Large Multinationals Research Articles

How important is regional vs. global scope? An examination of U.S. multinationals

Beginning with Rugman and Verbeke (J Int Bus Stud 35(1):3–18, 2004), several international business (IB) scholars have proposed that most large multinationals are not global but regional. This argument has recently been challenged for both its conceptualization and its implementation. We aim to contribute to this debate by revisiting the definitions of regional and global, by leveraging data from the U.S. Bureau of Economic Analysis that is new to this literature, and by analyzing multinationals’ scope in terms of both sales and production. We find that U.S. multinationals are significantly more global than has previously been acknowledged in the IB literature.

Martinite: an alternative to asbestos insulation available since XIX Century

New findings and technical investigations carried out on the material called Martinite have found that, already at the end of the Nineteenth century, this material, with excellent insulating properties, free from asbestos and other substances harmful to human health, was available on the national and international markets. At the beginning of the Twentieth century, Martinite was used in warships of the Italian Royal Navy and, in 1950, the Italian national naval certification body (UNAV) authorized it to be used on all ships. It also had other uses, including the construction of civil power plants. If properly advertised and distributed, Martinite could have been used all over the world in place of asbestos in different applications, avoiding the catastrophic consequences on the health of thousands of people. The product did not receive the desired commercial development, because of the small size of the company, which could not compete with the large asbestos multinationals. KEYWORDS: asbestos; Martinite; asbestos substitutes; insulation.

The Role of NGOs in Supporting Education in Africa

Non-Government Organisations (NG0s) which support education in Africa may use different titles such as Council or Trust, are almost always Non-profit organizations. They differ in size, ranging from small local organisations through to large internal multinationals. When founded they will often reflect the ideas, objectives and views of their founders. Funds for new NGOs especially smaller organisations were, and still are, likely to come from supporters, small charities and foundations. Their activities are likely to focus either on specific areas for example village schools or supporting specific causes such as school children with disabilities. Funding for many NGOs has changed significantly from their early years. Many now receive large proportions of their funding from governments. However many NGOs perceive their work to be guided by the principals of neutrality and impartiality. Governments however may view the NGO education programmes they fund as being part of a “counter insurgency strategy” or as one of their “combat teams”. Governments and international funders such as the European Union often now prefer to support consortia where a number of NGOs and multilateral organisations join together to work on a single project. There are significant benefits but also some significant problems.

Real Effects of Public Country-by-Country Reporting and the Firm Structure of European Banks

This study investigates the effect of mandatory public Country-by-Country Reporting (CbCR) for European banks on their presence in tax and regulatory havens. We find that the number of subsidiaries of European banks in tax havens declines significantly after the introduction of mandatory public CbCR in contrast to insurance firms that need not disclose. We document that this decline is mainly driven by a reduction of subsidiaries in small countries with little economic substance (“dot havens”) and in tax havens that are regulatory havens at the same time, i.e., with high financial secrecy. Further, we find that high exposure to reputational risk is a major amplifier of reorganizational activities. Our results explain prior mixed evidence and document that CbCR effectively curbs tax haven presence only under specific circumstances, i.e., in countries offering both tax shelter and financial secrecy, and more strongly for banks with high reputational risk. These findings suggest that increased tax disclosure on banks does not effectively attenuate tax haven presence per se, but only for a subset of havens and banks. Policymakers need to be aware of these limitations, especially during the current discussion of extending public CbCR to all large multinationals.

