Large Multinational Enterprises Research Articles

The moderating effects of national cultural practices on the relationship between international diversification strategies and corporate environmental responsibility disclosures

This study examines the relationships between an important market strategy (international diversification) and corporate environmental responsibility disclosure (CERD), a nonmarket strategy. We rely on institutional theory and the stakeholder perspective and hypothesize a positive relationship between international diversification and CERD. We also hypothesize a direct effect of performance-based cultural practices (PBC) and socially supportive cultural practices (SSC), derived from the GLOBE culture database on CERD and its moderating effect on the international diversification – CERD link. The sample includes 335 large Multinational enterprises (MNEs) from 31 countries then distributed among three corporate social responsibility (CSR) regimes: European, Anglo-Saxon, and Asian and emerging markets. The results show support for the hypothesized relationships between international diversification strategies and CERD and that the direction of the relationship varies by region of the world. We find significant support for the moderating role of national cultural practices on the international diversification-environmental disclosure links.

Conceptualizing the MNEs Transfer Pricing Behavior: Indonesian Tax Authority Perspective

Indonesian tax authorities currently encounter a lack of cooperative compliance among companies engaged in transfer pricing practices with their affiliated entities across borders. Transfer pricing is commonly associated with tax purposes, such as tax planning or avoidance, which is considered standard practice for business entities. Hence, there is a significant necessity to assess and evaluate the prevalence of tax planning or avoidance through transfer pricing in multinational enterprises operating in Indonesia. To gauge the extent of transfer pricing used for tax avoidance purposes, this study examines the perspective of tax authorities on companies' transfer pricing optimization behavior. Employing a qualitative approach, the study aims to comprehend the utilization of transfer pricing and its implications. The findings provide insights into transfer pricing behavior within companies over time. According to tax authorities, companies are motivated by the benefits of transfer pricing, including revenue optimization, corporate profit allocation, and cost optimization. However, these practices are influenced by various factors that facilitate or constrain transfer pricing activities. Multinational enterprises demonstrate limited awareness of normative beliefs regarding international and domestic transfer pricing regulations. Notably, companies affiliated with large multinational enterprises, possessing a strong understanding of transfer pricing, exhibit a high potential for tax planning or avoidance through transfer pricing arrangements with related parties. These findings contribute to the existing body of research on transfer pricing practices from the perspective of tax authorities as part of the Indonesian government.

The geography of acquisitions and greenfield investments: Firm heterogeneity and regional institutional conditions

AbstractThis paper investigates how institutional conditions at national and regional levels shape the decisions of Multinational Enterprises (MNEs) to invest abroad by means of either acquisitions or greenfield investments. The empirical analysis covers all foreign direct investment (FDI) projects in the European Union by the largest MNEs in the world to study alternative choices by the same firm and account for firm‐level characteristics in investment decisions. The empirical results show that—other things being equal—regions with stronger investment eco‐systems are more likely to attract acquisitions, while greenfield investments are more likely in regions with comparatively weaker systemic conditions. Howerver, the regional quality of institutions makes a fundamental difference to the nature of the investment projects attracted by regions: those with high quality of government can attract greenfield investments undertaken by the most productive MNEs. By improving their quality of government, local, and regional policy makers can attract higher quality greenfield investment projects to their constituencies, potentially breaking the vicious circle between low productivity areas and low productivity FDI.

Navigating multiple institutional environments: institutional quality and the role of Belt and Road Initiative on location choice of Chinese MNEs

Purpose This study aims to explore the extent to which Chinese multinational enterprises (MNEs) rely on supranational institution – the Belt and Road Initiative (BRI) – versus host country institutional quality to navigate their foreign location choice. Design/methodology/approach This study uses a conditional logit regression model using a sample of 1,302 greenfield investments by Chinese MNEs in 54 BRI participating countries during the period 2011–2018. Findings The results indicate that as a supranational institution, the BRI serves as a substitution mechanism to address the deficiencies in institutional quality in BRI participating countries, thereby attracting Chinese MNEs to invest in those countries. In addition, the BRI’s substitution effect on host country institutional quality is more pronounced for large MNEs, MNEs in the manufacturing industry and MNEs in inland regions. Originality/value This study expands the understanding of the BRI as a supranational institution for MNEs from emerging markets and reveals its substitution effect on the host country institutional quality. Furthermore, it highlights that MNEs with diverse characteristics gain varying degrees of benefits from the BRI.

