Market Multinational Enterprises Research Articles

Are Chinese MNEs more strongly attracted to global cities and knowledge intensive city clusters than developed market MNEs when undertaking greenfield strategic asset seeking related FDI?

PurposeCities are host to many of the world’s knowledge intensive research and innovation clusters. As such, they are likely to be attractive locations for emerging market multinational enterprises (MNEs) seeking to engage in knowledge seeking “springboard” type firm-level catch-up strategies. The purpose of this study is to therefore explore whether city-based research-intensive clusters containing deep pools of location bounded (i.e. “sticky”) knowledge are a stronger driver for greenfield research and development (R&D)-related FDI projects for Chinese MNEs than they are for developed market MNEs.Design/methodology/approachThe authors use logistic modelling on 97,163 worldwide greenfield FDI projects to explore the relative likelihoods of Chinese MNEs engaging in R&D-related greenfield (i.e. “strategic asset seeking”) FDI projects as well as how city type (global or research-intensive cluster city) moderates this relationship for Chinese MNEs.FindingsThe authors find that Chinese MNEs are more likely to engage in overseas R&D FDI projects (compared with other types of project) than DMNEs and that research-intensive city clusters hold a stronger attraction for Chinese MNEs than developed market MNEs.Research limitations/implicationsThe authors discuss how the research contributes to the debate on emerging market MNE catch-up theory, as well as that on sub-national city location choice, by highlighting the growing importance of sub-national geography to understanding strategic asset seeking related greenfield FDI.Practical implicationsSub-national city location choice is an important driver of strategic asset seeking FDI for Chinese MNEs, one that both national and local city level policymakers should pay attention to.Social implicationsChinese FDI via aggressive mergers and acquisitions to acquire key technologies has been restricted in recent years. Policymakers must consider whether they may also wish to restrict Chinese greenfield FDI in R&D-related projects, which now exhibit a pronounced upward trend.Originality/valueThe authors highlight the growing importance of sub-national geography to understanding strategic asset seeking related greenfield FDI in Chinese MNEs (and how it plays, more generally, a central role in their strategies).

Comparative analysis of FDI by Indian and Chinese MNEs in Europe

PurposeExploration of potential markets in foreign regions such as Europe becomes critical for emerging market multinational enterprises (MNEs). This study aims to investigate structural factors that affect the location choice of Chinese and Indian MNEs in Europe and compares them with USA and Japanese MNEs.Design/methodology/approachThe authors use a holistic approach to identify possible configurations of the determinants of Indian and Chinese outward foreign direct investment (FDI) into 38 European countries. The authors test two configurations as follows: knowledge-seeking by Chinese and Indian MNEs in “non-predictable” markets; market-seeking by USA and Japanese MNEs.FindingsThe findings reveal several strategies deployed in Europe by Chinese and Indian MNEs that are more specific than the pure strategies identified in the literature (e.g. market-seeking, knowledge-seeking). More importantly, unlike USA and Japanese MNEs, the findings confirm a two-stage strategy hypothesis for Chinese MNEs in Europe. Additionally, they show that the quality of institutions and infrastructure underlies the attractiveness of a territory.Research limitations/implicationsMultilevel configurational research might have also been used to consider firm- and industry-level determinants.Practical implicationsGood governance positively affects the entire set of locational determinants. In addition, good infrastructure and institutions are necessary conditions for a country to attract FDI inflow.Originality/valueRecent internationalization models have been useful in identifying drivers of FDI by emerging market multinational enterprises vs advanced market multinational enterprises in Europe. This study mobilizes a comparative configurational approach.

Does Foreign Listing Matter in Cross-border M&A of Emerging Market MNEs?

Prior research suggests that foreign listing may play a crucial role in attenuating liability of foreignness, but many of its implications are yet to be discussed thoroughly, for instance, the contexts and mechanisms that financial distance affect strategies of emerging market multinational enterprises (MNEs). In this study, we examine the effect of heterogeneity in financial market orientation on cross-border transactions, focusing on the price premiums of cross-border mergers and acquisitions (M&A). Using in-depth data concerned with specific cross-border M&A deals, this study suggests as the gap of financial market orientation between acquirer¡¯s home country and host country increases, the MNEs from emerging markets are more likely to bear high price premiums. At firm level, when acquirers are listed in foreign stock exchanges, they are supposed to pay lower premiums. Furthermore, the effect of foreign listing can also negatively moderate the positive relationship between financial market orientation gap and cross-border M&A premiums. When considering the role of prior host country M&A experience of the acquirer, we find this type of experience negatively moderates the positive relationship between financial market orientation gap and cross-border M&A premiums of emerging market MNEs, while the moderating effect of prior host country M&A experience on the relationship between foreign listing and cross-border M&A premiums of emerging market MNEs shows no significant results.