AB InBev's Dividend Decision

In 2018, AB InBev was a widely recognized global leader of the beer industry. It had patiently built a global presence and a broad brand portfolio through carefully selected mergers and acquisitions of brewers, from small local craft breweries to large multinationals. The corporate treasury team was always the tip of the spear, securing the proper financing that enabled this aggressive growth strategy. 2016 marked the epitome of AB InBev's success—the company had successfully completed the acquisition of SABMiller. This $104 billion merger was the largest deal in the history of beer, and was enabled by the largest corporate bond offering to date—$61.9 billion. It was a huge win for AB InBev.But in October 2018, the financing side of the landmark deal had become the pain point for the company's management. Unexpectedly deteriorating economic conditions in Latin America, fluctuations in commodity prices, and changing consumer tastes slowed the growth in the company's EBITDA, undermining its ability to delever. The company's persistently high debt levels became the talk of the town, and the corporate treasury team was certain that leverage would have to be brought down to move AB InBev's price in a positive direction. But what sounded very simple was not an easy feat. Excerpt UVA-F-1907 Rev. Jul. 17, 2020 AB InBev's Dividend Decision The history of AB InBev is a global story that spans continents and generations. It's not just our history, it's the history of beer itself. —Anheuser-Busch InBev SA/NV (AB InBev) Bruno Bouvier, head of AB InBev's corporate treasury, flipped through the presentation on his desk one more time. With less than 24 hours until the October 24, 2018, board meeting, he was still unsure about what recommendation he would make to address the global brewer's financial challenges. The lower-than-expected EBITDA growth, upcoming debt-repayment obligations, significant dividend payouts, and strategic objectives were putting pressure on the company's financing. These issues did not go unnoticed by the capital markets, with AB InBev's share price dropping from USD133 in September 2016 to just over USD81 in October 2018 (Exhibit1). . . .

Controls to Minimize Disruption of the Pharmaceutical Supply Chain During the COVID-19 Pandemic.

This article reviews currently available scientific literature related to the epidemiology, infectivity, survival, and susceptibility to disinfectants of Coronaviruses, in the context of the controls established to meet good manufacturing practice (GMP) regulations and guidance, and the public health guidance issued specifically to combat the COVID-19 pandemic. The possible impact of the COVID-19 pandemic on the pharmaceutical supply chain is assessed and recommendations are listed for risk mitigation steps to minimize supply disruption to pharmaceutical drug products. Areas addressed include a brief history of the COVID-19 viral pandemic, a description of the virus, the regulatory response to the pandemic, the screening of employees, the persistence of the virus on inanimate surfaces, cleaning and disinfection of manufacturing facilities, the use of GMP-mandated personal protective equipment to counter the spread of the disease, the role of air changes in viral clearance, and approaches to risk assessment and mitigation. Biological medicinal products have a great record of safety, yet the cell cultures used for production can be susceptible to viruses, and contamination events have occurred. Studies on SARS-CoV-2 for it ability to replicate in various mammalian cell lines used for biopharmaceutical manufacturing suggests that the virus poses a low risk and any contamination would be detected by currently used adventitious virus testing. The consequences of the potential virus exposure of manufacturing processes as well as the effectiveness of mitigation efforts are discussed. The pharmaceutical supply chain is complex, traversing many geographies and companies that range from large multinationals to mid- and small-size operations. This paper recommends practices that can be adopted by all companies, irrespective of their size, geographic location, or position in the supply chain.

A Call to Integrate Economic, Social and Environmental Motives into Guidance for Business Support for the Transition to a Circular Economy

A broad range of organizations, from small and medium-sized enterprises to large multi-nationals, are interested in adopting circular economy practices. A circular economy can help companies make better use of materials by minimizing the input of natural resources, reducing waste, and optimizing the economic, social, technical and environmental costs and benefits of materials and products throughout their lifecycle. Despite the interest of companies in a circular economy, only 9% of material flows in the global economy are circular. There is formal guidance for those offering business support with the aim to expedite the transition to a circular economy. However, support measures narrowly confine the role of companies and the motivations of business managers to the economic realms, assuming that companies are solely driven by monetary factors. Conversely, pluralist economic views emphasize the broader role of companies in society: for example, in respect of the well-being of their staff and the communities in which they reside. Indeed, our practical experiences of business support have brought alternative motivations to explore a circular economy to the fore. We argue that business support should stem from a broader conception of the role of business in society. The diverse motivations and willingness of business managers to engage in a circular economy should be investigated further with results feeding into broader and more inclusive business support guidelines in the future to accelerate the transition towards a circular economy.