Market Competition Analysis and Strategic Research of Ford Motor Company

In the trend of global electrification and intelligence of automobiles, many large traditional fuel vehicle companies are facing huge transformation challenges, which may determine the fate of future car companies. This article selects Ford Motor Company, a large multinational enterprise in the United States, and uses methods such as macro analysis of the automotive industry, comparative analysis of indicators, DuPont analysis, strategic analysis, and risk analysis to study the current situation of Ford Motor Company. This article finds that Ford Motor Company's fuel vehicle market has performed well and stably, which can offset the significant research and development and losses of electric vehicles in recent years. Despite Ford's sluggish performance in the Chinese market in recent years and mediocre sales of electric vehicles, Ford has also made sustained strategic adjustments and actively responded. Finally, this article also proposes that Ford Motor Company should seize the hybrid vehicle market, seize the advantages accumulated by traditional popular models for a long time, and continuously promote localization adjustments in various regions.

The BEFIT Directive: A Game Changer for Transfer Pricing or an Irrelevant Buzz?

The recently proposed BEFIT legislation in the European Union seeks to standardize tax bases and simplify transfer pricing rules for large multinational enterprises. This article delves into potential challenges of this proposition, mainly focusing on its implications from a transfer pricing perspective. Challenges around the coexistence of varying transfer pricing rules, the interplay between BEFIT and Pillar Two, and uncertainties surrounding dispute resolutions are explored.

SOUTH AFRICA’S RESPONSE TO THE DIGITAL ECONOMY’S DIRECT TAX CHALLENGES – PART 1

International tax rules were developed more than a century ago. At their core is the principle that profits should be taxed where economic activities physically take place and where value is created. Advances in technology and the progression of the fourth industrial revolution have changed how businesses around the world operate and have given rise to the “digital economy”. Businesses no longer need to be “physically” present in a jurisdiction but can operate digitally or virtually anywhere in the world. New business models such as e-commerce, payment services, app stores, online advertising, cloud computing and participative network platforms have emerged. The digital economy and these new business models pose various challenges to the effectiveness of rules on the current jurisdiction to tax; businesses are able to derive significant economic benefits from a country without a “taxable nexus” to such country – for example, without the creation of a fixed place of business, permanent establishment or establishing a place of effective management. The digital economy is global in nature and, therefore, policy actions dealing with the global economy need a global approach. The Organisation for Economic Co-operation and Development (OECD) has taken a leading role in developing new direct-tax rules that will address the tax challenges posed by the digital economy and has agreed to develop a two-pillar solution that can be consented to internationally and implemented by countries. Pillar one proposes new rules on tax nexus and profit allocation for large multinational enterprises (MNEs) that meet certain revenue and profitability thresholds. The rules do not require MNEs to be physically present in a jurisdiction. Pillar two proposes mechanisms to ensure large MNEs pay a minimum level of tax (currently set at 15 per cent) regardless of where their headquarters are or the jurisdictions in which they operate. Some countries (such as the United Kingdom (UK), United States of America (USA), India, and Nigeria) have opted to take unilateral measures as they wait for a global solution. These unilateral measures are often uncoordinated and give rise to some undesirable consequences, such as double taxation. South Africa has decided to wait for global consensus and is currently not taxing the digital economy through its direct-tax rules. Although the OECD solutions are helpful proposals on taxing the digital economy and are a step in the right direction, it is submitted that they are not completely suited for South Africa as a developing African country; they do not consider some of South Africa’s unique circumstances, such as the prevalence of corruption, semi-skilled tax administration and limited resources. South Africa should not merely adopt the rules blindly but should adapt them to suit its needs as a developing country. South Africa needs to protect its tax base while embracing the digital economy; perhaps, while it waits for a global solution, it could strengthen its source rules as recommended by the Davis Tax Committee. This article is divided into two parts. Part 1 evaluates the suitability of South Africa adopting the OECD global solutions to the direct-tax challenges posed by the digital economy in a developing African country; Part 2 evaluates whether South Africa’s response to these challenges is the best option by considering the approach and consequences of select developed and developing jurisdictions (that is, USA, UK, Nigeria and India) adopting unilateral measures while waiting for an OECD global solution.

