw massive problems ahead for local retailers. These expectations were not met; this paper investigates why.Design/methodology/approachAsda's progress is considered through a brief discussion of the company's history to 1999, an investigation of the changes Wal‐Mart subsequently made to Asda's operations, the comparative impact of these changes and then a consideration of the restrictions on impact deriving from organisational, competitive and environmental factors.FindingsDespite the strong rhetoric on entry, the commercial reality has seen only moderate success for Asda and a widening gap to the market leader, Tesco. Explanation for this includes competitive strategy and reactions, market restrictions particularly in land‐use planning and unwillingness by Asda (Wal‐Mart) to alter their focused store format strategy in line with competitor actions and market directions.Research limitations/implicationsThe analysis is at a macro corporate and national level, drawing mainly on published data. Research implications include the rebalancing of considerations of organisational competence and market environment factors on international success. A focus on political and non‐market activities is suggested, though an unwillingness of companies to reconsider strategic directions is also indicted as a key factor.Practical implicationsImplications for national and international strategic decision making at the corporate and governmental levels are identified. Businesses can use the findings to re‐consider their positioning and actions. Reflections on hyperbolic reactions to takeovers might also be provoked.Originality/valueNo other paper has considered the market level changes in connection with Asda since its take‐over by Wal‐Mart and sought explanations for the relative (lack of) performance. The conclusion, that Asda has not been as successful as reported in the literature and the media, is original.

Expatriate or local? Predicting Japanese, subsidiary expatriate staffing strategies

Can Dunning's OLI (Ownership, Location, Internalization) framework be extended from predicting FDI location decisions and entry mode choices to other international strategic decisions? Using data from 891 new (two years or younger) Japanese foreign subsidiaries, we investigate the relationship between Dunning's OLI variables and expatriate staffing ratios (the ratio of expatriates to local employees). We found empirical support for Dunning's framework as a predictor of Japanese new subsidiary expatriate staffing ratios. Implications and directions for future research are discussed.

Mapping moral philosophies: strategic implications for multinational firms

AbstractStrategic managers appear increasingly under pressure from stakeholder concerns regarding social and ethical issues. Partially in response, the supply of ethical decision‐making models has grown rapidly. Business ethics scholars have broadened their scope to incorporate moral philosophies into their research endeavors. Despite these positive trends, the international focus of business ethics research has been slow to evolve. Yet, diverse moral philosophies, often most apparent across international borders, have important strategic implications for multinational firms. The ethical norms pursued by cross‐cultural alliance partners, distributors, suppliers, customers, financiers, and foreign government agencies can create public relations disasters, foster shareholder unrest, lead to consumer boycotts, and impact organizational outcomes. We seek to rectify the deficiency in international business ethics scholarship with two distinct contributions. First, we develop a new cross‐cultural, macro‐level model of societal ethics. Second, we map moral philosophies onto an established framework for assessing socioeconomic environments. These theoretical tools should assist managers of multinational organizations, international policy‐makers, and researchers to recognize and prepare for the ethical consequences of international strategic decisions. Copyright © 2003 John Wiley & Sons, Ltd.

European government‐controlled enterprises: explaining international strategic and policy decisions

European government‐controlled enterprises: explaining international strategic and policy decisions

Government Controlled Enterprises: International Strategic and Policy Decisions, by Renato Mazzolini

Government Controlled Enterprises: International Strategic and Policy Decisions, <i>by Renato Mazzolini</i>