DMI: DVA 2019 Awards

At the September DMI Design Leadership Conference, DMI celebrated the 2019 DMI Design Value Award winners at a special reception and gala. These were teams that have delivered significant value through design or design management practices. The 13 winners fill out a distinguished list of international organizations including nonprofit agencies, government entities, large multinationals, and regional enterprises.As the longest‐standing global institution of its kind, DMI holds an exclusive position in the design and design management landscape. For over 40 years, DMI has been an active advocate for the strategic value of design. The organization brings together designers, educators, researchers, and leaders from every design discipline, every industry, and every corner of the planet to facilitate transformational organizational change and design‐drive innovation. Find more about the Institute at www.dmi.org.The 2019 DMI Design Value Awards recognized teams that have delivered significant value through excellence in design or design management practices. The 13 Design Value Award winners are exemplars in their fields: a distinguished list of teams that include non‐profit organizations, government agencies, large multinational corporations, hospitals, and regional enterprises.

Designing and managing co-innovation: the case of Loccioni and Pfizer

PurposeKnowing the factors influencing the success of collaborative innovation is particularly relevant for both academics and practitioners. Nonetheless, many studies have regarded the megatrends influencing innovation imperatives, the development of co-innovation strategies, the selection of partners and the involvement of user communities, but not so much the understanding of how the co-innovation process is concretely designed and managed. Adding to extant research, the purpose of this paper is to explore how companies collaborate in co-innovation processes.Design/methodology/approachA longitudinal, single case study has been conducted on the co-innovation process between Loccioni, an Italian medium-sized, high tech family firm, and Pfizer, one of the largest companies operating in the pharmaceutical sector.FindingsFrom the case study analysis, three main results have emerged. First, the role of medium-sized companies in leading the co-innovation process as both the initiator and orchestrator. Second, the interplay between the local and the global dimension of co-innovation and the importance of (un)formal roles in innovation. Third, the “double funnel” of co-innovation, linking both the technological and the relational dimensions. Specifically, the case highlights the relevance of the relational – beyond the technological – aspects of co-innovation, providing a relational model that links the geographical dimensions (local/distant) and the role of specific individuals.Originality/valueThe paper presents an example of how a medium-sized firm has implemented its co-innovation process, shedding new light on possible barriers and success factors that other smaller or similar companies may follow when dealing with large multinationals.

Identifying and tracking key climate adaptation actors in the UK

To understand how climate adaptation planning and decision-making will progress, a better understanding is needed as to which organisations are expected to take on key responsibilities. Methodological challenges have impeded efforts to identify and track adaptation actors beyond the coarse scale of nation states. Yet, for effective adaptation to succeed, who do national governments need to engage, support and encourage? Using the UK as a case study, we conducted a systematic review of official government documents on climate adaptation, between 2006 and 2015, to understand which organisations are identified as key to future adaptation efforts and tracked the extent to which these organisations changed over time. Our unique longitudinal dataset found a very large number of organisations (n = 568). These organisations varied in size (small-medium enterprises to large multinationals), type (public, private and not-for-profit), sector (e.g. water, energy, transport and health), scale (local, national and international), and roles and responsibilities (policymaking, decision-making, knowledge production, retail). Importantly, our findings reveal a mismatch between official government policies that repeatedly call on private organisations to drive adaptation, on the one hand, and a clear dominance of the public sector on the other hand. Yet, the capacity of organisations to fulfil the roles and responsibilities assigned to them, particularly in the public sector, is diminishing. Unless addressed, climate adaptation actions could be assigned to those either unable, or unwilling, to implement them.

Anti-corruption reporting in emerging country multinationals

Purpose Based on a lens of analysis combining legitimacy and stakeholder theories, this paper aims to explore some factors which influence anti-corruption (AC) reporting in large multinationals from emerging countries. Design/methodology/approach An ordinal logistic regression is used to assess the relation between the AC reporting and multinationals’ industrial affiliation, number of countries of operations, membership of the United Nations Global Compact (UNGC) and public ownership. The sample was drawn from the 2016 Transparency International Report “Transparency in Corporate Reporting – Assessing Emerging Market Multinationals”. Findings Evidence suggests that in emerging countries, listed multinationals, which operate in a large number of countries or are members of the UNGC, present significant levels of AC reporting. Unexpectedly, results also suggest that such reporting is not significantly affected by the corruption risk level of the industries to which the multinationals belong. Finally, results suggest that in emerging markets, the dependency for resources may also affect AC reporting. Originality/value This paper contributes to the extant literature, by exploring different determinants of AC reporting, namely, a thus far unexplored one: public vs private ownership. This paper also contributes to the literature by providing insights into the relationships in a specific context: that of emerging countries. Finally, the reliance on the international community for the provision of resources is shown as a factor that potentially affects AC reporting.