Optimization of Expense Reimbursement Process of Financial Sharing Center

In recent years, the financial sharing center has become a hot spot, many large multinational enterprises set up their own financial sharing center, what is more, the financial sharing center is set up as a separate company, in order to more convenient division of rights and responsibilities, but also can widely accept the business of other enterprises, in order to increase their own revenue. In these financial sharing centers, expense reimbursement is an important part, and the scientific and smooth process is the key to determine the working efficiency of employees. Therefore, constantly optimizing the expense reimbursement process of the financial sharing center has become one of the important tasks of the financial department. This paper takes P Business Service (Chengdu) Co., Ltd. as an example to specifically describe how to optimize the expense reimbursement process to improve work efficiency.

SME internationalisation: past, present and future trends

PurposeSmall- and medium-sized enterprises (SMEs) generally make a crucial contribution to local and national economies. As the market has become increasingly globalised over the past two decades, SMEs often feel the need and/or push to internationalise their business activities. It is in this need that several barriers and challenges are perceived by SMEs, since these companies generally have different characteristics and resources compared to large multinational enterprises (MNEs). Accordingly, given that the literature on internationalisation is rather extensive and relatively fragmented, this study seeks to systematically understand the scientific structure of research on the internationalisation of SMEs, and how it is organised.Design/methodology/approachThe authors used a bibliometric approach and data co-citation to identify and systematise the scientific publications, intellectual structures and research trends related to SME internationalisation.FindingsThe study research reveals five approaches that theoretically support the internationalisation processes of SMEs: (1) internationalisation and networks; (2) internationalisation and venture capital; (3) internationalisation and intrinsic characteristics; (4) internationalisation and transactional costs; and (5) internationalisation and firm resources and capabilities.Originality/valueThis study has important implications for academics and practitioners who are likely to benefit from a holistic understanding of the different aspects of SME internationalisation.

Dynamics of Large Multinationals

Abstract Multinational enterprises are very large multi-product firms. To capture salient features of the data, we develop a model of large multinational enterprises, each one producing a continuum of products. These outsized firms compete as oligopolists in domestic and foreign markets, facing competitive pressure from monopolistically competitive single-product firms. The multinational enterprises engage in foreign direct investment (FDI) in order to expand the product scope of their foreign affiliates, and they invest in research and development (R&D) in order to invent new products. We study the dynamic evolution of these enterprises and characterize transition dynamics and steady states. We also characterize the evolution of prices, markups, market shares, and exports relative to subsidiary sales. Furthermore, we study comparative dynamics that result from changes in trade costs, R&D costs, FDI costs, and productivity. Finally, we illustrate the use of our model for an analysis of mergers.

The EU Cooperative Compliance Programme for Large Multinational Enterprises: A Promising Mechanism for Tax Certainty in the Uncertain Tax World Following the OECD/G20 Base Erosion and Profit Shifting Initiative?

This article examines the EU Cooperative Compliance Programme for Large Multinational Enterprises (European Trust and Cooperation Approach) and discusses its potential and that of the OECD’s International Compliance Assurance Programme as mechanisms that could provide (a minimum level of) tax certainty following the OECD/G20 Base Erosion and Profit Shifting initiative.

Creating Strategies for Enhancing Complex New Product Development: Cluster Analysis of DEA Results

Firms need to constantly innovate to survive and remain competitive in the marketplace. Despite this, little research has examined the dynamics that affect innovation in large-scale, complex organizations that leverage multiple teams. This study utilizes data envelopment analysis output from a sample of new product development teams to create clusters based on how teams need to change communication-related inputs to increase creative efficiency. The study results exemplify how this approach can provide recommendations that sets of teams can implement, optimizing the use of resources compared to making individual adjustments. Implications are provided for new product development and large multinational enterprises.

