Performance Of Multinational Firms Research Articles

THE HOME COUNTRY EFFECT ON BETWEEN- AND WITHIN-FIRM PERFORMANCE DIFFERENCES

This study estimates the home country effect on multinational firm performance using data from 117 home countries (28,079 firms) and 123 host countries (85,579 affiliates) from 2010 to 2019. Using a variance decomposition approach, we find that the effect explains a sizable portion of variance between firms but is mostly trivial for performance differences among foreign affiliates within firms. These findings complement and improve research on location effects, informing the debate on the conceptualization of the home country effect. We revise assumptions about the transferability of homegrown advantages and highlight the importance of aligning theory and empirics in understanding performance differences globally.

The influence of the five cardinal values of confucianism on firm performance

This paper investigates the influences of Confucian values on the performance of multinational firms. Building on the five cardinal values of Confucianism, a conceptual model is developed by integrating benevolence, justice, courtesy, knowledge, and integrity. Based on a cross-sectional sample of 160 Taiwanese firms, this study finds the levels of justice and knowledge that positively strengthen the relationship between the degree of internationalization and firm performance. It is also found that the levels of benevolence and integrity significantly strengthen the relationship between networking capability and firm performance. The paper concludes with a discussion of the theoretical and managerial implications.

Does location matter in determining firms’ performance? A comparative analysis of domestic and multinational companies

PurposeThe purpose of this paper is to investigate the impact of internationalization of investment on corporate policies through multinational firms (MNFs) and thereby variation in financial performances when compared to domestic firms (DFs) using 10 years’ (2004-2013) secondary data of 153 firms listed on Pakistan Stock Exchange.Design/methodology/approachThis study applies regression and ratio analyses for testing of hypotheses and other statistics.FindingsThe results indicate that the performance of MNFs is better than that of DFs primarily because of internationalization of investments and inventory utilization. The rest of the factors included in the model, namely, cash conversion cycle and corporate governance (CG) indices, have less prominent role in determining firms’ performance.Research limitations/implicationsSample size was restricted to 153 firms, as complete data for the period selected to carry out the study were available only for these firms. For determining the quality of CG, only sample average has been used as bench mark due to non-availability of industrial average.Practical implicationsThe recommendations of the research can be used by economic planners and corporate experts as policy guidelines and bench mark for improving the corporate and economic performance of the country. Besides, these recommendations are beneficial for emerging economies particularly and developed economies generally across the globe.Social implicationsEconomic and financial regulators can get guidance from the findings of the study to adjust national-level corporate planning. For example, State Bank of Pakistan (the central bank of the country) can amend its prudential regulations with regard to maintaining liquidity by corporate units according to the results of the study. Corporate units can directly get guidance and adopt the findings of the study in their corporate planning to improve their performance. The findings and methodology of the research can also be used by research students on further exploring the field.Originality/valueSplitting the sample into domestic and multinationals firms, separately and jointly analyzing these firms and then comparing corporate strategies of these firms based on location are unique.

Multinational Subsidiary Performance: Evidence from the Ghanaian Banking Sector

The global economic volatility has given rise to diverse firm operational strategies including internationalization through subsidiary establishment. This has aroused the interest of scholars to the study of multinational firm performance. The study seeks to ascertain the factors that contribute to the performance of multinational subsidiary banks in Ghana. Using an unbalanced random effects panel regression estimation following the Hausman specification test, the study found that increasing bank size does not necessarily lead to performance. As it stands, the Multinational Subsidiary (MNS) banks under perform as they increase in size. It was further noted that the banks are inefficient and so shift their costs and risks to customers in the form of high interest charges on credit. Notwithstanding, it appears that older MNSs perform better than the relatively younger ones. The study found that leadership origin does not have any significant impact on bank performance. Evidence was, however, found about the significant influence of the host country economic conditions on MNS performance.

Evaluating impact of construction risks in the Arabian Gulf Region from perspective of multinational architecture, engineering and construction firms

Although multinational firms use risk mitigation measures when venturing into new international markets, there has been little research into identifying and evaluating the impact of these risks on project and multinational firm performance in the Arabian Gulf Region (AGR). Risks encountered in the AGR are identified through a data collection process from multinational architecture, engineering and construction (AEC) companies with work experience in the AGR. The impact of these risks on four performance metrics (i.e. project cost, schedule and performance; and company performance) is then evaluated using relative importance index (RII), significance score (SS) and principal component analysis (PCA) for validation. The results indicate that multinational firms are potentially exposed to a total of 27 external risks and 47 internal risks. Of the 27 external risks, war threat, political instability, price inflation, resources availability and quality, authorities and regulations requirements, and inclement climate have the most significant impact on the four performance metrics. Of the 47 internal risks, defective late design documents, constructive changes and insufficient scope definition have the most significant impact on the four performance metrics. These findings can guide multinational AEC firms in the AGR in establishing effective risk mitigation plans.