The provisioning of collective goods by MNEs in emerging markets

PurposeThis paper aims to determine the essential “collective goods” which a foreign multinational enterprise (MNE) must have before production can start in a remote area of an emerging economy, and to consider the alternative governance modes available to procure or create these goods.Design/methodology/approachThis purpose is examined conceptually and theoretically. First, the concept of “collective goods” is presented, followed by a consideration of the traditional “buy, ally or make” contractual approaches available to obtain goods and services. These approaches are repositioned in the context of an “emerging economy” so that alternative “ordering systems” as well as “non-contractual” means of obtaining things have to be considered in the context of internalization and reciprocity theories.FindingsIt is difficult to obtain collective goods in remote areas of emerging economies where private ordering prevails and even succeeds but at high transaction costs and with substantial government intervention. However, the use of non-contractual modes of exchange such as reciprocity is available to facilitate exchanges between market MNEs and nonmarket state offices and civil-society associations such as non-governmental organizations with which collaboration is necessary but which cannot be acquired or controlled by MNEs. However, market firms can use philanthropy and lobbying to obtain the help of these nonmarket actors who know how to operate under private and state-ordering systems.Research limitations/implicationsTheoretical implications: Internalization theory explains why MNEs are able to obtain collective goods by providing them “in-house”, while reciprocity theory exemplifies how non-contractual modes of exchange can substitute for the traditional but contractual “buy, ally and/or make”.Practical implicationsManagerial implications: In terms of the organizational structure of the subsidiary of an MNE operating in an emerging economy, it appears that the line functions of procurement, engineering and production may rely more on contractual exchanges with foreign suppliers, while the staff functions of public affairs, government relations and human resources may be more adept at using reciprocal exchange with local suppliers.Originality/valueThe provisioning of the collective goods when a firm builds its facilities in a remote and underdeveloped part of an emerging economy has hardly received any research attention nor have the non-contractual ways – such as reciprocity – available in the context of private ordering to obtain these goods.

Multinational firms from emerging economies in Africa: implications for research and practice in human resource management

Although Africa's return to growth in the 2000s, coterminous with significantly increasing foreign direct investment, has led to renewed interest in Human Resource Management (HRM) on the continent, much of the literature has tended to focus on cross-culturally imposed variations in HRM and employment practices and the impact of foreign investment from the developed world. Policy and strategy in managing human resources, most notably those from emerging market multinational enterprises (MNEs), has been neglected. Opening this special issue, this article highlights present trends and debates, and reviews more recent contributions to knowledge of this area. Our analysis critically evaluates the use of new categories of expatriate workers including semi-skilled and relatively unskilled home country expatriates deployed in emerging market MNEs in African countries, the uneven nature of regulation, structural changes in African economies, and the consequences of national institutional restraints for multinational HRM. We identify an agenda for further research.

How Emerging Country MNEs (EMNEs) Address the Liability of Foreignness: The Solar Panel Case

Much existing literature on the Liability of Foreignness (LoF) concentrates on the manner in which it impacts on the strategy and performance of service based Multi-National Enterprises (MNEs) from developed economies expanding through Foreign Direct Investment (FDI). Few researchers have explored the LoF faced by more trade-oriented companies or Emerging market MNEs (EMNEs). This paper seeks to contribute to these gaps in the literature by exploring how LoF impacts on trade-based internationalisation by EMNEs and the mitigating strategies used to reduce LoF in this context. Through a case study of the European Union (EU) antidumping investigation against Chinese solar panel producers, the paper will seek to shed light on these questions. The case demonstrates how Chinese MNEs used sophisticated strategies of localisation, alliance-building and appealing to universal values in seeking to overcome their LoF. We argue that the evolution of company strategy in this case demonstrates both that LoF is relevant to trade-oriented MNEs and that existing research can provide useful insights into potential strategies for mitigation. We also argue that MNEs in this case also benefited from an Asset of Foreignness (AoF) in that they had a pro-active, supportive home state.

Leveraging Local Talent for Global Learning

A unique challenge of developed market multinational enterprises (MNEs) is the significant knowledge gap between corporate headquarters and their foreign subsidiaries in emerging markets. Given the...

Antecedents of MNE performance: evidence from Asia Pacific emerging markets

The purpose of this study is to clarify how ownership structure, internationalisation path, product diversification and geographic scope affect emerging market Multinational Enterprises (MNEs) performance in a sample of Asia Pacific Emerging market MNEs. The result shows that (1) the relationship between internationalisation and firm performance is a non-linear relationship. (2) Moderate product diversification and geographic scope can increase emerging market MNEs’ capacities. By contrast, firm performance will turn out to be negative when emerging market MNEs heavily expand their product offerings and geographic markets. (3) The relationship between ownership structure and firm performance is a non-linear relationship (S Shape).

The Impact of Regional Trade Agreements on the Global Orientation of Emerging Market Multinationals

We analyze how an aspect of institutional change—regional integration in the form of regional trade agreements (RTAs)—affects the degree of global orientation (DGO) of emerging market (EM) multinational enterprises (MNEs). We decompose regional integration into three key dimensions reflecting variations among RTA member countries—RTA Diversity, RTA Potential Market Size, and RTA Experience. We conceptualize and test how these three RTA characteristics determine firms’ DGO on a sample of 421 MNEs from 27 EMs worldwide during 2000–2006. We find that greater RTA Diversity and RTA Experience increase EM MNEs’ global orientation, while greater RTA Potential Market Size influences the EM MNEs to be more regionally oriented. Conversely, our post-hoc analyses revealed that the results do not hold for MNEs based in the three most developed nations in the European Union—Germany, France, and the UK—emphasizing important differences of the effects of RTA characteristics on EM vs. Triad MNEs’ DGO.

The Globalization Strategy of Daewoo Motor Company

This paper aims to add to the existing body of literature on multinational enterprise (MNE) by addressing the dynamic aspect of emerging market MNEs. Emerging market MNEs can follow non-sequential and non-linear internationalization process. The paper presents the globalization strategy of Daewoo Motor Company as a case study.