Start-up Context, Social Ties, and Growth Strategies of Second-Generation Immigrant Entrepreneurs

Second generation immigrant entrepreneurs (SGIEs) in developed economies have contributed to the emergence of new areas of business activity. An understanding of their growth strategies can shed light on the role of individual immigrants in the founding of potentially global firms competing with large multinational enterprises. Based on eleven case studies of SGIEs of Indian origin in the UK, our findings reveal that SGIEs are heterogeneous in their growth strategies contingent on their start-up context and use of social ties. Founder SGIEs combining non-co-ethnic ties with non-family co-ethnic ties geographically expand outward to other foreign countries, including their country of origin. In contrast, successor SGIEs combining non-co-ethnic ties with family ties expand their product/ service scope within the UK; they exploit foreign market links, including their country of origin, to source supplies or customers through inward internationalization. These findings contribute to the immigrant entrepreneurship, international business and international entrepreneurship literatures.

Let’s Talk About Senior Managers. Investigating Managerial Roles in Foreign Divestment Decisions

Global economy has been damaged severely by the pandemic, macroeconomics and geopolitical tensions, leading to a significant amount of foreign divestment made by several large multinational enterprises. This research delves into roles of top managers at headquarters in foreign divestment through their executive decisions. Adopting the dynamic managerial capabilities framework, we establish the linkage between global dynamic managerial human capital, social capital and managerial cognition on divestment probability. In addition, we examine if a turnover of a chief officer leads to foreign divestment decisions. We further investigate how the influences could be modified by cultural, economic and political differences. Accordingly, we fill the gap voiced by prior scholars about the striking omission of managerial roles in divestment studies and develop our understanding of the microfoundations of the dynamic capabilities. Several theoretical and practical implications have been also discussed in this study.

Knowledge Management in Multinationals: Boundary Spanning Activities of Regional Headquarters

As multinational enterprises (MNEs) have become knowledge driven and dispersed across many locations, the role of regional headquarters (RHQs) in managing knowledge between headquarters (HQ) and subsidiaries has become increasingly prominent. Yet, few studies have comprehensively examined their role in MNE knowledge management. This study builds on the boundary spanning perspective to investigate the specific roles and activities played by RHQs in knowledge management of the MNEs. Based on an in-depth qualitative study of seven Korean large MNEs, this study reveals how RHQs affect the knowledge flows in MNEs by performing four different activities, labeled transfer, translation, transformation, and facilitation. RHQs not only enhance efficiency in knowledge transfer between HQ and subsidiaries, but also enlarge the usefulness and application scope of the knowledge by interpreting cultural and contextual factors. RHQs also create new solutions by transforming subsidiary knowledge and facilitate knowledge sharing by restraining knowledge hiding of subsidiaries. Based on these findings, we develop an integrated framework, specifying the conditions under which each of the four activities is more likely to occur and showing how each activity disproportionately affects HQ and subsidiaries.

Antitrust Regulation in the Field of IP of MNEs in the New Era: Starting with the Patent Tying Behaviour from the Perspective of Comparative Law

With the vigorous development of patented technology, the problem of some large multinational enterprises implementing monopoly behaviour by abusing intellectual property rights such as patent tying is becoming more and more prominent. This has had a great impact on fair market competition, especially in those developing countries. Combined with the regulation of China’s Antitrust Law and other legal systems on this issue at the present stage, and based on the analysis of its imperfections, this paper explores the excellent achievements in international attempts such as the principle of the rationality of the United States and the comprehensive analysis method of the European Union. In the context of TRIPS, countries all over the world need to pay close attention to how to regulate the monopoly caused by the abuse of intellectual property rights, including patent tying. It is concluded that to better resist the monopoly of abusing intellectual property rights and develop the new driving force of a domestic innovative economy, China needs to start with the substantive concept and clarify the clear meaning, definition standards, and rank order of relevant legal concepts and systems. It also needs to up special authoritative law enforcement agencies to regulate the monopoly of multinational enterprises abusing intellectual property rights, innovate their punishment methods, strengthen the punishment, and better ensure fair market competition.

