Multinational Enterprises Research Articles

The Effect of Institutional Voids, Informal Institutions, and Institutional Tension on Escaped-Based Internationalization from Developed Countries

ABSTRACT Literature on firm internationalization has predominantly examined host-country determinants while largely overlooking home-country environments. Existing theory on home-country institutional voids has been limited to emerging markets, positing that the absence of formal institutions influences organizational strategy. We extend this theory by incorporating developed market multinational enterprises, informal institutions, and institutional tension. We propose and find that a formal void related to labor laws is positively associated with internationalization, whereas an informal institution related to worker collectivism is negatively related to it. We also suggest, and partially find, that interaction between these conflicting forces mitigates their effects.

Driving Digital Sustainability in Global Value Chains: Multinational Enterprises as Chief Orchestrators

Driving Digital Sustainability in Global Value Chains: Multinational Enterprises as Chief Orchestrators

Engaging management accountants in corporate sustainability

PurposeExpectations regarding the participation of management accountants (MAs) in the promotion of sustainability of multinational enterprises (MNEs) have been poorly realised. This raises the question of whether MAs are invited to join in sustainability promotion or does sustainability not fit the perceived professional role of MAs. We suggest that the development of individual-level engagement of corporate sustainability is required for MAs to start contributing to corporate sustainability.Design/methodology/approachWe utilise the psychological ownership theory to investigate how MAs’ professional role could develop to incorporate advancing sustainability. Our qualitative study is based on 32 interviews conducted in seven local business units of three different technology-oriented MNEs.FindingsWe reveal features connected to the professional role of MAs that may impede the activation of the routes to psychological ownership of corporate sustainability, thus undermining their involvement in corporate sustainability enhancement. Moreover, we show that MAs’ own perceptions of their professional role may impede the stimulation of the routes.Originality/valueFrom a managerial viewpoint, our study helps readers to understand how the routes to psychological ownership of corporate sustainability could be cultivated in the development of the future role of MAs. It also gives input for MA professional organisations and MA professional education providers to develop conditions that foster sustainability thinking among MAs. Moreover, by integrating the examination of MAs’ professional role with the psychological ownership theory, we broaden the theoretical scene both in management accounting and in business sustainability research.

Saudi Arabia Regional Headquarters Program – Transfer Pricing Perspective

In February 2021, the Government of the Kingdom of Saudi Arabia announced its plans to limit the awarding of contracts to foreign multinational enterprises that do not have a regional headquarters set-up in the country. In December 2023, the Saudi Arabia Ministry of Investment in coordination with Ministry of Finance and the tax authorities announced a 30-year incentive plan for Saudi Arabia Regional Headquarters, which includes inter alia 0% corporate income tax and withholding taxes for the entire period. In February 2024, the tax authorities provided more clarifications about the conditions to obtain the benefits of the new regime. These also include the need to comply with the arm’s length principle and transfer pricing rules, which raises interesting questions from a tax technical point of view considering the particularities of the Saudi Arabia Regional Headquarters regime.

The Power of Boilerplate: Bilateralism, Plurilateralism, and the International Tax System

How do states exercise power in complex, decentralized governance regimes? This article sheds light on this question by analyzing one of the pillars of the post-war economic order: the international tax regime. The taxation of multinational enterprises is governed by a system composed of thousands of Bilateral Tax Treaties signed between pairs of national governments. We argue that despite the bilateral nature of these treaties, their legal content is largely controlled by a small group of economically powerful governments. By drafting and promoting “boilerplate” legal language, and by leveraging network effects, OECD countries were able to build a coherent, encompassing, quasi-multilateral regime to govern the taxation of multinationals in most of the world. We test and find support for our arguments about the role of network effects and the power of boilerplate using inferential network analysis and an automated text analysis of a corpus of 3200 treaty texts.