Social media led co-creation of knowledge in developing societies: SME’s roles in the adoption, use and appropriation of smartphones in South Asia

Social media supports the creative economy through its involvement in the adoption and appropriation of new innovation and accelerates economic growth. The current paper expands on this notion by identifying and analyzing the interaction between social media-based communities and small and medium enterprises (SMEs), as it examines how social media contributes to the knowledge co-creation and supports the adoption, use and appropriation of smartphones in South Asian countries, which are inhabited by approximately 1.6 billion people. The findings obtained through virtual ethnography (VE) provide insights into the dynamics and kinetics of knowledge co-creation and how that benefits large multinationals, small local businesses and consumers in developing societies. As such, we advance the knowledge management scholarship by presenting a holistic model of co-creation of knowledge involving multiple stakeholders.

Emerging Market Multinationals and International Corporate Social Responsibility Standards: Bringing Animals to the Fore

The literature presents a broad approach to Corporate Social Responsibility (CSR), which aggregates a diversity of issues, such as the environment, labor conditions, and human rights. We addressed the impact of increasing CSR demands during the internationalization of emerging market multinationals (EMNs) on one particular subject, animal welfare (AW). This subject raises important ethical concerns, especially as we understand that animals are sentient beings. Through content analysis of annual reports, we tracked the evolution of AW-CSR activities throughout the internationalization of two large Brazilian meat-processing multinationals as they accessed markets with complex AW regulations. We also synthetized findings on broiler chicken on-farm AW research in Brazil and conducted interviews to gauge the impact of CSR standards on animals. Our findings show that, although EMNs that enter developed markets engage with various standards, the impacts of standard enforcement on actual welfare are not straightforward and call for broader AW and animal ethics developments. Uneven results among AW criteria indicate that some aspects are prioritized over others. Furthermore, some actions of actors such as EMNs and low-tier suppliers seem to counterbalance the expected impact of normative pressures to change the lives of animals for the better. We conclude that AW standards may improve AW in emerging markets; but these standards do not appear to be sufficiently stringent, and require improvements to have a more significant positive impact. A major signal emerging from this research is the fundamental need to broaden the animal ethics debate regarding the use of animals to produce meat.

The role of small- and medium-sized enterprises in the Dutch economy: an analysis using an extended supply and use table

Firm size is increasingly acknowledged as an important factor for (macro-)economic policy. It is known that the overall importance of small- and medium-sized enterprises (SMEs) is different relative to large multinationals in terms of their impact on economic growth, exports and innovation. Yet empirical evidence to substantiate the role of firms of different sizes is rare. To tackle this problem, we develop a novel approach by extending the Dutch supply–use framework to firm size. We utilize firm-level data to construct a purpose-built supply–use table distinguishing between SMEs and large enterprises and derive an extended input–output table. In doing so, we adopt a more evolved definition of SMEs, accounting for the fact that small firms may be subsidiaries of large (multinational) enterprise groups. The analysis shows that due to their function as suppliers, SMEs benefit much more from Dutch exports to foreign markets than the traditional export figures show. SMEs are less dependent on imports than large enterprises. This might be detrimental to the competitiveness of SMEs if they do not fully appreciate the benefits of sourcing internationally in terms of cheaper or higher quality inputs. The paper shows the policy relevance of macroeconomic statistics which distinguish firm size.

South African managers’ perceptions of black economic empowerment (BEE): A ‘sunset’ clause may be necessary to ensure future sustainable growth

Transformational policies in South Africa, such as black economic empowerment (BEE), have increasingly and inextricably become part of the everyday political, economic and social life of all South Africans since the founding of the new democracy in April 1994. In this regard, South African businesses are subject to a whole array of mandatory regulations which specifically influence their operational capabilities and competitiveness to compete effectively and efficiently in both national and global markets. In a survey among 500 individual managers in South African businesses ranging from small, medium to large multinationals companies, it was found that BEE is well integrated into most of these organisations. However, the mounting resistance to and rejection of BEE that exists at management level can also increasingly be seen at the intellectual level of the population through public discourse in the daily newspapers, in which BEE is essentially viewed as a perpetuation of past injustices. The African National Congress (ANC) government must take cognisance of the negative influence that BEE has had on South Africa over the last more or less ten years and accept that a ‘sunset’ or termination clause needs to be set before too much further damage is done to the economy of the country and its world competiveness ranking.