DECISION TO INVEST ABROAD: THE CASE OF SOUTH KOREAN MULTINATIONALS

Recent firm-based empirical studies examine whether firms serving foreign markets either through exports or foreign direct investment (FDI) are more efficient than their domestically-oriented counterparts. The purpose of the present paper is to study the link between performance of multinational firms and the choice to participate in foreign investment. In so doing, this paper explicitly differentiates exports and FDI decisions. Using firm-level data for large South Korean manufacturing firms, I provide evidence that the premium for FDI is huge compared to exports, and that good firms undertake FDI. Studying performance across firms, I find that firms that engage in FDI outperform other firms in the future in all possible dimensions; they are larger, pay higher wages, and are also more productive. These results are consistent with the hypothesis that good firms self-select to engage in FDI. I also find clear evidence that past FDI experience has a strong positive effect on the probability of current investment abroad. This implies that the sunk cost involved in FDI plays a role in current decisions to undertake FDI.

Terrorism and international business: A research agenda

Terrorism threatens international business (IB) through its direct and indirect effects. As governments tighten security at public sites, businesses have become more attractive terrorist targets, with important implications for the operations and performance of multinational firms. While terrorism has been substantially studied in other fields, there has been little scholarly research to address terrorism and the distinctive challenges that it poses for IB. In this article we conceptualize terrorism in relation to IB. We provide background on the dimensions and effects of terrorism, and develop a theoretical grounding for terrorism research by drawing on the literature from IB, economics, political science, and other fields. After discussing findings from the literature review, we offer a comprehensive agenda for future research regarding the relationship between terrorism and IB. Our agenda emphasizes the effects of terrorism, organizational preparedness, company strategy and performance, global supply chain and distribution channels, and human resource issues. Our review helps establish a baseline for future empirical research. Consistent with the early stages of research, IB scholars are encouraged to offer useful perspectives and effective solutions that shed needed light on terrorism and help reduce its destructive effects for IB and multinational firms.

Performance of Multinational Firms’ Subsidiaries: Influences of Cumulative Experience

In this study, we examine the impact of cumulative experience that arise from a series of sequential entries on the performance of foreign subsidiaries of multinational firms. Drawing upon the literature on organizational learning, we propose that multinational firms acquire different types of experience at the firm level, including general entry experience, entry specific experience, and exporting experience, which exert different influences on their performance. We also investigate the effect of experience on performance at the subsidiary level. Using a dataset of 245 subsidiaries of 81 large U.S. firms in China, we find that firms’ entry specific experience, exporting experience, and subsidiary level experience exhibit significant effects on the return on sales of foreign subsidiaries. Further, the effect of exporting experience gets weaker as firms accumulate more entry specific experience. Firms’ general entry experience, however, is not related to subsidiary performance.

Survival and Profitability: The Roles of Experience and Intangible Assets in Foreign Subsidiary Performance

This study integrates research on the financial performance of multinational firms with research on foreign subsidiary survival. We examined the influences a firm's intangible assets and its experience have on foreign subsidiary survival and profitability using a sample of 3,080 subsidiaries of 641 Japanese firms. The results show survival and profitability have different antecedents. Host country experience has a direct effect on survival but a contingent relationship with profitability. The entry mode moderated the nature of these relationships.

Bundling Human Capital with Organizational Context: The Impact of International Assignment Experience on Multinational Firm Performance and CEO Pay

Bundling Human Capital with Organizational Context: The Impact of International Assignment Experience on Multinational Firm Performance and CEO Pay

Cultural Diversity and the Performance of Multinational Firms

We test the hypothesis that culturally related international diversification will have a positive impact on firm performance and that the opposite will be true for culturally unrelated globalization. Cultural diversity for Fortune 500 firms was used to predict performance over a ten-year period (1985–1994), controlling for several organizational and industry characteristics. Regression tests using nine indicators of cultural diversity revealed no significant cultural effects. Alternate interpretations are offered.

Effects of International Diversity and Product Diversity on the Performance of Multinational Firms

This study examined the relationships among international diversity, product diversity, and firm performance. For a sample of large American industrial multinational enterprises (MNEs), it showed a consistent quadratic relationship between product diversification and MNE performance but minimal performance differences across different measures of international diversity. Analysis of the interactions of international diversity and product diversity indicates a weak effect from increasing internationalization on the performance effect of product diversity.