Thriving in a weak institutional environment: strategies for engaging with regulative institutions

PurposeThis paper explores how a firm that is established in an environment characterized by uncertainty can engage with weak regulative institutions by developing operational and institutional capabilities.Design/methodology/approachWe employ a multiple case study approach with seven leading multinational firms in Brazil in industries that vary in industry concentration.FindingsFirms choose among alternative strategies for engaging with regulative institutions as an ongoing process, based on their assessment of four characteristics of the uncertainty they face and their capabilities. Strategies that require a firm to exert greater effort to adapt to institutions or influence institutions have a greater potential to catalyze for developing operational capabilities. Although firms in industries with different concentrations behave similarly in individually adapting to regulative institutions, firms in decentralized industries are more likely to collaborate to influence institutions, which enables them to both access public agents through network partners and better negotiate their own interests.Practical implicationsThis research guides managers in developing institutional engagement strategies to reduce the potential consequences of institutional uncertainty in their supply chain. It also suggests types of institutional capability aligned with decentralized vs concentrated industries.Originality/valueWe extend the construct of institutional engagement strategies from the context of entrance to a new international market to an ongoing process in firms that are established in an environment characterized by weak regulative institutions. We also examine the role of industry concentration in the application of institutional engagement strategies.

Universities and Firm Performance: Evidence from Germany

Abstract This paper analyses the impact of universities on firm performance based on the universe of firms in Germany from 2013 to 2017. From a regional perspective, firms have 0.92 % more revenues per employee in counties with a university than in a county without a university. To address potential endogeneity concerns, I focus on a subsample of universities, founded for political reasons. Analysing different types of German universities indicates that the high-skilled regional labour supply is important for the positive impact of universities, while proximity to the knowledge spillovers of research-intensive universities is associated with weaker firm performance. The latter finding is at least partially explained by the networks of multinational firms.

Examining the Drivers and Boundary Conditions of Social Innovation: Evidence from MNE Subsidiaries in a Developing Economy

Although social innovation can help multinational enterprise (MNE) subsidiaries create social value for developing countries, they often encounter significant challenges in successfully implementing social innovation projects. This research applies the knowledge-based perspective to propose and test a theoretical framework to explain why MNE subsidiaries differ in their ability to pursue social innovation successfully in a developing country. The framework contends that MNEs’ relationship learning contributes to social innovation variability under varying levels of subsidiary autonomy and mode of entry. Analysis of primary data collected from 207 subsidiaries of MNEs operating in Ghana shows that relationship learning has a positive relationship with social innovation. Further analysis reveals that subsidiary autonomy enhances the positive association between relationship learning and social innovation, and that this moderating effect is stronger for subsidiaries with equity entry mode as opposed to non-equity entry mode. These insights advance the limited understanding of the antecedents of MNEs’ social innovation in developing countries and offer guidance on how MNE subsidiaries can successfully pursue social innovation interventions in a developing country.

Isolating the Effect of Social Risk on MNEs’ CSR Reporting: A New Approach Based on China's Belt & Road Initiative

AbstractThis article highlights CSR disclosure as a strategic response of Chinese multinational enterprises (MNEs) to the social risk they face in host countries. Deviating from prior research that aims to directly measure social risk, we offer a new approach to isolate the effect of social risk by leveraging China's Belt & Road Initiative (BRI) as the research context, under which Chinese MNEs are largely protected from political risk in membership countries but are exposed to substantial social risk from local nongovernment stakeholders. Results from difference-in-differences analyses show that after the enactment of the BRI, Chinese MNEs investing in BRI countries significantly increases their likelihood of CSR disclosure than that of their counterparts investing in non-BRI countries. Further, such effects are more pronounced for state-owned MNEs and MNEs in natural resource industries. This research enriches the international business literature on the relationship between political risk and social risk, and that between corporate political actions and corporate social responsibility.

Attitudes of Respondents on the Significance of Digitization in Multinational Enterprises and Its Importance for Well-Being

Abstract This paper investigates the intricate dynamics of digitization in multinational enterprises, exploring the attitudes of stakeholders and their perceived impact on individual well-being within these complex ecosystems. The comprehensive literature review underscores the transformative potential of digitization, noting its “bright sides” such as efficiency gains and innovation, alongside the “dark sides” involving cybersecurity threats and job displacement. The study utilizes a rigorous research methodology employing statistical tools like the Mann-Whitney U Test, Kruskal-Wallis Test, Linear Regression and Factor Analysis to analyze attitudes and perceptions. The qualitative phase aims to capture in-depth insights into decision-making processes, challenges faced, and perceived benefits. The quantitative survey, designed based on identified factors from the literature, seeks to validate these findings on a broader scale. The findings reveal nuanced interplays between attitudes toward digitization in multinational enterprises and their broader implications for the well-being of individuals and society. The analysis also highlights the communalities and factors influencing peoples’ attitudes, emphasizing the delicate balance between the positive and negative dimensions of digitization. This study contributes a nuanced understanding of the intricate relationship between organizational attitudes toward digitization and its effects on the well-being of those navigating the complexities of multinational enterprises. Beyond its academic value, the research provides actionable insights for practitioners in crafting strategies that align digitization goals with the holistic well-being of stakeholders.