A tango with a gorilla: An exploration of the microfoundations of open innovation partnerships between young innovative companies and multi-national enterprises

Our purpose is to clarify the microfoundations of open innovation (OI) in young innovative companies (YICs) in partnering with large multi-national enterprises (MNEs). Despite the progress in OI SME research, YICs remain understudied, and we know little about the nuances and complexity of how OI is managed. Through a qualitative research design, we explore four cases and twelve projects within the information communications technology (ICT) and medical device (MD) industries. Based on an analysis of primary and secondary data at the OI project level, we reveal five types of micro-foundations. These microfoundation types include YIC antecedent, YIC behaviour, MNE antecedent, MNE behaviour and joint action – which are found to influence the outcome of an OI project between an YIC and an MNE. These microfoundation types are deemed as either enabling (positive impact on the YIC OI project outcome) or limiting (negative impact on the YIC OI project outcome). The captured evidence asserts that is the lower-level activities both antecedents and behaviours that ultimately influence and shape the OI project and thus the innovation outcome. This study advances the OI literature and clarifies how the aggregation of this wide range of microfoundations – both antecedents and behaviours, shapes the OI project outcome. Our research illustrates that the deliberate management of microfoundations is a necessary constructive element in an OI project between an YIC and an MNE. Microfoundations provide a guiding rail for YICs to reflect, learn and create value.

Corporate Social Responsibility of SMEs: Learning Orientation and Performance Outcomes

Responsibility and sustainability are today a key part of doing business globally. However, the attention of scholars and policymakers has mainly been on large multinational enterprises, with small and medium-sized enterprises (SMEs) receiving less attention. Recent studies have noted the importance of learning for SMEs to engage in corporate social responsibility (CSR), but it is not yet known how the learning orientation of SMEs impacts their CSR, and how the development impacts the internationalization and performance of SMEs, which are research gaps that recent studies have noted. Shedding light on those dynamics is also important from a practical perspective since in most countries SMEs constitute a large majority of firms in both amounts and total employment. The present study contributes by illustrating how CSR impacts different types of performance in SMEs, and how the learning orientation of SMEs predetermines their CSR. Regression analyses conducted on an empirical sample of Finnish SMEs indicate that CSR in SMEs has an impact on certain types of performance and that their learning orientation determines their CSR. Therefore, the study contributes to the literature on responsibility and sustainability in SMEs, and to that SME internationalization, by shedding light on the antecedents and outcomes of CSR for SMEs.

Family-owned multinational enterprises in the post-pandemic global economy.

Contractor (J Int Bus Stud, 2022 ) argues that the COVID-19 pandemic has only accelerated changes in the world economy that had already started, and that the fundamental rationale for globalization remains. Although we agree with much of Contractor’s analysis and conclusions, we argue that in the case of large family-owned multinational enterprises (MNEs), international behavior after the pandemic is likely to be varied, reflecting the strategic persistence and the heterogeneity of the goals, governance, and resources of these firms compared to nonfamily firms. We therefore complement Contractor’s article by discussing why most large family MNEs will pursue strategies that are consistent with globalization, but some will pursue strategies that move them in the opposite direction.

Staying in or stepping out? Growth strategies of second-generation immigrant entrepreneurs

Second generation immigrant entrepreneurs (SGIEs) in developed economies have contributed to the emergence of new areas of business activity, especially in information technology, business services, and creative industries. An understanding of their growth strategies can shed light on the role of individual immigrants in the founding of potentially global firms competing with large multinational enterprises. Based on eleven case studies of SGIEs of Indian origin in the UK, our findings reveal that SGIEs are heterogeneous in their growth strategies contingent on their a) founding or succession context, and b) use of social ties. Founder SGIEs combining non-co-ethnic ties with non-family co-ethnic ties geographically expand outward to other foreign countries, including their country of origin. In contrast, successor SGIEs combining non-co-ethnic ties with family ties expand their product/ service scope within the UK; they exploit foreign market links, including their country of origin, to source supplies or customers through inward internationalization. These findings contribute to the immigrant entrepreneurship, international business and international entrepreneurship literatures.