Contribution au développement d’un apprentissage pédagogique en entrepreneuriat international

Afin de comprendre et de décrire le comportement d’internationalisation des entreprises, les premières recherches menées avant les années 70 se sont concentrées sur les grandes multinationales dont les stratégies d’internationalisation étaient rendues possibles par de lourds investissements. D’autres recherches concernant l’internationalisation des PME, menées aux Etats Unies et en Europe au début des années 80, ont donné lieu à des modèles comportementaux par étapes où la taille est une barrière à l’internationalisation. Or, on constate que de toute petites entreprises (TPE), nouvellement créées, inexpérimentées et avec des ressources limitées, s’internationalisent et déjouent les modèles classiques d’internationalisation en brulant les étapes. L’âge, la taille et les ressources ne sont plus des obstacles à l’internationalisation. Cela fait dire à Cavusgil (1980) que l’internationalisation graduelle des entreprises est devenue caduque. Veilleux et Ferro (2010), confirment que de nos jours, entre 1 et 2% des nouvelles entreprises sont internationales dès leur création et 76% ont des perspectives d’exportation dans les deux premières années. Et la majorité des travaux de recherche menées depuis les années 90 traite la précocité et la rapidité de cette internationalisation d’un point de vue facteurs externes à l’entreprise telle que la saturation des marchés locaux et/ou nationaux, la libéralisation des marchés internationaux ou encore les aides apportées par les gouvernements, la pression concurrentielle ; et d’un point de vue facteurs internes tel que le rôle du dirigeant et ses diverses expériences, l’appui de ses réseaux sociaux, le recours à des nouvelles technologies de communication et de production, les caractéristiques du produit. Cependant, rares sont donc les travaux qui abordent l’internationalisation de ces TPE à travers un apprentissage pédagogique en entrepreneuriat international ; apprentissage médiatisé par l’Université, permettant rapidement à ces entreprises de se positionner sur un marché international. L’objet de cette recherche est justement le questionnement de la pertinence de cet apprentissage ; et ce, à travers notre participation à la formation "Entrepreneuriat International et Développement de l’Entreprise Globale" initié par le "College of Business" de l’Université de l’Indiana (ISU). Il s’agit d’un programme de formation, proposé par le "College of Business" de l’ISU, associant des Universités appartenant aux quatre autres continents : l'Europe, l'Amérique, l'Asie, l'Afrique & l'Océanie. Un groupe mixte d’enseignants-chercheurs et de chercheurs appartenant à ces différentes Universités a bénéficié de ce programme de formation.

Convergence of management practices in India’s IT sector with ana priorivalidation

PurposeThe purpose of this paper is to document similarities and differences between management practices of different types of organizations in India’s IT sector through an empirical survey. The authors expected these differences to be significant enough for us to be able to groupa priorithis set of companies meaningfully through cluster analysis on the basis of the similarity of their management practices alone.Design/methodology/approachUsing a mixed-methods approach, 73 senior-level executives of companies working in India’s IT sector were approached with a pretested questionnaire to find out differences on eighteen management practices in the areas of operations management, monitoring management, targets management and talent management. The different types of organizations surveyed were small and amp; medium global multinationals, large global multinationals, small and medium Indian multinationals, large Indian multinationals and small and medium local Indian companies. The differences and similarities found through statistical testing were further validateda priorithrough cluster analysis and qualitative interviews with senior-level executives.FindingsThe management practices of multinationals in India are moving toward Western management practices, indicating that management practices converge as the organizations grow in size. Though the practices of large Indian multinationals were not significantly different from those of global multinationals, the surprising finding was that large Indian multinationals scored better than global multinationals on a few practices. The practices of small and medium Indian companies differed significantly from those of other types of organizations and hence they formed a cluster.Practical implicationsThe finding that large Indian IT multinationals have an edge over global multinationals in certain people management practices is a confirmation of the role of human resource practices in their current success and their continuing competitive advantage.Originality/valueThis is perhaps the first study of its kind to document state of specific management practices across different types of organizations in India’s IT sector and then use measures on these practices to group a priori these organizations for validation.