Multinational firms and sustainability in global supply chains: scope and boundaries of responsibility

Multinational firms and sustainability in global supply chains: scope and boundaries of responsibility

Growing Old, but Paying Back: Understanding How Age Influences Corporate Social Innovation Depth and Breadth of Multinationals in Weak Institutional Contexts

Corporate Social Innovation (CSI) has emerged as a research priority for multinational enterprises (MNEs) due to the increasing popularity of sustainable development solutions addressing wicked problems in the 21st century. Although most studies on CSI have focused on data from developed economies, emphasising the younger generation's forward-looking, sustainable, and environmentally friendly attitudes, there exists a gap in our understanding of the attitude of the older generation towards CSI practices of MNEs operating in emerging economies. The UN's SDG 3 advocates for the well-being of all at all ages. Despite this, healthcare outcomes in global-south countries fall below standard. Therefore, we conducted an in-depth critical analysis of textual data concerning CSI practices of 115 healthcare MNEs operating in 13 emerging economies. We quantified the number of CSI practices in their annual reports and operationalised the dependent variable using an entropy index to calculate the density and percentage score of CSI. Drawing on Upper Echelons, our analysis revealed that older CEOs are likelier to promote, initiate, and implement CSI in greater depth and breadth. These findings present a compelling case supporting the argument that CEOs and board members tend to contribute more to society as they age. We offer empirical evidence supporting the strengthening roles of senior board members and female board chairs. Our findings complement existing CSI studies from developed countries and illustrate how CEO and board characteristics influence the depth and breadth of CSI in emerging economies.

MOŽE LI KORPORATIVNO UPRAVLJANJE RIJEŠITI FINANCIJSKE POTEŠKOĆE? ANALIZA STUDIJE SLUČAJA PODUZEĆA S POTEŠKOĆAMA

The paper examined the concepts of corporate governance and financial distress. This was achieved by a review of case studies. The review of literature showed that few studies have actually attempted to address the question of whether corporate governance can cure a financially distressed firm. In an attempt to fill this gap, the study this paper examined corporate governance cases of firms that were financially distressed or eventually collapsed. The idea is to be able to take a position as to whether corporate governance can be used as an antidote to financial distress. To achieve this objective, the paper conducted a case study analysis of financial distress cases from different jurisdictions (Multinational, African and Nigerian firms). Documentary evidences on financial distress and challenges of corporate governance were also reviewed. The result of the case study analyses showed that corporate governance can be a cure for financially distressed firms with a condition that key stakeholders in the firm implement the corporate governance provisions.

The role of institutional and political factors in attracting Chinese and Russian multinationals to the Visegrad countries

Abstract International business research is usually focused on various aspects of foreign direct investment (FDI) by non-European emerging-market multinational enterprises (EMNEs) without attention to non-traditional factors pulling them into host countries. The objective of this paper is to examine the investments of EMNEs from two source countries, China and Russia, within the Visegrad Four (V4) economies. Based on interviews and a qualitative document analysis, it explores the main characteristics of their investments into the V4, including host-country determinants by focusing on macroeconomic, institutional and political factors. The paper finds that these factors do influence EMNEs’ investment practices, and that they correlate with the changing quality of political relations, but this influence needs to be assessed on a case-by-case basis.