Globalization and U.S. Industry Concentration

I show that a tariff policy change that increased trade with China led to a decline in U.S. public listing rates and elevated industry concentration. Consistent with heterogeneous firm models of trade, the shock impeded the entry and performance of small domestic manufacturers but did not adversely impact large multinationals. In addition, stock price reactions to the policy change and threat of reversal imply that trade liberalization creates or destroys value depending on firm size. These findings suggest that recent trends in the U.S. public equity market are driven, in part, by fundamental changes in the global competitive landscape.

DMI: DVA 2018 Awards

At the September DMI Design Leadership Conference, DMI celebrated the 2018 DMI Design Value Award winners at a special reception and gala. These were teams that have delivered significant value through design or design management practices. The 12 winners fill out a distinguished list of international organizations including non‐profit agencies, government entities, large multinationals, and regional enterprises.As the longest‐standing global institution of its kind, DMI holds an exclusive position in the design and design management landscape. For over 40 years, DMI has been an active advocate for the strategic value of design. The organization brings together designers, educators, researchers, and leaders from every design discipline, every industry, and every corner of the planet to facilitate transformational organizational change and design‐drive innovation. Find more about the Institute at www.dmi.org.The 2018 DMI Design Value Awards recognized teams that have delivered significant value through excellence in design or design management practices. The 12 Design Value Award winners are exemplars in their fields: a distinguished list of teams that include non‐profit organizations, government agencies, large multinational corporations, and regional enterprises.

The Evolution of Corporate Cash

In a study published recently in the Review of Financial Studies, the authors examine and then attempt to explain the considerable variation in the cash‐to‐assets ratios of U.S. public companies over a nearly 100‐year period. For example, between 1920 and 1945, the average cash holdings of both small and large U.S. companies tripled. By 1970, however, the cash levels of both had fallen back to their starting point in the early 1920s. Then, at the start of the 1980s, the cash policies of small and large companies began to part ways. Thanks to the very large cash holdings of the wave of companies that went public during the next two decades, the average corporate cash ratio increased sharply from 1980 to 2000—a period when the cash holdings of large, established U.S. companies remained largely unchanged. But since 2000, it has been the large U.S. companies—many of them multinationals with profits “trapped” overseas—that have experienced the largest increase in cash holdings.The authors find especially compelling evidence that the significant increase in average cash holdings from 1980 to 2000 was driven primarily by a “Nasdaq effect” in which a large number of firms went public on the Nasdaq while holding amounts of cash that increased steadily throughout this 20‐year period. This Nasdaq effect was most pronounced among unprofitable, largely debt‐free, high‐growth, and high‐volatility firms, most of which operated in the healthcare or high‐tech industries. And this trend may well continue in the future, given recent reports of a growing fraction of IPOs by companies that have yet to show profits.But along with and apart from this “Nasdaq” effect, the authors also find that for NYSE companies, the sensitivities of company‐specific cash holdings to commonly studied variables have been remarkably stable during the past 90 years. The kinds of companies that have operated with high cash‐to‐assets ratios in recent years—riskier companies with growth opportunities and little if any profits or use of debt—have had large cash holdings in nearly every decade during the last century. And as in the past, relatively low‐growth and low‐risk public companies producing steady income have continued to operate with lower levels of cash.But even with this relative stability of firm‐specific cash sensitivities, the authors do not find changes in corporate characteristics helpful in explaining the changes in aggregate cash holdings over time, particularly the large increases during the 1930s and early '1940s, and the period since 2000. The largest roles in such increases appear to have been played by macroeconomic factors, such as the level of general economic growth and its effect on corporate profitability and investment. Nevertheless, in recent times, even after taking these macro and micro factors into account, the authors' study provides clear evidence that the repatriation tax incentives (that were recently eliminated by the 2018 tax legislation) have played the largest role in the increase in aggregate corporate cash holdings that has taken place since 2000. With the recent elimination of such incentives, the cash holdings of large multinationals are likely to fall toward pre‐2000 levels.