Sustainability and Industry 4.0 in the packaging and printing industry: a diagnostic survey in Poland

Abstract Industry 4.0 (I4.0) became an important paradigm to bridge the gap between technologies and humans. The paper aims to diagnose sustainability performance and I4.0 maturity in Poland’s printing and packaging sector and identify research areas where further actions for improvements are necessary. This article adopts a mixed-method study combining in-depth interviews of eleven heterogeneous enterprises, supported with a quantitative survey on a representative sample of 301 companies. The findings revealed an insignificant correlation from a statistical point of view (0.44) between the adopted I4.0 technologies currently used and sustainable best practices. Internet of Things technologies are more often adopted in the printing industry (27.2 %) than in the packaging industry (14 %). The study concludes that using I4.0 technologies boosts the execution of sustainable practices and/or realising sustainable development practices requires I4.0 technology adoption. The paper clarifies that more in-depth analyses are needed to help achieve sustainable objectives for printing and packaging companies through digital technologies. The methodology is replicable and might be applied in other economies across separate multinational enterprises to influence sustainable digitalised business strategy.

Market or Community? An Institutional Logics Interpretation of how MNE Subsidiaries Respond to Mandated Social Innovation in India

Despite growing concern in the social innovation (SI) literature about the tackling of grand challenges, our understanding of the role of multinational enterprises (MNEs) remains in its infancy. This article examines foreign MNE subsidiaries’ SI investments focusing on United Nations’ Sustainable Development Goals (UNSDGs) in host countries. Using financial data from large, listed subsidiaries of foreign MNEs operating in India, along with hand-collected data from firms’ disclosures of corporate social responsibility (CSR) activity for five years starting in 2015, we utilise the externalities framework propounded by Montiel et al. (2021). This neatly translates the 17 UNSDGS into actionable goals to examine the efforts of foreign MNE subsidiaries in increasing positive externalities as opposed to reducing negative externalities via SI-related investment in host countries. The study also evaluates the effects of the local embeddedness of the foreign MNE subsidiaries on SI investment. We find that MNE subsidiaries tend to favour increasing positive externalities as compared to reducing negative externalities through their SI investments. Also, older subsidiaries tend to prioritize greater investments in SI projects related to reducing negative externalities and subsidiaries with higher MNE ownership tend to reduce investments in SI projects related to increasing positive externalities. We discuss possible interpretations of the exploratory results using the institutional logics perspective and conclude with implications for policy and future research.

The Impact of Language Competence of Local Workforce on Expatriation Strategies in Multinational Enterprises

The Impact of Language Competence of Local Workforce on Expatriation Strategies in Multinational Enterprises

A systems thinking approach to international business education

Purpose International business (IB) education typically focuses on the multinational enterprise (MNE) and how it navigates varying institutional setups for its own benefit. This reductionist and MNE-centric approach underplays the influence these firms have on the societal and environmental fabric of the geographies they are operating in. This paper aims to propose integrating systems thinking into IB education to address this shortcoming with the intention to setup IB education to engage with wicked grand challenges. Design/methodology/approach This conceptual paper offers an approach for integrating complexity, criticality and diversity into IB education through teaching systems thinking capabilities. Findings Integrating systems thinking into IB education allows for a more realistic appreciation of IB’s contribution to addressing grand challenges. The authors propose a systems thinking perspective to IB education and offer how systems thinking capabilities could be taught in IB. Originality/value Grand challenges are characterised by wicked problems. Addressing them requires a multilevel, cross-disciplinary approach that takes into consideration the inter- and intradependencies of all actors within a system.

The impact of research and development internationalisation on environmental, social and governance: Evidence from emerging market multinational enterprises

The impact of research and development internationalisation on environmental, social and governance: Evidence from emerging market multinational enterprises

Human Capital and the Quality of Foreign Direct Investments

The purpose of this study is to analyse to what extent the difference between the quantity and quality of Human Capital (HC) is relevant to the quantity and quality of inward Foreign Direct Investments (FDI). Most developing economies keep attracting multinational enterprises (MNEs) with short-term goals in labour-intensive industries, with little or no embodiment in the local environment. As such, low-valueadding investments erode the national HC base, leading to the vicious cycle of lowquality investments. The legitimate policy question is whether countries are unable to attract high-quality investment due to the low quality of HC. This study, which combines traditional and more advanced proxies of HC, considers a sample of 54 developed and developing countries. It is found that the role of HC quality in FDI attraction is industry-specific and that it varies depending on the country’s level of development. The quality of HC seems to matter relatively more for high-quality FDI than for overall FDI.